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Natural Resources Ministry announces new Kurdistan
Region petroleum contracts
2.10.2007
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Kurdistan spearheads Iraq oil investment
October
2, 2007
Erbil-Hewler, Kurdistan region 'Iraq', The
Spokesman of Kurdistan Regional Government .
The Kurdistan Regional Government (KRG) Ministry for
Natural Resources today announced that the KRG
Regional Oil and Gas Council has approved four new
production sharing contracts (PSCs) and sanctioned
two new refinery projects in the Kurdistan Region in
Iraq. The announcement came a day after the Council
unanimously decided to award the contracts at its
second formal meeting.
Dr Ashti Hawrami, the KRG Minister for Natural
Resoures, said, “The projects will spearhead
international investment for the whole of Iraq”. He
added, “The first step was the KRG Oil and Gas Law
in August, also approved unanimously by Kurdistan’s
legislature. Pursuant to the Iraq Constitution, the
KRG Law is the supreme law governing oil and gas
activities in the Region. |
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Now, these contracts
with reputable and experienced oil companies. New
oil discoveries under these contracts will bring
large amounts of new revenues for sharing throughout
Iraq, and locally refined petroleum products will
help the people of the Kurdistan Region and the
whole of Iraq, who now suffer from costly black
market imports. It will spell the beginning of the
end of the wasteful fuel subsidies of the federal
government, and the corruption and crime that goes
with them.”
Dr Hawrami said, “Next, we must see the draft
federal Oil and Gas Law and the draft federal
Revenue Sharing Law passed in the agreed form and
consistent with the Iraqi Constitution. These will
provide a proper platform for investment established
in southern and central Iraq. If we use the federal
Constitution as our guide, we will avoid the costly
mistakes that were made in Iraq’s past and get
projects going not just in the Kurdistan Region, but
throughout our country.”
The combined initial exploration investments on the
upstream projects will be approximately US$500
million. Estimated investment on the two new
refinery projects will be around $300 million.
New upstream projects
The Ministry for Natural Resources today executed
two of the approved production sharing contracts (PSCs)
for oil and gas exploration and development in the
Kurdistan Region:
Award of the Miran Block (1,015 square kilometres)
in Sulaimaniyah Governorate to Heritage Energy
Middle East Limited, a wholly owned subsidiary of
Canadian listed oil company Heritage Oil and Gas.
The Miran Block is a low to medium exploration risk
area.
Award of the Sindi/Amedi Block (2,358 square
kilometres) along the Iraq/Turkish border to Perenco
Kurdistan Limited, a wholly owned subsidiary of
Perenco S.A., the privately held French oil
exploration and production company. The Sindi/Amedi
Block is a high exploration risk area.
The signing of the other two PSCs with experienced
international companies will follow shortly.
If commercial discoveries are made, these two PSCs
will provide an estimated aggregate return/profit of
over 85% to Iraq and around 15% to the contractors.
The commercial terms of these contracts conform to
the term guidelines published by the KRG on its
website on 29 June and provide similar returns to
Iraq. The contract signed with Hunt Oil in August
this year was also within these terms. The existing
KRG contracts, signed prior to Kurdistan Region Oil
and Gas Law, will also, where necessary, be brought
into conformity with the guidelines, and as required
by that Law.
The details of commercial terms of all contracts
will soon be published by the KRG as required by the
Law. All contracts issued by the KRG are in the form
of the Model PSC, also published on 29 June.
Under the four PSCs, the KRG has the right to up to
25% participation interest, and it has retained the
right to assign up to another 25% to qualified Iraqi
and international companies to further stimulate the
local economy.
Downstream projects
Miran area Refinery: Heritage has also agreed to
fully fund (on a joint-venture basis) the completion
of a new 20,000 barrels per day refinery in the Taq
Taq / Miran area, to be completed within two years.
Taq Taq Refinery: The KRG’s Regional Oil and Gas
Council has also approved a project for a refinery
to be fully funded, commissioned and constructed by
the Taq Taq field oil project operators (Genel/Addax)
and other local and international investors. The
refinery will also be expected to produce another
20,000 barrels per day. This refinery will be
completed within eighteen months.
Revenue sharing, transparency
The government share of all revenues generated from
the Kurdistan Region PSCs shall be for the benefit
of all the Iraqi people. The products from the new
refineries shall be available to the people of the
Kurdistan Region and all of Iraq.
The KRG is in continuing negotiations with a number
of international oil companies, downstream operators
and local companies for further upstream and
downstream projects.
“The KRG has established a transparent, attractive
and competitive petroleum sector,” said Dr Hawrami.
“We are open for business, and working hard to
implement a broad range of projects that will be
Iraq’s best hope for recovery and prosperity.”
Industry and media inquiries: spokesman(at)krg.org
krg.org
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