Hue Mi
06-07-2009, 10:30 AM
Load ‘em up: fields in Iraqi Kurdistan begin (http://www.iraqoilreport.com/the-biz/load-em-up-fields-in-iraqi-kurdistan-begin/1556/)
Submitted by Ben Lando (http://www.iraqoilreport.com/author/blando/) on Monday, 1 June 20096 Comments (http://www.iraqoilreport.com/the-biz/load-em-up-fields-in-iraqi-kurdistan-begin/1556/#respond)
By BEN LANDO and ALAA MAJEED
Iraq Oil Report
A media show Monday in the northern Iraqi city of Erbil (http://www.iraqoilreport.com/topics/erbil), capital of the semi-autonomous Kurdistan (http://www.iraqoilreport.com/topics/kurdistan) Regional Government, is the official kick off to the first oil pumped from fields in the KRG to be exported from Iraq.
But doubts remain that the upbeat news of new oil exports – thus state income – can overcome key obstacles: The Oil Ministry in Baghdad (http://www.iraqoilreport.com/topics/baghdad) has denounced the two dozen oil deals the KRG has signed and there’s no agreement yet as to how the foreign firms will be compensated. And disputes over the rights to sign contracts and how to manage disputed territories were exacerbated by the announcement of a gas export deal in the north.
“No one should doubt that what the KRG has done is in the best interests of Iraq,” Nechirvan Barzani, prime minister of the KRG, said at the ceremony in Erbil, whose attendees included KRG President Massoud Barzani and Kurdish leader and Iraqi President Jalal Talabani (http://www.iraqoilreport.com/topics/jalal-talabani).
http://www.iraqoilreport.com/wp-content/uploads/2009/03/img_0827-300x199.jpg (http://www.iraqoilreport.com/wp-content/uploads/2009/03/img_0827.jpg)
(Oil surfaces just outside Tawke village in northern Iraq - source: Ben Lando/IOR)
Iraq is currently exporting around 1.8 million barrels per day. Oil from the Tawke field, operated by Norway’s DNO, and the Taq Taq field, operated by Turkey (http://www.iraqoilreport.com/topics/turkey)’s Genel Enerji (http://www.iraqoilreport.com/topics/genel-enerji) and Canada’s Addax Petroleum (http://www.iraqoilreport.com/topics/addax-petroleum), are to reach a combined 100,000 bpd shortly. The KRG Ministry of Natural Resources says it will reach 250,000 bpd in exports by mid 2010.
In his speech, Nechirvan Barzani didn’t sidestep the dispute with Baghdad. He recalled Saddam Hussein (http://www.iraqoilreport.com/topics/saddam-hussein)’s dictatorship of “consolidated power, combined with tremendous oil reserves,” which KRG officials in the past have said justifies a decentralization of the new Iraqi government, especially in the oil sector.
He said the 2005 Constitution has backed the KRG’s oil deals and laws – Baghdad claims the Constitution supports their opposition to the deals – and blamed the central government for a “lack of political will … and outright political interference” for thus far railroading a revenue sharing law and oil law, which would clarify collection and redistribution of state income and the roles of the central and local governments in setting and executing oil policy. Again, Baghdad says it is the KRG and Kurdish politicians in the national government that are holding up the oil and revenue laws.
“The revenues from today’s historic export will – and must – be handled fairly and transparently,” Barzani said. “And oil contractors shall and must be rewarded for their contribution, according to their entitlements.”
Iraq’s nationalized oil sector has sole control over oil exports. While the state-controlled pipelines are open for exports from KRG fields, the Oil Ministry in Baghdad says paying the contractors is up to the KRG.
“The revenues would go to the state’s budget,” said Oil Ministry spokesman Assem Jihad (http://www.iraqoilreport.com/topics/jihad). “This doesn’t mean that the Ministry of Oil and the government has to approve the contracts signed by the KRG with the foreign companies. …They were signed without the agreement of the federal government.”
The KRG receives 17 percent of state income, making it impossible to cover the contractors’ production sharing costs and afford to run their semi-autonomous regional government. The Finance Ministry in Baghdad is rumored to be looking into a special payment structure, which would undermine Oil Minister Hussain al-Shahristani (http://www.iraqoilreport.com/topics/hussain-al-shahristani)’s longterm opposition to KRG’s oil moves.
