Iraq says Kurd oil deals illegal

Thursday, June 11, 2009

BAGHDAD: Contracts that semi-autonomous Kurdish authorities have signed with private oil firms are illegal until they are ratified by the Oil Ministry in Baghdad, the Iraqi government reaffirmed on Wednesday.

Oil Minister Hussain al-Shahristani also rejected paying firms that have developed the Taq Taq and Tawke oil fields in northern Iraq as part of contracts signed independently with the Kurdish Regional Government (KRG). “These contracts need to be ratified by the Iraqi federal Oil Ministry. Till that time they are illegal,” government spokesman Ali al-Dabbagh told reporters at a news conference with Oil Minister Hussain al-Shahristani. After the conference, Shahristani told reporters: “We will not discuss any compensation for these companies (developers of Taq Taq and Tawke) under any circumstances.”

His statement could ratchet up tensions between Baghdad and the KRG, which has said it would not pay Norway’s DNO International, Toronto-listed Addax Petroleum and Turkey’s Genel Enerji, from its own purse. Genel is to merge with Britain’s Heritage Oil.

Shahristani said the KRG should pay the firms from the 17 percent of the federal budget it gets each year, an option ruled out by Kurdish natural resources minister Ashti Hawrami.

The Iraqi government at the beginning of the month allowed crude to start being exported from Tawke and Taq Taq. That seemed to represent a break in a long-running dispute between the government in Baghdad and Kurds over land, power and Iraq’s vast oil resources.

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