By Kadhim Ajrash, Nayla Razzouk and Khalid Al-Ansary - Sep 30, 2012 9:33 AM ET
Iraq will pay money today that it owes to international oil companies pumping crude in the country’s northern Kurdish region, an official with the semi-autonomous Kurdistan Regional Government said.
Ashti Hawrami, the Kurdish natural resources minister, told reporters in Baghdad the central government informed him of the decision to resume payments. He spoke today before meeting Iraqi Oil Minister Abdul Kareem al-Luaibi for talks about drafting a national energy law.
Iraq’s central government made two earlier payments to help reimburse companies for their production costs in the Kurdish area. Hawrami didn’t say whether the promised funds would settle the full amount outstanding. He said Sept. 24 in Istanbul that the government would pay 1 trillion dinars ($858 million), two-thirds of it in an initial sum and the rest at an unspecified future date.
Iraqi and Kurdish authorities have been at loggerheads over oil sales and contract terms with Exxon Mobil Corp. (XOM), Total SA (FP)and other companies that have flouted warnings by officials in Baghdad and struck separate deals with the semi-autonomous Kurds. The two sides reached an accord earlier this month for the resumption of crude exports from the Kurdish region. Their failure to agree on a national energy law after six years of effort is central to their dispute. Hawrami said Sept. 18 that parliament may approve the law by the end of the year.
Second in OPEC
Iraq is the second-largest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia, and holds the world’s fifth-biggest crude reserves, according to BP Plc (BP/) data.
The Middle Eastern country has boosted crude production to almost 3.4 million barrels a day from 2.4 million barrels a day in 2010, Hussain al-Shahristani, deputy prime minister for energy affairs, said at a conference today in Baghdad. Iraq currently exports 2.6 million barrels a day, according to separate comments by Shahristani and Luaibi.
The government wants to attract $500 billion in investment in energy projects by 2030, including $80 billion from private companies, Shahristani said. The outlays would help generate about $6 trillion in revenue, mostly from oil exports, and create 250,000 jobs, he said.
Electricity Target
As part of the plan, Iraq is targeting an increase in electricity output to 22 gigawatts by 2016, enough to satisfy local demand, he said. Some Iraqis experience power shortages lasting 12 hours a day on average, Mussab Serri, a spokesman for the Electricity Ministry, said by telephone today in Baghdad.
The outages, a result of inadequate investment in generating plants and transmission networks, hamper economic reconstruction. Protests over unreliable electricity supplies have made the issue a major government concern.
The Oil Ministry also plans to sell licenses to explore for natural gas in its next auction of energy rights, Shahristani said, without specifying a date. Iraq has held four auctions of energy rights, most recently in May, since the U.S.-led invasion that ousted former President Saddam Hussein in 2003.