Last month, Austria’s OMV and Hungary’s MOL announced they purchased shares in natural gas projects in the KRG – the Chemchemal and Khor Mor fields – operated by the United Arab (http://www.iraqoilreport.com/topics/arab) Emirates’ Dana Gas and Crescent Petroleum. (Both OMV and MOL have signed oil deals with the KRG.) And they said the gas would be put to export via Turkey to feed the Nabucco pipeline, a proposed project to feed non-Russia (http://www.iraqoilreport.com/topics/russia)n gas to Europe.
The announcement ruffled feathers immediately. Iraqi citizens, power plants and industry are in desperate need for gas currently, and more so if the Iraqi economy diversifies and expands as hoped.
Domestic needs will come first, Jihad said, before exports.
“No side has the right to export gas unless through the (Ministry of Oil),” he said. “The sides that are authorized are the (Ministry of Oil) and the federal government.”
DISPUTED TERRITORIES
Barzani rolled into his speech all the grievances the KRG has with Baghdad, including the outstanding issue of land, currently outside the official KRG border, which the Iraqi Kurdish leadership claim should be annexed.
The areas, which most prominently include the northern oil capital of Kirkuk and other cities which have and will likely continue witnessing ebbs and flows of violence, were the scenes of Saddam Hussein’s ethnic cleansing, especially of the Kurds, and forced settlement of Sunni (http://www.iraqoilreport.com/topics/sunni) Arabs.
Kurds claim the territory as theirs, many wanting it part of the KRG, but Arabs, Turkomen and others want it to remain under Baghdad administration like other Iraqi provinces or made a special province.
Barzani demanded a referendum, called for in the 2005 Constitution, take place.
“Our message is loud and clear: we want justice for the people of Kirkuk (http://www.iraqoilreport.com/topics/kirkuk) and the disputed territories of the Kurdistan Region.”
Joost Hiltermann, an expert on the Baghdad-KRG disputes and Middle East & North Africa deputy program manager at the International Crisis Group, says both sides are “selectively using” the Constitution in the fight over disputed territories.
The federal government failed to implement the referendum and has been slow in finding a post-deadline solution. Meanwhile, the KRG has dismissed any rigid definition of the so-called “green line” border determining the KRG from the rest of Iraq.
For example the Khormala Dome of the Kirkuk field structure has been virtually idled, equipment gathering dust on site, with the two sides at odds. Multiple times Baghdad has accused KRG security forces of stopping work.
And one of the two gas projects OMV and MOL have farmed into, the Khor Mor field, “is located at least partially outside the 2003 Green Line, in other words, in disputed territory,” Hiltermann said.
Submitted by Ben Lando (http://www.iraqoilreport.com/author/blando/) on Monday, 1 June 20096 Comments (http://www.iraqoilreport.com/the-biz/load-em-up-fields-in-iraqi-kurdistan-begin/1556/#respond)
By BEN LANDO and ALAA MAJEED
Iraq Oil Report
A media show Monday in the northern Iraqi city of Erbil (http://www.iraqoilreport.com/topics/erbil), capital of the semi-autonomous Kurdistan (http://www.iraqoilreport.com/topics/kurdistan) Regional Government, is the official kick off to the first oil pumped from fields in the KRG to be exported from Iraq.
But doubts remain that the upbeat news of new oil exports – thus state income – can overcome key obstacles: The Oil Ministry in Baghdad (http://www.iraqoilreport.com/topics/baghdad) has denounced the two dozen oil deals the KRG has signed and there’s no agreement yet as to how the foreign firms will be compensated. And disputes over the rights to sign contracts and how to manage disputed territories were exacerbated by the announcement of a gas export deal in the north.
“No one should doubt that what the KRG has done is in the best interests of Iraq,” Nechirvan Barzani, prime minister of the KRG, said at the ceremony in Erbil, whose attendees included KRG President Massoud Barzani and Kurdish leader and Iraqi President Jalal Talabani (http://www.iraqoilreport.com/topics/jalal-talabani).
http://www.iraqoilreport.com/wp-content/uploads/2009/03/img_0827-300x199.jpg (http://www.iraqoilreport.com/wp-content/uploads/2009/03/img_0827.jpg)
(Oil surfaces just outside Tawke village in northern Iraq - source: Ben Lando/IOR)
Iraq is currently exporting around 1.8 million barrels per day. Oil from the Tawke field, operated by Norway’s DNO, and the Taq Taq field, operated by Turkey (http://www.iraqoilreport.com/topics/turkey)’s Genel Enerji (http://www.iraqoilreport.com/topics/genel-enerji) and Canada’s Addax Petroleum (http://www.iraqoilreport.com/topics/addax-petroleum), are to reach a combined 100,000 bpd shortly. The KRG Ministry of Natural Resources says it will reach 250,000 bpd in exports by mid 2010.
