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Middle east

Iraqi Kurds to export oil for first time


Latest update : 2009-06-02

Iraq's semi-autonomous Kurdish region is to export oil to its neighbours for the first time on Monday. Oil firms developing the region's oil fields expect output to start at 40,000 barrels per day.

AFP - Iraq's self-ruled Kurdish region will begin exporting crude oil for the first time on June 1, piping up to 90,000 bpd to its neighbours in a landmark step for the area, officials said on Sunday.

Companies chosen by the regional government will pump oil from two Kurdish fields via an Iraqi pipeline to Turkey with the consent of Baghdad in a step that could pave the way to ending bitter domestic feuds over Iraq's oil wealth.

Initial exports will be around 40,000 barrels per day from the Taq Taq field in the province of Arbil and another 50,000 bpd from the Tawke field in Dohuk, company officials told AFP.

"Piping of the oil will start Monday morning from the Taq Taq field, pumping it from seven wells," said Mohammed Okotan, director of the Taq Taq project for Turkey's Genel Enerji, which is partnered with Calgary-based Addax Petroleum.

"We will try to reach 60,000 barrels a day by the end of this year," said Okotan, adding that the project aims to double exports in two years.

"The quality of the crude is excellent," he said.

At the Tawke field, northwest of Taq Taq, Norwegian oil firm DNO will also start pumping oil for export on Monday.

"We'll start with 50,000 bpd and we'll see how this operation goes and if we can increase it," said DNO director of operations Jon Sargent.

Exports from Tawke will link with the Iraq-Turkey main export pipeline at the border town of Fishkhabur, while crude from Taq Taq will be trucked from the capital Arbil before connecting with the Iraq-Turkey export pipeline.

Regional president Massud Barzani will preside over an official ceremony on Monday.

Disagreements over oil rights, especially between Baghdad and the Kurdish government, have held up exploitation of much of Iraq's massive reserves as well as long-delayed hydrocarbons legislation.

Terms of the Taq Taq deal are for Baghdad to receive 88 percent of revenues of which the Kurd region will get back 17 percent. Genel Enerji and Addax will share 12 percent, Okotan told reporters.

Executives from DNO refused to provide revenue sharing figures, although one DNO official confided that the terms are quite similar to those in the Taq Taq field.

Baghdad has repeatedly said that it is opposed to Arbil signing its own contracts, a position which Kurdish officials have thumbed their nose at by signings dozens of agreements with foreign firms.

Earlier this month Kurd officials announced an eight billion dollar plan to develop Kurdish gas fields with four European and two United Arab Emirates partners that could later supply the EU's flagship Nabucco pipeline.

Oil minister Hussein al-Shahristani responded by calling the deal illegal, although he has come under heavy criticism for failing to lift the nation's anaemic oil and gas output as crude prices have plunged.

Iraq is in dire need of revenue to rebuild its shattered economy, especially after oil prices tumbled a peak of 147 dollars a barrel last July to a current level just above 60 dollars, putting huge pressure on Iraq's budget.

The nation derives more than 90 percent of its revenues from the energy sector.

Iraq wants pump six million barrels per day, up from its current stated output of around 2.2 million, within the next four to five years as new projects come online.

The conflict-ravaged country has the world's third largest proven reserves of oil, with more than 115 billion barrels, behind only Saudi Arabia and Iran.


Date created : 2009-06-01