Russian Gazprom Neft acquires Iraqi
Kurdistan oil interests
Gazprom followed U.S. majors Exxon and Chevron in
signing oil accords with Kurdistan region.
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Iraqi Kurdistan win more
oil deals. Russian Gazprom Neft interests in two
blocks in Kurdistan.
August 2, 2012
Kurdistan region 'Iraq',— Iraq's Kurdistan pledged
on Wednesday to
exports in a bid to ease tensions with the Iraq
central government, as firms from France and Russia
ignored threats from Baghdad and joined U.S. peers
to invest in the semi-autonomous northern region.
Iraq's oil dispute with its Kurdistan region
escalated after Baghdad threatened to
a contract of France's Total for signing Kurdish
deals and a unit of Russia's Gazprom also entered
the autonomous Kurdistan region.
Total and Gazprom followed U.S. majors Exxon and
Chevron in signing oil accords with Kurdistan, which
is already deeply at odds with Baghdad in a
long-running dispute over control of territories and
oil rights along their internal frontier.
Oil is at the heart of a broader conflict over
political autonomy in Iraq as ethnic Kurdish
officials in Kurdistan, with its own government and
armed forces since 1991, chaff against Iraq-Arab-led
central government's authority in Baghdad.
OPEC member Iraq says only the central government
can agree to petroleum deals, and has already
punished foreign companies for signing up to explore
for oil in the northern Kurdistan area.
In an apparent move to appease Baghdad, the
Kurdistan Regional Government said on Wednesday it
would resume oil exports from its region after it
halted shipments in April due to disagreements over
central government payments.
After Total announced on Tuesday it had agreed to
buy a stake in two blocks in the region, Baghdad
responded with a warning again it considered any
deals with Kurdistan illegal and told the French
company it would be punished.
"We are working to cancel Total's stake in the
Halfaya contract. We will disqualify and terminate
the contract of any company signing a deal with the
Kurdistan region without the approval of the oil
ministry," Abdul-Mahdy al-Ameedi,www.ekurd.net
director of the ministry's contracts directorate,
Total declined to comment on the Iraqi statement.
In June, Total and its partners PetroChina and
Petronas started production at Halfaya oilfield.
Total has an 18.75 percent stake in the operation
under a contract signed with the central Iraq
government in 2010.
Total's Chief Executive Christophe de Margerie
signalled in February the company was thinking about
Kurdistan investments because terms were better than
those offered in a new bidding round by Baghdad for
the rest of Iraq.
Gazprom Neft, the oil arm of Russian gas export
monopoly Gazprom, said on Wednesday it had also
acquired interests in two blocks in Iraq's Kurdistan
even after its international rivals angered the
central Iraqi government.
Gazprom Neft will take 40 percent of the Garmian
block, and 80 percent of the Shakal block. The
regional government of the autonomous region will
keep 20 percent in both. Gazprom Neft estimated the
blocks contained potential resources of about 3.6
billion barrels of oil equivalent.
It already has a project in Iraq, near Iran's
border, where it expects to produce about 15,000
barrels per day from 2013.
Kurdistan will restart oil exports in the first week
of August at 100,000 barrels per day (bpd), the
region's Ministry of Natural Resources said.
"The decision was a confidence-building measure
aimed at solving once and for all the ongoing oil
and gas issues in Iraq," a statement on the KRG's
TWO REGIONS, TWO POLICIES
Pulling back from years of war, Iraq's central
government had ambitious plans for doubling its oil
output over the next three years. Earlier this year
its production rose above 3 million barrels per day
for the first time in more than three decades.
Baghdad signed multi-billion dollar deals with
foreign oil operators to develop its southern
oilfields with the aim of becoming a major oil
export player with output targets at around 8
million bpd by 2017.
But two years after those deals were signed, some
report only modest gains and companies have been
frustrated by infrastructure bottlenecks, payment
disputes and logistical constraints.
That has made Iraqi Kurdistan an attractive
alternative for oil explorers. Exxon was the first
international oil major to enter into the Kurdistan
region, which offers more investor-friendly
production-sharing contracts to companies.
Norway's Statoil is also looking closely at
exploration deals with the Kurdistan authorities,
industry sources have said.
"Production sharing contracts offered by Kurds
represent a prize for most foreign oil firms, while
Baghdad's tough-terms deals are more grin and bear,"
Ali Shallal, a legal expert specialised in drafting
oil contracts said.
Iraq on Wednesday also signed an initial exploration
deal with Russia's Bashneft and Britain's Premier
Oil PLC to develop the country's oil block 12 as a
part of its push to further develop its energy
Iraq is also preparing to invite international oil
companies to develop the giant Nassiriya field and
construct a refinery in a bidding round and a date
will be set soon, Ameedi said.
The largely undeveloped Nassiriya field is listed as
having reserves of under 5 billion barrels.
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