In his speech, Nechirvan Barzani didn’t sidestep the dispute with Baghdad. He recalled Saddam Hussein (http://www.iraqoilreport.com/topics/saddam-hussein)’s dictatorship of “consolidated power, combined with tremendous oil reserves,” which KRG officials in the past have said justifies a decentralization of the new Iraqi government, especially in the oil sector.
He said the 2005 Constitution has backed the KRG’s oil deals and laws – Baghdad claims the Constitution supports their opposition to the deals – and blamed the central government for a “lack of political will … and outright political interference” for thus far railroading a revenue sharing law and oil law, which would clarify collection and redistribution of state income and the roles of the central and local governments in setting and executing oil policy. Again, Baghdad says it is the KRG and Kurdish politicians in the national government that are holding up the oil and revenue laws.
“The revenues from today’s historic export will – and must – be handled fairly and transparently,” Barzani said. “And oil contractors shall and must be rewarded for their contribution, according to their entitlements.”
Iraq’s nationalized oil sector has sole control over oil exports. While the state-controlled pipelines are open for exports from KRG fields, the Oil Ministry in Baghdad says paying the contractors is up to the KRG.
“The revenues would go to the state’s budget,” said Oil Ministry spokesman Assem Jihad (http://www.iraqoilreport.com/topics/jihad). “This doesn’t mean that the Ministry of Oil and the government has to approve the contracts signed by the KRG with the foreign companies. …They were signed without the agreement of the federal government.”
The KRG receives 17 percent of state income, making it impossible to cover the contractors’ production sharing costs and afford to run their semi-autonomous regional government. The Finance Ministry in Baghdad is rumored to be looking into a special payment structure, which would undermine Oil Minister Hussain al-Shahristani (http://www.iraqoilreport.com/topics/hussain-al-shahristani)’s longterm opposition to KRG’s oil moves.
Last month, Austria’s OMV and Hungary’s MOL announced they purchased shares in natural gas projects in the KRG – the Chemchemal and Khor Mor fields – operated by the United Arab (http://www.iraqoilreport.com/topics/arab) Emirates’ Dana Gas and Crescent Petroleum. (Both OMV and MOL have signed oil deals with the KRG.) And they said the gas would be put to export via Turkey to feed the Nabucco pipeline, a proposed project to feed non-Russia (http://www.iraqoilreport.com/topics/russia)n gas to Europe.
The announcement ruffled feathers immediately. Iraqi citizens, power plants and industry are in desperate need for gas currently, and more so if the Iraqi economy diversifies and expands as hoped.
Domestic needs will come first, Jihad said, before exports.
“No side has the right to export gas unless through the (Ministry of Oil),” he said. “The sides that are authorized are the (Ministry of Oil) and the federal government.”
DISPUTED TERRITORIES
Barzani rolled into his speech all the grievances the KRG has with Baghdad, including the outstanding issue of land, currently outside the official KRG border, which the Iraqi Kurdish leadership claim should be annexed.
The areas, which most prominently include the northern oil capital of Kirkuk and other cities which have and will likely continue witnessing ebbs and flows of violence, were the scenes of Saddam Hussein’s ethnic cleansing, especially of the Kurds, and forced settlement of Sunni (http://www.iraqoilreport.com/topics/sunni) Arabs.
Kurds claim the territory as theirs, many wanting it part of the KRG, but Arabs, Turkomen and others want it to remain under Baghdad administration like other Iraqi provinces or made a special province.
Barzani demanded a referendum, called for in the 2005 Constitution, take place.
“Our message is loud and clear: we want justice for the people of Kirkuk (http://www.iraqoilreport.com/topics/kirkuk) and the disputed territories of the Kurdistan Region.”
Joost Hiltermann, an expert on the Baghdad-KRG disputes and Middle East & North Africa deputy program manager at the International Crisis Group, says both sides are “selectively using” the Constitution in the fight over disputed territories.
The federal government failed to implement the referendum and has been slow in finding a post-deadline solution. Meanwhile, the KRG has dismissed any rigid definition of the so-called “green line” border determining the KRG from the rest of Iraq.
For example the Khormala Dome of the Kirkuk field structure has been virtually idled, equipment gathering dust on site, with the two sides at odds. Multiple times Baghdad has accused KRG security forces of stopping work.
And one of the two gas projects OMV and MOL have farmed into, the Khor Mor field, “is located at least partially outside the 2003 Green Line, in other words, in disputed territory,” Hiltermann said.