Iraqi Kurds Defy Baghdad on Oil Deals

Middle East Online. Posted November 26, 2007.

The autonomous Kurdish regional government in northern Iraq defied Baghdad on Monday, vowing to sign more contracts with international oil firms despite the national government's opposition.

"The (regional) government will continue with the contracts and they will be implemented," its prime minister Nechirvan Barzani said.

"No one can cancel any contract of the KRG (Kurdistan regional government) signed with foreign companies," a defiant Barzani told reporters in the regional capital Arbil.

Iraqi Oil Minister Hussain Shahristani has declared all oil contracts between the Kurdish administration and foreign companies null and void, saying they have been signed illegally in the absence of a national oil law.

Barzani insisted the contracts are legal and fall within the provisions of the region's constitution.

The Kurdish government has inked 15 exploration and export contracts with 20 international companies since it passed its own oil law in August, infuriating the Baghdad government.

The regional government says the contracts will benefit all Iraqis as 85 percent of the returns from the deals will be for Iraq and the rest will go to the contractor.

Iraq's oil and gas bill is stalled in the national parliament amid bitter differences between rival factions.

When approved, the new law will open up Iraq's long state-dominated oil and gas sector to foreign investment.

It will also stipulate that receipts be shared equally between Iraq's 18 provinces, a key concern for the Sunni Arab minority that Washington says has fuelled the anti-American insurgency.

Iraq's oil reserves -- the world's third largest -- lie mainly in the Kurdish north and Shiite south and the Sunnis fear the two communities could monopolise future income.

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