04/10/2012 15:05:00

Iraq, Kurds May Reach Draft Oil Law Pact Soon

BAGHDAD--The federal government in Baghdad and the semi-autonomous region of Kurdistan in northern Iraq could soon reach an agreement on a new draft hydrocarbon law that would help resolve an impasse over who should control oil resources, Iraq's oil minister said Thursday.

Disputes between the federal government in Baghdad and the Kurdistan Regional Government in Erbil have prevented agreement on a draft federal oil and gas law for more than five years.

The law is important for settling a dispute between Baghdad and the regional government in Kurdistan, as the Iraqi government doesn't recognize many deals signed by the Kurds with foreign companies. It wants to review these deals and bring them in line with oil laws valid in Baghdad.

"The parliament has tasked the federal oil minister and minister of natural resources in Kurdistan to reach a version of the law acceptable to all parties," federal oil minister Abdul Kareem Luaiby told reporters in Baghdad.

"A new amended version of the law is expected shortly. It depends on discussions," Mr. Luaiby said without giving a timespan for reaching an agreement.

Mr. Luaiby and Ashti Hawrami, the Kurdish minister of natural resources, met in Baghdad last week to attempt to reach a version of the law that would be acceptable to both sides.

The Iraqi government maintains all the contracts signed with the Kurdistan government are illegal, but it has been defied by oil companies, which are increasingly drawn to the region as oil contracts in southern Iraq have turned out to be less attractive than anticipated.

Last November, Exxon Mobil Corp. (XOM) provoked protests from Baghdad when it became the first big Western oil company to enter Kurdistan. Tensions rose even higher in recent weeks when U.S. oil giant Chevron Corp. (CVX), France's Total SA (TOT) and the oil producing arm of Russia's OAO Gazprom (GAZP.RS) all struck their own deals in Kurdistan.

Write to Hassan Hafidh at hassan.hafidh@dowjones.com

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(END) Dow Jones Newswires

October 04, 2012 10:05 ET (14:05 GMT)

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