Erbil-Baghdad issues deterrent for energy companies
14/11/2011 11:42
Erbil, Nov. 14 (AKnews) – Issues between Baghdad and Erbil remain a deterrent for international energy companies to invest in the region’s oil fields.

Careoon Jessy, a UK based oil professional participating in the first oil and gas conference in Iraq being held in Erbil city told AKnews that the Kurdish Hydrocarbon Law is a good piece of legislation that encourages international energy companies to come to Kurdistan. However investors have concerns.

“The issues between Baghdad and Erbil have created fears which deter international energy companies from quickly deciding to invest in the region,” Jessy said.

He said if the central and regional authorities could settle the dispute it would urge more companies to come to the semi-autonomous oil-rich Kurdish region.

Authorities in Erbil and Baghdad have been in a deadlock over oil contracts since 2003. Baghdad refuses to recognize oil deals signed between energy companies and the Kurdish Regional Government (KRG). Meanwhile the Kurds continue to stress their power to sign deals because the revenue go to the federal treasury.

The Kurds also say the political agreements between Prime Minister Nuri al-Maliki’s bloc and the Kurds which stipulate Maliki can keep his job for a second term give them the right to sign oil deals.

Sergey Michael, a Ukrainian oil expert at the conference believes the conference is key to urging foreign energy companies to work in the region. He too fears the issues between Baghdad and Erbil are a destablising influence.

“What I have noticed is that Kurdistan has a booming oil sector. But since it is part of Iraq and there are issues regarding the oil deals good management of the oil fields has failed”

The Financial Times reported Exxon Mobil Corp., the largest oil company in the world had become the first supermajor oil operator to sign a contract in the Kurdistan region.

This sparked criticism from deputy-Prime Minister Hussein al-Shahristani whose office issued a statement rebuking the deals and “cautioning” Exxon against pursuing oil contracts in Kurdistan.

The Iraqi government says the oil deals in Kurdistan will remain illegal until long-awaited rules can be worked out to split revenues among Iraq’s fractious regions.

The three-day Kurdistan-Iraq Oil & Gas Conference opened on Sunday with more than 300 delegates from the world's energy companies present.

Dr Barham Ahmed Salih, KRG Prime Minister, said at the opening of the conference that Kurdistan is looking to increase its oil exports to world markets to 175,000 bopd next year. Kurdistan Region currently exports some 50,000 bopd.

Reported by Fryad Mohammed