Iraqi Kurds' Oil Deals Provoke Conflict with Baghdad

AlterNet. Posted November 16, 2007.

Iraq to Blacklist Firms That Signed Oil Deals with Kurds
By Omar Hasan
Middle East Online

Iraq warned on Thursday that foreign oil companies which signed deals with the autonomous Kurdish regional government will be barred from doing business in the country and from exporting oil.

"Any company that has signed contracts without the approval of the federal authority of Iraq will not have any chance of working with the government of Iraq," Oil Minister Hussein Shahristani said.

"We warned the companies that there will be consequences… that Iraq will not allow its oil to be exported," Shahristani told reporters on the sidelines of OPEC meetings in the Saudi capital Riyadh.

Last week, the Kurdish authorities signed seven production-sharing contracts with a number of foreign oil companies in defiance of the Iraqi central government and before approving a controversial federal oil law.

The latest contracts bring to 15 the number of deals finalised by the Kurdish regional government since it passed its own oil law in August.

The regional administration said 85 percent of the returns from the foreign deals would be for Iraq and the rest would go to the contractor.

The Kurdish government's minister for natural resources, Ashti Hawrami, said last week that with the signing of the latest contracts, 20 international oil companies are now working in the region.

He said talks were ongoing with foreign firms over 24 new oil blocks in the oil-rich north and that announcements would be made soon.

But Shahristani warned that foreign firms which sign contracts with the Kurds risk being blacklisted by Iraq.

"Our position is that any company that signs a contract without the approval of the federal authority will compromise their chances of getting business in future in Iraq," he said.

The Iraqi hydrocarbons law is stalled before parliament due to bitter differences between warring political factions over the sharing of lucrative revenues from the crude, the third-largest proven reserves in the world.

The bill opens up the long state-dominated oil and gas sector to foreign investment and assures that receipts will be shared equally between Iraq's 18 provinces, a measure Washington regards as key to unite the rival communities.

Shahristani however said that "for the time being, Iraq does not need production-sharing agreements" to increase its oil output.

He said Iraq is currently exporting more than two million barrels a day.

Iraqi Kurds Announce SEVEN New Oil Deals to Foreign Firms, and FOUR to the New Kurdistan Oil Company
By Ben Lando
Iraq Oil Report


The KRG announced the new deals Tuesday, a major move which will have reverberations yet to be realized within the political spheres from Baghdad to Washington, as well as the global oil industry.

Iraq Oil Report will have more details, but here’s what’s out so far:

# Award of two PSCs, for the Mala Omar and Shorish Blocks (of 285 and 526 square kilometres respectively) in Erbil Governorate, to OMV Petroleum Exploration GMBH, a wholly-owned subsidiary of OMV Aktiengesellschaft, the largest oil and gas company in Central Europe. The blocks are considered to be low to medium exploration risk areas.

# Award of the Akre-Bijeel Block (889 square kilometres) in the Dihok Governorate to Kalegran Limited, a wholly-owned subsidiary of MOL Hungarian Oil and Gas PLC, and Gulf Keystone Petroleum International Limited, a wholly-owned subsidiary of UK-listed Gulf Keystone Petroleum Limited. The Akre-Bijeel Block is a medium exploration risk area.

# Award of the Shaikan Block (283 square kilometres) in the Dihok Governorate to Gulf Keystone Petroleum International Limited, Texas Keystone Inc., and Kalegran Limited. The Shaikan Block is a low exploration risk area.

# Award of the Rovi and Sarta Blocks (517 and 607 square kilometres respectively) to Reliance Energy Ltd. These PSCs had been negotiated prior to the entry into force of the Kurdistan Oil and Gas Law, and had been awaiting the passage of the Law and the approval of the Council.

# Award of another block (1226 square kilometres) also in the Dihok Governorate to a western company, with details to be announced in coming days. The block is considered to be a medium exploration risk area.

# Award of four strategic blocks in the Suleimaniyah-Erbil area to the Kurdistan Exploration and Production Company (KEPCO), a government-owned oil exploration and development company established by the Kurdistan Oil and Gas Law.

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