SULAIMANIYA, Iraq: Worsening a deep divide with Iraqi leaders, the Kurdish regional government has struck four new oil exploration deals over the strong objections of the Baghdad central government. The deals are the latest effort by the Kurds to jump-start their oil industry as national oil legislation languishes in Parliament.The new deals follow an agreement last month between the Kurds and Hunt Oil Co. of Dallas that was criticized as illegal by the Iraqi oil minister, Hussain al-Shahristani. Kurdish officials, who have said they want to be producing at least one million barrels of new oil daily within five years, say all the deals are consistent with the Iraqi Constitution.
But the deals have aggravated tensions with the Arabs who dominate the national government, calling into question whether Iraqi politicians will ever be able to work out differences on how to develop the huge petroleum reserves.
The Kurds want the Iraqi Parliament to pass draft legislation governing new oil exploration and the allocation of oil revenue between the country's Kurdish, Sunni and Shiite regions. But many in Parliament object to the version favored by the Kurds, and it is unclear how the Kurds' own regional oil law, approved in August, will conform with whatever might ultimately be approved by the central government.
In particular, many Sunni Arab leaders object to the production-sharing agreements being negotiated by the Kurds, which call for companies to invest large sums to find and produce oil and then award the companies a portion of the profits later generated by the oil fields.
The Kurds' new oil and gas exploration production-sharing contracts were signed with Heritage Oil Corp., a publicly traded Canadian concern, and Perenco SA, a privately held French company. The total initial amount invested is expected to be $500 million, the regional government said, and two other deals with "experienced international companies" will be announced soon. If the exploration leads to oil production, Kurdish officials said that in rough terms the deals call for the companies to recover their costs and split profits, with about 15 percent going to the companies and 85 percent to the government.
In addition, the Kurdish government announced plans to complete, within two years, two refineries that are each capable of processing 20,000 barrels a day, or enough to meet 30 percent to 40 percent of the current demand in Iraqi Kurdistan for gasoline and other refined products - easing reliance on imports from Turkey and Iran. "We are desperate for fuel and fuel products," a Kurdish official said.
In Baghdad, a spokesman for the Oil Ministry criticized the new oil production contracts and warned companies not to sign deals without the blessing of the national government. "Any contracts signed before the approval of the oil law will be ignored or considered illegal," said the spokesman, Assim Jihad. He added that the ministry would take "rigid steps against those who ignore its orders."
A Kurdish official defended the deals, saying that the eventual revenue would be shared with all Iraqi regions and that any delays in signing exploration pacts would only increase the time it will take to get money for the country's treasury.
| The Kurds do seem like sensible fellows, don't they. What the Kurdish fellow said is something you'd expect from an .. American. |