Iraqi Kurds vs. Baghdad heats up over oil

WASHINGTON, Nov. 20 (UPI) -- Iraqi Kurds issued a scathing rebuke of Iraq's oil minister, who has warned companies signing deals in the north will be kept out of the rest of the country.

"Our contracts with the (international oil companies) are both constitutional and legal within the framework of the Kurdistan Oil and Gas Law, the only existing framework regulating our oil industry in the post-Saddam era," the Kurdistan Regional Government said in a statement Tuesday.

Oil Minister Hussain al-Shahristani said last week only the central government has the rights to sign oil sector contracts, referring to the Kurdistan Regional Government in the northern part of Iraq, which has passed its own regional oil law in August and signed more than a dozen oil deals since.

"The current law in Iraq does not allow any company to sign a contract with any entity other than the federal authorities represented by the Ministry of Oil. By doing so they are putting themselves at risk," he said in Riyadh on the sidelines of the summit of the Organization of Petroleum Exporting Countries. "They are opportunists who are seeking an opportunity where they think they can get a high profit. I would like them to know that that oil cannot be exported from Iraq without the permission of the federal authorities."

Iraq has the world's third-largest oil reserves in the world but needs major investment to realize its potential. For more than a year the government has been working on a new oil law. It's been hung up on disputes between the KRG and the central government over the rights to sign oil deals and the extent of foreign companies' involvement in the oil sector.

Shahristani said he'll no longer wait for the law either and pledged to sign deals under the Saddam-era oil law.

The KRG statement said that move "will not only go against the country's principal agreement between crucial political forces, but they are directly engendering the country's Constitution in which federalism and revenue-sharing are the only elements keeping the country together."

The KRG says oil companies that sign deals in the north are helping to increase oil production and investing in Iraq.

"It is amazing that a Minister in Baghdad should continue to threaten international oil companies with sanctions and punishment because they have decided to invest in one of the secure and safe parts of Iraq," the statement said.

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Ben Lando, UPI Energy Editor

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(e-mail: blando@upi.com)