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Kurdistan oil payments overshadowed by
renewed friction between Baghdad and KRG
8.6.2011
By Shwan Zulal - ekurd.net |
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June
8, 2011
While Iraqis struggle to delineate their future in
the midst of political deadlock, violence and chaos,
the fate of their most valuable and only asset is
being decided behind closed doors. Only recently,
the Iraqi deputy prime minister for energy, Hussein
Shahristani, has made a pact with the EU to export
oil and gas through the southern corridor. The deal
has taken KRG (Kurdistan Regional government) by
surprise.
This latest deal by the deputy prime minister who is
not even an oil minister anymore has raised few
eyebrows in Kurdistan and Turkey. The terms of the
deal is not yet clear and the only significant
information about it, was the EU has agreed to, only
buy gas from Iraqi central government through the
southern corridor.
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Iraqi deputy prime minister for energy, Hussein
Shahristani |
Meanwhile Shahristani is
ratcheting up his rhetoric and keeps insisting that
Kurdistan has no authority to sell its natural
resources without Baghdad's approval.
The Norwegian DNO said on Monday, that the first
payment of $103.7m USD for its oil exports in 2009
has been paid and the company described the payments
as a milestone for its operations in the Kurdistan
Region. DNO and its partners commenced oil exports
from the Tawke field in mid 2009 and only after less
than four months, production was halted because of
disputes between the KRG and Iraq's central
government.
DNO issued a statement regarding the latest
development saying, "The payments combined with the
recent positive and encouraging results from the
ongoing operations, forms a solid basis for
increased activities and investments within the
company's portfolio in the region". The Iraqi
finance minister confirmed first in may this year
that oil export payment to contractors in Kurdistan
Region would be processed and later KRG (Kurdistan
Regional Government) Prime Minister, Barham Salih,
confirmed the payment from Baghdad in a statement.
This latest payment to DNO has its own significance
and in some ways confirms the legality of oil
exploration and production in Kurdistan.
Nevertheless, it has to be view in the context of
Iraqi politics and its political ramification needs
to be taken into account. Since the new Iraqi
minister for oil and gas,www.ekurd.netAbdul-Karim
Luibi took his office last year, he has been leaning
towards accepting the Kurdish oil contracts and in
favour of resolving the outstanding legal disputes.
However, Shahristani has different ideas and been
overriding Luibi's decisions ever since taking
office.
Although parts of the payments have been approved
and oil production are commencing in Kurdistan with
a cap introduced by the central government, which is
agreed upon by the January agreement. It is not yet
clear as to what the future holds for the foreign
investors in Kurdistan and Iraq, because although
agreements have been made, adhering to it has not
been forthcoming.
Shahristani's manoeuvring and overpowering the oil
ministry as well as entering into oil and gas
agreement with the EU, is clearly setting him on a
collision course with KRG. It will be interesting to
see what the KRG's response would be to Shahristani
and EU's pact, because mutterings are coming out of
Kurdistan Region about blocking the deal and making
it difficult for gas going through Kurdistan on to
Turkey and Europe.
In order to connect to the southern corridor, the
pipelines have to pass through Kurdistan Region.
Even though it may be possible to go through Syria,
it would be neither politically palatable by the EU
nor provides energy security the Union seeks. It all
depends on what KRG would do next and how it will
react to the EU deal. If KRG go ahead and make their
views known privately to EU officials, we might see
the deal dropped quietly to save face for both
parties involved. Otherwise, if the deal goes ahead
without KRG's explicit consent, the purpose of the
deal would be defeated while it tries to reduce EU's
dependence on Russia for natural gas.
Shwan Zulal
is a Kurdish Blogger, a regular contributing writer
for ekurd.net, interested in political and legal
Reform in Kurdistan, KRG, Iraq and current Kurdish
affairs, including oil exploration companies and
relevant legislations. You may visit Zulal's website
at http://kurdishviews.blogspot.com/
Copyright © 2011 ekurd.net
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