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< Back to Iraqi Dinar in the News October 3rd, 2007

Iraq Kurds ink four new oil deals

by Sabah Jerges1 hour, 49 minutes ago

Iraq's Kurdistan regional government announced four more oil deals on Wednesday, ignoring criticism from Prime Minister Nuri al-Maliki's government and Washington of its unilateral sell-off of the country's national resources.

The regional government said in a statement posted on its website that it had approved four contracts for exploration and production, and had sanctioned two new refinery projects in the Kurdish autonomous region in northern Iraq.

Two production sharing contracts (PSCs) had already been signed, with Heritage Energy Middle East Limited, a subsidiary of the Canadian firm Heritage Oil and Gas, and Perenco S.A., an affiliate of a French company of the same name.

"The signing of the other two PSCs with experienced international companies will follow shortly," the statement said.

"The combined initial exploration investments on the upstream projects will be approximately 500 million dollars," it said. "Estimated investment on the two new refinery projects will be around 300 million dollars."

The Iraqi oil ministry did not immediately comment on the new deals, but Amira al-Baldawi, an MP from the Shiite coalition that leads the Baghdad government and a member of parliament's economic, investment and reconstruction committee, said the contracts were "illegal".

"They shall be revised and put in accordance to the Iraqi law and the new oil law to be issued," Baldawi told AFP.

Former oil minister Ibrahim Bahr al-Olum said he had advised the Kurdish authorities to postpone signing contracts until a new oil and gas law is passed by the national parliament.

Olum added, however, that such actions were to be expected because the legislative procedure is dragging.

"The procrastination of parliament to pass the law is pushing other parties to behave on their own," he said.

Last month, the Kurdish regional government inked a deal with Texas-based Hunt Oil Company, the first major oil contract awarded by any Iraqi authority to a foreign company since UN sanctions were imposed on Iraq when it invaded Kuwait in 1990.

The Hunt contract was declared "illegal" by Iraqi Oil Minister Hussein al-Shahristani, sparking a war of words with the regional government, which told him to stop meddling in its affairs and said he should be sacked.

US State Department deputy spokesman Tom Casey also criticised the Hunt deal last week.

"I'm not sure exactly how helpful it is for either any individual corporate entity or the Kurdistan regional government to be proceeding to make deals and contracts under an arrangement that in fact may be changed ... as a result of overarching national legislation," Casey told reporters in Washington.

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

The draft law was approved by Prime Minister Nuri al-Maliki's national unity cabinet in July but faces a tough passage in the 275-seat parliament, where the Kurdish bloc has 53 seats.

The bill is expected to come before MPs this month.

The regional government said the PSC awarded to Energy Middle East Limited covered the 1,015 square kilometre (406 square mile) Miran Block in Sulaimaniyah Governorate, "a low to medium exploration risk area."

Perenco S.A. has been awarded the "high exploration risk" 2,358 square kilometre (943 square mile) Sindi/Amedi Block along the Turkish border.

Regional natural resources minister Ashti Hawrami defended the deals.

"The projects will spearhead international investment for the whole of Iraq," he said. "New oil discoveries under these contracts will bring large amounts of new revenues for sharing throughout Iraq."