Baghdad reminds oil companies that it's in charge

Amid northern Iraqi skirmishes, Russian oil company Rosneft said it solidified a deal with the semiautonomous Kurdish government.
By Daniel J. Graeber  |  Oct. 19, 2017 at 8:58 AM
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Oct. 19 (UPI) -- The Iraqi Oil Ministry said Thursday that it was advising oil companies that they should be making contracts and dealing only with the federal government.

Iraqi Oil Minister Jabbar al-Luaibi said he was frustrated with announcements of intent to sign oil contracts inside the "geographic borders of Iraq without telling the federal government of the ministry of oil." A statement carried by his ministry said such action was considered blatant interference in its internal affairs and an insult to Iraqi sovereignty.

"The government and the ministry of oil are the only [entities] responsible [for] mak[ing] the strategies of oil and gas wealth, according to the constitution, rules, authorities and instructions," the ministry's statement read.

Luaibi's statement made no reference to any specific company or contract. The announcement, however, came one day after Russian oil company Rosneft said it signed an agreement with the semiautonomous Kurdistan Regional Government that put a production sharing agreement for five production areas in Kurdish territory in motion.

"The documents were signed in pursuance of the investment agreement which was concluded [in June] at the St. Petersburg International Economic Forum in 2017," Rosneft said.

According to the Russian company, Rosneft takes an 80 percent stake in the reserve areas in question for between $40 million and $110 million, depending on the license area.

Rosneft last month said it was finished with the due diligence requirements for an oil export pipeline from the Kurdish north and was in the process of finalizing the necessary legal documents. The company said that agreement set the stage for consideration of new gas pipeline infrastructure from the Kurdish region.

Rosneft said the agreement would help it play a leading role in expansions to Kurdish energy infrastructure in general.

Genel Energy, Gulf Keystone Petroleum and DNO International are some of the major companies with contracts for work inside Kurdish territory. They had no comment on the concerns expressed by the Iraqi government.

Fighting escalated during the weekend between Iraqi and Kurdish military forces, weeks after a controversial Kurdish referendum for independence. The Kurdish referendum coincided more or less with the liberation of parts of northern Iraq from the terrorist group calling itself the Islamic State.

Iraqi military forces operating in the northern restive provinces seized control over the oil fields in Kirkuk, this week, cutting off a revenue lifeline for the KRG.

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