Bloomberg News

Iraq Government Says Accord Made With Kurds on Oil Contracts

November 25, 2011

(Updates with Kurdish relationship to central government in 10th-11th paragraphs.)

Nov. 12 (Bloomberg) -- Iraq, home to the world’s fourth- largest oil reserves, has reached a tentative agreement on crude exploration and revenue with the semi-autonomous Kurdish region, according to an adviser to Prime Minister Nouri Kamil al-Maliki.

The central government and the Kurdish Regional Government have reached “mutually acceptable” solutions to long-standing disputes over oil, territory and Kurdish armed forces, Adal Barwari, al-Maliki’s adviser on Kurdish affairs, said in a Radio Free Europe/Radio Liberty interview published today on the U.S.- government funded news outlet’s website.

Barwari said in the interview that al-Maliki and Kurdish Prime Minister Barham Salih held talks in Baghdad in late October and appointed a trio of committees to hammer out their differences. Those committees completed their final reports on Nov. 5 and submitted them to al-Maliki and Salih, Barwari was cited as saying in the interview.

Barwari told Radio Free Europe/Radio Liberty that he didn’t know the details of the agreements because the committee recommendations had been submitted only to the prime ministers, according to the report.

Comments Conflict

Barwari’s comments conflict with central government denials of any deal over the past two days after Exxon Mobil Corp. signed contracts with the Kurdish authority to drill for crude on six blocks in the northern part of the country.

“The Iraqi government will treat any company breaching its laws in the same way it has treated similar companies in the past,” the media office of Hussain al-Shahristani, the country’s deputy prime minister for energy affairs, said today in an e-mailed statement. “The ministry of oil has informed Exxon Mobil of this position.”

Alan Jeffers, a spokesman for Irving, Texas-based Exxon, declined to comment. The Baghdad-based central government and Kurdish authorities have clashed over how to oversee drilling and allocate revenue from the Persian Gulf nation’s crude reserves since the fall of Saddam Hussein in 2003. Relations reached a low point in 2009 when oil exports were temporarily suspended.

Accord, Committee

The accord will be approved by the Iraqi parliament’s Oil and Energy Committee as soon as it’s received, committee member Bahaa al-Din Ahmad was cited as saying in the Radio Free Europe/Radio Liberty article.

The agreement “neither undermined the powers of the central government nor undercut the rights of” the Kurdish authority, Ahmad said, according to the article.

Kurdistan includes three regions in the country’s north: Erbil, Dohuk and Suleimaniah, governed by an elected parliament and 19 government ministries overseeing everything from agriculture to education to tourism, according to the regional authority’s website.

The central government counts the Kurdistan Regional Authority as one of its 19 administrative divisions, according to the U.S. Central Intelligence Agency’s website.

The accord has ended the risk that foreign oil producers such as Exxon, Marathon Oil Corp. and Gulf Keystone Petroleum Ltd. would be stripped of some oilfield projects as punishment for signing contracts in the Kurdish-controlled region, two people familiar with the talks told Bloomberg News yesterday.

Exxon, the world’s biggest company by market value, is the latest Western entrant into Kurdistan. Others include Vallares Plc, the explorer founded by former BP Plc Chief Executive Officer Tony Hayward, Afren Plc, Hess Corp., Murphy Oil Corp., Marathon Oil Corp. and Repsol YPF SA.

Iraq’s 115 billion barrels in estimated crude reserves are exceeded only by those of Saudi Arabia, Venezuela and Iran, according to BP’s annual statistical review of global energy. Canada’s oil sands are counted as a different category from so- called conventional resources in the BP statistics.

--With assistance from Glen Carey in Dubai, Mourad Haroutunian in Riyadh and Catherine Airlie in London. Editors: Rob Verdonck, Alastair Reed.

To contact the reporters on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net; Nayla Razzouk in Amman at nrazzouk2@bloomberg.net; Kadhim Ajrash in Baghdad at kajrash@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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