.UPDATE:Iraq KRG Oil Min: To Sign 20 E&P Contracts By Early '08
WASHINGTON -(Dow Jones)- The Kurdistan Regional Government is expecting to sign exploration and production contracts with around 20 more companies by the first half of next year, KRG Natural Resources Minister Ashti Hawrami said Tuesday.
The new contracts would come as tension escalates in Iraq over how the country's massive oil and gas resources should be managed, with the central government - backed by the U.S. administration - pushing for more centralized control.
The relationship between the autonomous Kurdish government and Iraq's federal government deteriorated Tuesday as Iraq's oil minister accused the Kurds of using military force to prevent Baghdad from developing an oil field in the north of the country. A KRG spokesman said "no one" was blocking any development in the region.
Iraq Oil Minister Hussein al-Shahristani has called contracts the KRG has already signed with companies such as TNK BP (TNBP.RS), a Russian company in which BP Plc (BP) holds 50%, and OMV (OMV.VI), "illegal," while Hawrami says the regional governments are allowed to sign deals under the current constitution.
"Dr. Sharistani, he is wrong, plainly wrong," Hawrami said. "We are a federal region...(he) can't do anything...we don't need his approval," he said.
Speaking at a press briefing here, Hawrami said that several of the new contracts could be signed by mid-December, following a trip to Texas. He declined to comment on which companies the KRG was planning to sign contracts with. "Significant companies are negotiating with us now," he said.
Once the contracts are all signed - doubling the number of firms currently in the Northern Iraq region - around $10 billion in exploration and production investment could lead to an boost of around one million barrels a day in the long term, Hawrami said. The KRG was also planning for an additional $4 billion in downstream investments to help solve power and fuel shortages.
Any oil produced in the region could be shipped out of the 1.6 million barrel a day Kirkuk-Ceyhan pipeline, but will still require an export permit, raising additional legal hurdles for the KRG and project operators.
Analysts have said that larger oil majors such as ExxonMobil (XOM) and Chevron Corp. (CVX) have shied away from signing deals with the KRG for fear of alienating the oil ministry in Baghdad as the central government gears up to offer contracts on some of the massive prospects in southern Iraq.
Also, the larger companies have wanted to avoid the legal quagmire that any contracts face as the country tries to establish a national hydrocarbons law. Development of that legislation - which would establish federal rules for the management of the country's resources and revenues from oil and gas - has faced tough political hurdles raised by regional and ethnic disputes.
A main point of difference between the KRG and Baghdad is that the Kurds are willing to give foreign energy companies more attractive contractual terms than Baghdad to work in the country, saying Iraq needs the investment, know-how and technology.
Hawrami said the production sharing agreement model the KRG prefers for contracts will ultimately give Iraqis a better rate of return, particularly as many state-run projects are likely to run over schedule and budget, than Baghdad's desire for more national oil company control.
KRG's strategy has been to focus on second-tier companies, as larger companies haven't expressed interest in the smaller blocks drawn by the regional government.
Some Iraqi government and industry officials have said they would blacklist any companies that signed contracts with the KRG.
Hawrami said if Iraq could agree on the Hydrocarbon law, production could rise from its current levels oscillating around 2 million barrels a day to as much as 8 million barrels a day.
CNN
The new contracts would come as tension escalates in Iraq over how the country's massive oil and gas resources should be managed, with the central government - backed by the U.S. administration - pushing for more centralized control.
The relationship between the autonomous Kurdish government and Iraq's federal government deteriorated Tuesday as Iraq's oil minister accused the Kurds of using military force to prevent Baghdad from developing an oil field in the north of the country. A KRG spokesman said "no one" was blocking any development in the region.
Iraq Oil Minister Hussein al-Shahristani has called contracts the KRG has already signed with companies such as TNK BP (TNBP.RS), a Russian company in which BP Plc (BP) holds 50%, and OMV (OMV.VI), "illegal," while Hawrami says the regional governments are allowed to sign deals under the current constitution.
"Dr. Sharistani, he is wrong, plainly wrong," Hawrami said. "We are a federal region...(he) can't do anything...we don't need his approval," he said.
Speaking at a press briefing here, Hawrami said that several of the new contracts could be signed by mid-December, following a trip to Texas. He declined to comment on which companies the KRG was planning to sign contracts with. "Significant companies are negotiating with us now," he said.
Once the contracts are all signed - doubling the number of firms currently in the Northern Iraq region - around $10 billion in exploration and production investment could lead to an boost of around one million barrels a day in the long term, Hawrami said. The KRG was also planning for an additional $4 billion in downstream investments to help solve power and fuel shortages.
Any oil produced in the region could be shipped out of the 1.6 million barrel a day Kirkuk-Ceyhan pipeline, but will still require an export permit, raising additional legal hurdles for the KRG and project operators.
Analysts have said that larger oil majors such as ExxonMobil (XOM) and Chevron Corp. (CVX) have shied away from signing deals with the KRG for fear of alienating the oil ministry in Baghdad as the central government gears up to offer contracts on some of the massive prospects in southern Iraq.
Also, the larger companies have wanted to avoid the legal quagmire that any contracts face as the country tries to establish a national hydrocarbons law. Development of that legislation - which would establish federal rules for the management of the country's resources and revenues from oil and gas - has faced tough political hurdles raised by regional and ethnic disputes.
A main point of difference between the KRG and Baghdad is that the Kurds are willing to give foreign energy companies more attractive contractual terms than Baghdad to work in the country, saying Iraq needs the investment, know-how and technology.
Hawrami said the production sharing agreement model the KRG prefers for contracts will ultimately give Iraqis a better rate of return, particularly as many state-run projects are likely to run over schedule and budget, than Baghdad's desire for more national oil company control.
KRG's strategy has been to focus on second-tier companies, as larger companies haven't expressed interest in the smaller blocks drawn by the regional government.
Some Iraqi government and industry officials have said they would blacklist any companies that signed contracts with the KRG.
Hawrami said if Iraq could agree on the Hydrocarbon law, production could rise from its current levels oscillating around 2 million barrels a day to as much as 8 million barrels a day.
CNN
posted by madtom at 12:12 AM
0 Comments:
Post a Comment
<< Home