Interview: KRG minister on Iraq oil beef

By BEN LANDO, UPI Energy Editor   |   Nov. 27, 2007 at 1:08 PM   |   0 comments

WASHINGTON, Nov. 27 (UPI) -- Iraqi Kurdistan's oil minister, Ashti Hawrami, begins his U.S. tour of political and business leaders from Washington to Texas a hot item with international oil companies, but with icy relations with his counterpart in Baghdad.

He has signed around 20 oil deals with international oil companies, most after the national oil minister labeled them illegal.

Hawrami blames Baghdad for playing politics with a national oil law, prompting the Kurdistan Regional Government to move ahead with its own regional oil law in August.

And he simultaneously defends his oil deals as constitutional while condemning Iraqi Oil Minister Hussain al-Shahristani's plans to rely on the Saddam Hussein-era legal regime to sign its own contracts.

"I tell the critics that rather than focus on these silly issues they should be focusing on doing something positive for the Iraqi people," Hawrami told United Press International in an interview.

Hawrami, joined by Qubad Talabani, son of Iraqi President Jalal Talabani and the KRG's main man in Washington, as well as another KRG-Washington staffer, was frank about his beef with Baghdad, defending the KRG's strategy, and the future where he would produce nearly half the amount of oil Iraq is pumping today.

"You cannot blame people from getting frustrated when time and time again the only thing Dr. Shahristani does is shout 'illegal' for any achievement Kurdistan makes. That is not the way to work. So when he puts people into corners, he should expect a message back," he said, adding he hasn't met with Shahristani since April.

"Sign some contracts, generate some revenue, remedy the wells which are not producing, increase the production. That's what we should be doing rather than saying, 'Oh, no, no, no you have no right to do that' and leave it in the ground for the next generation," he said. "These are empty gestures. They are unhelpful. It appears that some in Baghdad basically want to have control in their hands, for wrong reasons usually, to come back and fight us again as before."

The KRG's motives may be rooted in the Saddam-era carnage, but one need only look back two years, when Iraq's Constitution took the vague route in order to secure passage. Now either side of the debate -- be it over the draft oil law itself or signing oil deals -- uses its own interpretation.

The KRG is accused of acting unilaterally, ignoring the overall Iraqi oil strategy, which many experts say should focus on fixing the current infrastructure instead of finding more oil to pump.

The status of the oil law is as murky as its contents. It was drafted by three technocrats more than a year ago, altered during negotiations between Hawrami and Thamir Ghadhban, top energy adviser to Iraq's prime minister and one of the three authors, and altered some more after that.

It's a lightning rod because it could drastically alter two of the only aspects from the past decades in Iraq that has wide support in the country: a centrally controlled oil sector and one that has strict limitations on foreign oil company participation.

Iraq's oil production has averaged about 2 million barrels per day since 2003, though recent security improvements pushed it to around 2.4 million bpd last month. As the oil sector has stagnated compared with its potential, so has the life of Iraqis suffering daily threats of death and decreasing quality of life.

Baghdad has been unable to stop it, let alone invest money into the oil sector. The KRG was unwilling to wait.

It first signed oil deals in 2004, looking to explore its three-province region that was cut from development by Saddam. Of the 115 billion barrels of Iraq's proven oil reserves -- the largest in the world after Saudi Arabia and Iran -- only 0.5 percent is under KRG control.

Since Sept. 8, when it announced a controversial oil deal with Dallas-based Hunt Oil, it has signed another 14 production-sharing contracts with companies from around the world, including India's Reliance, Austria's OMV, Hungary's MOL and Norbest, an affiliate of BP's Russian arm, as well as some KRG-owned firms.

"We continue in our efforts," Hawrami said when asked if there are any more on the horizon. "We are not in a rush signing them off but if we have the right company competing appropriately to serve our policy or targets then there is nothing to hold it up."

This week Iraq's Oil Ministry escalated its rhetoric. It first called the deals "illegal" -- and threatened to blacklist any company that signs with the KRG -- but has now said the deals are nullified.

Just around the time of the Hunt deal, Shahristani announced he would no longer wait for the national law either. Last week he told UPI he is in discussions with oil companies over technical service agreements to enhance Iraq's largest producing fields.

"I encourage him to sign agreements; I have no problem with that. He should be relying on the constitution, that's a far stronger message to international oil companies," Hawrami said.

"Saddam's laws if they contradict the constitution, which most of them do, are null and void," he said, "So you cannot rely on Saddam's laws but you can rely on the constitution and you can rely on the future oil and gas law when it is passed. That is the way to go forge ahead with our development and future negotiations."

Hawrami said the two 2004 deals, one with Norway's DNO and the other with a venture between Turkey's Genel Enerji and Canada's Addax Petroleum, will help the KRG produce 200,000 bpd within two years and 1 million bpd in five years.

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(e-mail: blando@upi.com)

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