Oil tensions rise again between Kurdistan
By Fiona Bond
— In the week that Gulf Keystone Petroleum (GKP)
said it was preparing to export up to 5,000 barrels
of oil per day from its Kurdistan operations, Iraq's
Deputy Prime Minister has poured cold water on the
Iraqi oil law progress.
There had been considerably more optimism this year
around the potential passing of an oil law by the
central government in Baghdad, following an
agreement between Prime Minister Nuri al-Maliki and
the Kurdish factions.
However, according to reports this week, Deputy
Prime Minister for energy affairs, Hussein al-Shahristani,
has said the national oil law requires major
changes, indicating further problems to come.
IHS senior Middle East energy analyst Samuel Ciszuk
said on Thursday that
An employee works at Tawke oil fields in the
semiautonomous Kurdish region in Iraq's north.
with the draft, which has apparently been agreed in
a high level deal, suggests he is likely to counter
it, despite it complicating wider political issues.
"Al-Shahristani is continuing his agenda of
centralising control over the Iraqi oil and gas
industry, although increasingly it looks as if he
might be out of line in relations to his own Prime
Minister and potentially may even be undermining the
stability of the fragile coalition government,"
The draft oil law was approved by the government
back in 2007, but faced fierce opposition, mainly
from the Kurdish factions.
Iraq is currently de facto still deploying the old
oil law, which has been in place for decades,
although it is somewhat out of sync with Iraq's
constitution and the oil contracts issued to the
international oil companies over the past few years,
The new Iraqi constitution handed Kurdistan greater
power, allowing it to press ahead with the
development of its own oil and gas reserves and
successfully attract a host of international oil
companies to its unexploited acreage.
However, this spurred a counter reaction from the
more centralistic factions, with al-Shahristani
previously flying the flag for national control over
reserves and production and hailing the Kurdish
contract as "illegal".
This prompted the Oil Ministry to add some annexes
to the original oil law draft which hindered the
Kurdistan activities, in effect calling a halt to
the oil deals struck with IOCs and causing a bitter
stalemate between the two sides.
"This lack of relevant and functioning oil law is
complicating Iraq's ability to attract investment
into exploration. This, however, does not seem to
staunchly believes that an attractive enough TSC-based
framework can be found in negotiations with IOCs and
that a stable oil law framework is not necessary to
move ahead," said Ciszuk.
"Whether the oil law is near to being nudged from
the Iraqi government on the parliament floor is
likely going to be indicated by even more vociferous
opposition against it from al-Shahristani. The will
of al-Maliki to push it through parliament is likely
to be gauged in advance by his efforts to rein in
his deputy premier, or even remove him, with
reassurances over contract stability expected to be
given to IOCs working in Iraq proper in advance,
should the latter be the case," he added.
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