Iraqi minister says Maliki misquoted on Kurdish oil deals

February 08, 2011, Tuesday/ 17:10:00

Iraqi Prime Minister Nouri al-Maliki was misquoted as saying the central government would honor Kurdish production-sharing oil contracts, Deputy Prime Minister Hussain al-Shahristani said on Monday.

Shares in Norwegian oil firm DNO made a rapid increase on Monday on a media report quoting Maliki as saying Iraq would honor Kurdish production-sharing contracts, like that of DNO.

"All the contracts we (the central government) have signed were service contracts and we expect that all these (Kurdish) production-sharing contracts should be amended to be service contracts in order to be approved" by the Baghdad government, Shahristani, the deputy prime minister for energy, told Reuters.

The weekend report by the AFP news agency seemed to catch senior Iraqi oil officials by surprise. "In fact this was a misunderstanding and misquoting by the AFP of what the prime minister said," Shahristani said. "It did not actually represent the position of the prime minister and the Iraqi government towards this issue."

Exports from the semi-autonomous Kurdish region were stopped following a prolonged dispute between Iraqi Kurdish administration and the Arab-led government in Baghdad over the legality of contracts awarded by the Kurds to foreign companies.

“The oil ministry accepted these contracts because the nature of the extraction in Kurdistan is different from Basra,” Maliki was quoted as saying in the interview on Saturday, referring to Iraq’s oil-rich southern province. “There is a need for bigger efforts there, while in Basra it (oil) is closer to the surface. It’s difficult to have service contracts in Kurdistan but it’s normal to have them in southern Iraq,” he added.

Shahristani said the Kurdish contracts had not yet been reviewed by the central government.

Shares of DNO pared their gains but were still up by more than 3 percent on the day by midday.

Kurdish exports from two fields -- Taq Taq and Tawke -- flowed briefly in 2009 but were halted when the Iraqi government refused to pay the oil companies working the fields, including Norway’s DNO and Turkey’s Genel Enerji.

Around 40 companies, including DNO, have invested in the Kurdish-run northern Iraq, but revenues have been curtailed by their inability to sell oil for export because Baghdad has deemed the contracts they signed unconstitutional.

Last week, crude oil started to flow from the Kurdish region’s Tawke field at about 10,500 barrels per day after the two sides said they had reached a deal, a major step toward resolving fierce disputes between the war-torn country’s majority Arabs and minority Kurds.

Under the deal, the Iraqi oil ministry has agreed with its Kurdish counterpart to pay the exploration costs and expenses to the foreign firms working in the northern Kurdish region but the central government will not pay foreign companies their profits.

Baghdad deemed the production sharing agreements signed independently by the Kurdistan Regional Government (KRG) with foreign oil companies illegal. The Arab-led government in Baghdad had said in the past the Kurds should pay the firms’ profits from the KRG’s share of the annual national budget, not from the central government’s revenue.

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