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Iraq makes good on Kurd oil blacklist

Jan. 21, 2008 at 4:16 PM   |   Comments

BAGHDAD, Jan. 21 (UPI) -- Iraq's Oil Ministry has reportedly cut current and will block future deals as part of a blacklist of firms that have signed oil contracts with the Kurd region.

Companies will not be able to purchase Iraqi oil or bid on upcoming projects in Iraq's oil and gas sector if they've signed any deals with the Kurdistan Regional Government since February 2007. That's when a deal was reached -- and a few months later rejected -- by the KRG and Baghdad on the oil law.

The KRG has signed dozens of production-sharing contracts since it passed its own regional oil law in August, blaming Baghdad for taking too long and violating the deal.

Oil Minister Hussain al-Shahristani has called the Kurd contracts illegal and the KRG moves unconstitutional. While inter-Iraqi politics has not dealt with the KRG-Baghdad dispute -- whose power struggle has derailed a draft oil law -- the ministry is.

Shahristani has sent letters to companies that have signed contracts to explore and develop the Kurd region's prospective oil sector, canceling deals the companies have with Baghdad. Weekly Petroleum Argus reports letters have been sent to SK Energy in South Korea, OMV in Austria and Reliance Industries in India, among others.

Later this year the ministry will start bidding rounds for service contracts on producing oil fields, and companies that want in must register by Jan. 31. The ministry is also conducting direct negotiations with select super major oil companies for contracts on Iraq's largest fields.

The ministry will prequalify companies that will be able to bid.

SK Energy, a South Korean refiner that is part of a consortium in a KRG deal, has had its Iraqi crude shipments cut.

International Oil Daily reports the country's largest refiner is trying to balance its desires for Iraq oil and the KRG deal, with Seoul attempting to broke a political deal. SK, which imported 90,000 barrels per day from January through November 2007, will likely just increase imports from Iraq's neighbors.

South Korea in total imported about 125,000 bpd during that timeframe, a major increase since 2006.

Shahristani has also reportedly cut all memorandums of understanding with oil firms that have signed with the KRG. The annual memorandums allow an exchange of information, technology and training between the ministry and companies.

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