Iraq’s Kurds to go it alone on oil deals

March 22 2007

In an interview, Ashti Hawrami, the Kurdish energy minister, said Kurdistan would become a hub for energy companies that were not ready to invest in the rest of Iraq because of security concerns.

“We are in discussions with a number of other companies. It is more likely that the contractors will come [to Kurdistan] to start with and set up a base to hopefully then invest in the rest of Iraq,” he said, adding that he saw no reason why the hydrocarbon law should not pass parliament by the end of May, the target date.

Kurdistan will still share any revenue it makes from the oil sales with the rest of the country even if the law is not yet in place, he said. “Even if things don’t go ahead, we will still share it. If things go completely wrong we will rethink it.”

He said the negotiations of the draft hydrocarbon law had accelerated the interest of oil companies, several of which had already completed contracts that were ready to sign. He declined to name the companies, but interested parties are believed to include OMV of Austria, and US companies Marathon and Anadarko.

“It is 15 [contractors] we want to end up with. If we get another 10, I’ll be very happy with myself. We need to keep the momentum going,” he said.

It is unclear how Baghdad will react to Kurdistan’s ambitions. It has in the past objected to Kurdish contracts, but is also likely to be careful not to upset negotiation of the hydrocarbon law.

Kurdistan wants to produce 200,000 barrels a day of oil by the end of next year and ramp up to 1m b/d within five years. The region is thought to hold 25bn barrels of oil reserves, with another 20bn lying in the disputed areas.

But Kurdistan has to find a way to export its oil before it is able to realize its goals. The Kirkuk pipeline, the main northern artery, has been sabotaged so often that it is all but useless.