x Abu Dhabi, UAEMonday 22 January 2018

Kurdish oil exports begin Monday

The move will pave the way for a broader resolution to a bitter domestic dispute that has held up the development of Iraq's vast oil and gas resources.

Oil exports from Iraqi Kurdistan are set to start today, paving the way for a broader resolution to a bitter domestic dispute that has held up the development of Iraq's vast oil and gas resources. For the first time in post-war Iraq, Baghdad has consented to deals granting foreign producers a cut of oil revenues, albeit only a small one. "We consider the start of the exports as a historic moment for us," said Mehmet Okutan, the project manager in charge of developing Kurdistan's Taq Taq oilfield. He said the project partners, Turkey's Genel Enerji and Canada's Addax, would get a 12 per cent share of revenues, with Baghdad taking 88 per cent, according to Agence France-Presse. The Iraqi government would then pass 17 per cent of its share to the Kurdistan regional government (KRG), which administers the semi­autonomous region. DNO, a Norwegian company that will export crude from Kurdistan's Tawke oilfield, is thought to have reached a similar deal. Initial exports through a cross-border pipeline into Turkey would be about 90,000 barrels per day (bpd), consisting of 40,000 bpd from Taq Taq and 50,000 bpd from Tawke, company officials said. Genel and Addax would strive to increase output from Taq Taq to 60,000 bpd by the end of this year and to double exports within two years, Mr Okutan said. In allowing the exports, the Iraqi central government, led by Nouri al Maliki, the prime minister, has taken a decisive step away from the Iraqi oil minister's firm position that production sharing deals between the KRG and foreign oil companies were "illegal". That had prompted Kurdish members of Iraq's parliament to block the passage of a national oil law, urgently needed as a legal framework for oil development in the rest of Iraq. Mr al Maliki "must have had the final say", said Samuel Ciszuk, the Middle East energy analyst with the consulting firm IHS Global Insight, adding that the decision seemed to have been taken behind the oil minister's back. He said the promised revenue share was meagre by international standards, which could dash international oil companies' hopes of eventually landing lucrative deals in Iraq. The oil minister, Dr Hussein al Shahristani, had been pressing ahead with plans to award fee-based technical services contracts to foreign companies prepared to forgo a revenue share from Iraqi oil production in return for establishing a foothold in the country. But the proposed deals are unattractive to international oil companies and are risky, not least because of the lack of a federal oil law. Parliamentarians critical of the oil ministry's lack of progress in boosting Iraq's oil exports, at a time when the country urgently needs foreign revenue for reconstruction, recently signed a petition summoning Dr Shahristani before parliament for questioning. The development opens the way for a no-confidence vote that could force Dr Shahristani to resign. The 140 petition signatories made their move just weeks ahead of the scheduled awarding at the end of this month of contracts following Iraq's first post-war oil and gas bidding round. tcarlisle@thenational.ae