Tuesday, 7 December 2010

Kurdish region expected to resume oil flow by next year

A dispute between Iraqi Kurdistan and the central government has resulted in suspension of Kurdish oil exports. Speaking about the issue, Iraq's Oil Minister Hussain Al-Shahristani has said that the region will mostly likely resume oil flow next year.

The semi-autonomous northern area - populated primarily by Iraqi Kurds - has been locked in a dispute with Baghdad for a while. The central government deems field development contracts signed between Kurdistan Regional Government (KRG) and foreign companies to be illegal.

It is estimated that the region could produce up to 150,000 b/d. Commenting on the ongoing dispute, during a conference in Baghdad, Shahristani said, "It is supposed to be resolved and the region will start handing over the oil at the beginning of next year."

Iraq has signed contracts with a number of foreign oil companies; with the intention of increasing output capacity from 2.5million b/d up to 12million b/d. Oil flow from the north could be instrumental in boosting exports, which play a 95 per cent role in the country's federal budget.

The central government of Iraq has insisted on controlling the country's energy resources, including those in northern Iraq. However, Kurdish region's Oil Minister has expressed hope that the contracts signed between the region and foreign investors will be recognised by the new government.

The ongoing dispute between Baghdad and the Kurds extends over land sovereignty, energy resources, foreign investment and revenue dispensation. On the subject of foreign contracts Shahristani said that Baghdad was not interested in the existing contracts, and urged firms working in the north to submit receipts for equipment and other expenses to the central government. He added that the contracts would also be reviewed and that if “they are acceptable and reasonable like the rest of the contracts that have been concluded in the rest of Iraq, the costs will be paid to the companies.”

Source: Reuters

For more news and expert analysis about Iraq, please see Iraq Focus.

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