| 2008: Kurds, Baghdad set to discuss new oil law as disputes remain |
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June 4, 2008 Kurdistan’s Prime Minister Nechirvan Barzani said yesterday talks with Baghdad about a long-awaited new federal oil law would continue within two weeks. “We will be traveling to Baghdad to start negotiations on the oil law in two weeks. It’s important that we agree on the law otherwise foreign companies won’t come to invest in our region,” Barzani told reporters on the sidelines of a press conference in Dubai. Disputes between the largely autonomous northern region of Kurdistan and Baghdad have delayed the law for over a year. Iraq needs billions of dollars to modernise the oil industry and raise output after decades of sanctions and war, but uncertainty over the law has stalled international investment Barzani said the Kurds were proposing a single package covering oil law, revenue sharing law, Iraqi oil ministry and an Iraqi national oil company to be presented to parliament. “Baghdad has different views. It’s not about Kurdistan and Baghdad, it’s an economic matter. It’s about state-run and private. We’re supporting private and a free-market economy,” he added. Talks with Baghdad will also revolve around deals struck between the Kurdish Regional Government (KRG) and Austria’s OMV AG and South Korea’s SK Energy after Baghdad said the deals were illegal, Barzani said. The KRG has signed 15 oil and gas contracts with 20 international companies since it passed its own hydrocarbons law in August, causing tensions with the Iraqi government, which is seeking centralized control over the country’s oil resources. The Kurds maintain the deals are in line with the Iraqi constitution. However, the contracts are considered illegal by the Iraqi Oil Ministry, which has threatened to exclude and blacklist participating international oil companies from future opportunities elsewhere in Iraq. Iraq’s Oil Ministry has already ended crude oil supply contracts with SK Energy and OMV. “We will discuss the OMV and SK issue with Baghdad when we go there. We don’t think it has the right to stop the deals,” Barzani said. The Kurdish PM also said Iraq should boost crude oil export capacity to 6mn bpd, three times the amount the country is exporting presently. “We think Iraq needs to export more oil. Iraq has capacity to export 6mn bpd, but they’re happy with 2mn,” Barzani said. Kurdistan’s own plans involve boosting crude output to 1mn bpd, Barzani said. “We are ready to pump 150,000 bpd, but we hope to increase this to 1mn bpd in two years,” he said. Earlier, the Kurdish region’s top energy official Ashti Hawrami said he hoped Iraq’s parliament would pass the law this year. Baghdad controls Iraq’s export pipelines, and until the Kurdish region reaches an agreement with the federal government it is unable to produce more oil. Norwegian producer DNO is producing from wells in the Kurdish region and has built a pipeline to hook up to Iraq’s main northern export route to Turkey, but has yet to receive an export license from Baghdad. Barzani said that the region was not exporting oil without Baghdad’s consent. “We are not selling oil to anybody,” he said. The Kurdish region aims to raise output to 1mn bpd in around five years. Iraq has the world’s third largest oil reserves at around 115bn barrels, although the country’s deputy prime minister Barham Salih said in April reserves could be as much as 350bn barrels. Little exploration has been carried out in areas such as the Kurdish region. Hawrami estimated potential oil reserves in the region at around 45bn barrels. Source: Reuters |