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Middle east

Iraqi Kurds celebrate launch of oil exports

Text by NEWS WIRES

Latest update : 2009-06-02

Iraq's self-ruled Kurdish region celebrated its first oil exports on Monday with a colourful ceremony in the presence of Iraqi President Jalal Talibani. Oil firms developing the region's oilfields say exports started at 100,000 barrels per day.

REUTERS - In a ceremony that would not have been out of place for the Oscars, Iraq's Kurdish region on Monday celebrated the launch of oil exports from what it says are Iraq's first newly developed oilfields in over 20 years.

 

Exports from the Taq Taq and Tawke oilfields, developed by foreign companies, started at 100,000 barrels per day (bpd).

 

Iraqi President Jalal Talabani, a Kurd, and Kurdish regional President Masoud Barzani, symbolically began the flow by turning a flower-festooned valve on a stage, to a backdrop of strobe lights, a satellite link to the fields and an operatic score.

 

Exports from the region could hit 1 million bpd by end-2012, said Kurdish officials, who missed no opportunity to contrast their success with the failure of the Shi'ite Arab-led central government so far to boost flagging oil output elsewhere.

 

The largely autonomous Kurdish Regional Government (KRG) and Baghdad have had a long and bitter feud over territory and resources, and while allowing the exports, Baghdad rejects the contracts the KRG has signed with private oil firms.

 

"Today we are the successful example for the rest of Iraq. Today we show that the market driven policies and competition can lay a foundation for Iraq," KRG natural resources minister Ashti Hawrami told an audience of several hundred people.

 

Any central government representatives present kept a very low profile.

 

Baghdad's decision this month to allow exports from Taq Taq and Tawke was seen as a breakthrough after years of deadlock, but uncertainties remain over how the developers are to be paid.

 

Norway's DNO International developed the Tawke field, and Toronto-listed Addax Petroleum developed Taq Taq. Turkey's Genel Enerji is a partner in both deals.

 

There was no danger that the firms would not be paid, Hawrami said, but the money would not come from the 17 percent portion of total state oil revenues allocated to the KRG each year.

 

PEAK OUTPUT

 

Oil Minister Hussain al-Shahristani said all the oil pumped would be sold by the central government and the revenues would go into its coffers.

 

Exports from Tawke started at 60,000 bpd, officials said, though engineers at the field said 50,000 bpd was the current maximum. Another 40,000 bpd will be pumped out of Taq Taq.

 

The exports from new fields in Kurdistan are a poke in the eye for Shahristani, who says the KRG's deals are illegal.

 

Shahristani faces growing criticism in parliament, having presided over a drop in overall Iraqi oil output to 2.3-2.4 million bpd, lower than before the 2003 U.S. invasion.

 

"From the central government's point of view, these contracts are not correct, are not constitutional," Shahristani told U.S.-funded al-Hurra television, defending his record.

 

"They were completed secretly, not competitively, and the interest of the Iraqi people, who own this wealth, was not taken into account."

 

A sharp fall in oil prices since last year has hit Iraq's finances hard and Baghdad's acceptance of the Kurdish crude exports is thought to be a sign of its need for money.

 

TROUBLE AHEAD

 

Shunning production sharing deals, Shahristani is instead offering tenders for long-term, fixed fee service contracts in two rounds, the first to be decided at the end of June. Fields around the northern city of Kirkuk, disputed by Kurds, Arabs and ethnic Turkmen, are among those on offer.

 

Hawrami warned that the KRG expected to be consulted over the Kirkuk tender and could reject any deal.

 

U.S. officials fear Kurd-Arab tensions could reignite violence just as the sectarian war and insurgency are fading.

 

While it sits on the world's third largest oil reserves, Iraq's oil industry is in dire need of investment. (Additional reporting by Sherko Raouf and Shamal Aqrawi, Writing by Tim Cocks and Mohammed Abbas; Editing by Christian Wiessner)


 

Date created : 2009-06-02

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