Iraq Kurds ink four new oil deals

The regional government said in a statement posted on its website that it had approved four contracts for exploration and production, and had sanctioned two new refinery projects in the Kurdish autonomous region in northern Iraq.

Two production sharing contracts (PSCs) had already been signed, with Heritage Energy Middle East Limited, a subsidiary of the Canadian firm Heritage Oil and Gas, and Perenco S.A., an affiliate of a French company of the same name.

‘The signing of the other two PSCs with experienced international companies will follow shortly,’ the statement said.

‘The combined initial exploration investments on the upstream projects will be approximately 500 million dollars,’ it said. ‘Estimated investment on the two new refinery projects will be around 300 million dollars.’

The Iraqi oil ministry did not immediately comment on the new deals, but Amira Al Baldawi, an MP from the Shia coalition that leads the Baghdad government and a member of parliament’s economic, investment and reconstruction committee, said the contracts were ‘illegal’.

‘They shall be revised and put in accordance to the Iraqi law and the new oil law to be issued,’ Baldawi told AFP.

Last month, the Kurdish regional government inked a deal with Texas-based Hunt Oil Company, the first major oil contract awarded by any Iraqi authority to a foreign company since UN sanctions were imposed on Iraq when it invaded Kuwait in 1990.

No details of the contract have been released but the Dallas company, which has links with the White House, has said it would begin its geological survey work in Dohuk province, near the border with Turkey, by the end of this year and would begin drilling in 2008.

The Hunt contract was declared ‘illegal’ by Iraqi Oil Minister Hussein Al Shahristani, sparking a war of words with the regional government, which told him to stop meddling in its affairs and said he should be sacked.

A senior US embassy official speaking on condition of anonymity told reporters in Baghdad last week that the Hunt deal had ‘needlessly elevated tensions’ in Iraq.

He said the US State Department had advised Hunt to wait for the Iraqi parliament to pass a much-anticipated oil and gas law that will establish a new framework for the industry but that it went ahead anyway.

The bill opens up the long state-dominated oil and gas sector to foreign investment and provides assurances that receipts will be shared equally between Iraq’s 18 provinces, a measure Washington regards as key to efforts to reconcile the country’s divided communities.

The draft law was approved by Prime Minister Nuri Al Maliki’s national unity cabinet in July but faces a tough passage in the 275-seat parliament, where the Kurdish bloc has 53 seats.

The bill is expected to come before MPs this month.

The regional government said the PSC awarded to Energy Middle East Limited covered the 1,015 square kilometre (406 square mile) Miran Block in Sulaimaniyah Governorate, ‘a low to medium exploration risk area.’

Perenco S.A. has been awarded the ‘high exploration risk’ 2,358 square kilometre (943 square mile) Sindi/Amedi Block along the Turkish border.

Regional natural resources minister Ashti Hawrami defended the deals.

‘The projects will spearhead international investment for the whole of Iraq,’ he said.

‘New oil discoveries under these contracts will bring large amounts of new revenues for sharing throughout Iraq.’