Iraq Energy Roundup

By DANIEL GRAEBER, UPI CORRESPONDENT  |  July 25, 2008 at 11:41 AM
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U.S. State Department probes Kurdish oil deals

The inspector general for the U.S. State Department will look into whether government officials colluded with the Texas-based Hunt Oil on Kurdish oil contracts.

"I have initiated a review of the responses provided to Congress recently on issues surrounding oil contracts, oil field development and U.S. policy in Iraq," acting State Department Inspector General Harold Geisel wrote in a June 22 letter.

The Kurdistan Regional Government in 2007 signed an oil contract with Hunt Oil while there was no hydrocarbon law in Baghdad governing the deal. Baghdad and the KRG are at odds over the Hunt Oil deal and a series of other contracts.

U.S. officials said they provided technical assistance to the Hunt Oil deal and other no-bid contracts at the ire of war critics, who say the move undermined the authority of Baghdad. Hunt officials said State Department officials raised no objections when confronted on the contract.

"There was no communication to me or in my presence made by the nine State Department officials with whom I met … that Hunt should not pursue our course of action leading to a contract," said Hunt's David McDonald in an e-mail message obtained by The New York Times.

Democratic lawmakers led by Sen. Carl Levin of Michigan and Sen. Charles Schumer of New York in June asked for the investigation to determine how U.S. policy fits with the Hunt deal.

"If, as alleged, the State Department misrepresented U.S. policy to companies like Hunt, that is highly troubling," Schumer said.

Hunt Chief Executive Ray L. Hunt served on the Foreign Intelligence Advisory Board for U.S. President George Bush and was a major contributor to his presidential campaign.

Iraqi oil exports to Turkey resume

Iraq resumed exports to Turkey through its 600-mile Kirkuk-Ceyhan oil pipeline following the settlement of some of its outstanding debts to Ankara.

Ankara on July 21 ordered a halt to the export of 480,000 barrels per day of oil through the pipeline terminating at the Mediterranean port of Ceyhan. Baghdad paid half of its $100 million debt, putting an end to the 17-hour shutdown.

Turkish officials had reported earlier the shutdown was due to technical matters and had nothing to do with outstanding debts. Iraqi oil officials, however, said the move followed a decision in a Turkish court ordering the shutdown while the debt was settled, the Oil and Gas Journal reported.

Around 20 percent of all oil exports from Iraq are carried through the northern pipeline. The vast majority moves through the southern port city of Basra.

Haditha refinery back online

Iraqi Oil Minister Hussein Shahristani presided over a ceremony marking the reopening of an oil refinery in the western Iraqi city of Haditha.

Officials shut the refinery down earlier because of the mounting violence in Anbar province, though the security situation there is relatively calm, in part because of the resolve of the Sunni paramilitary force the Sons of Iraq.

A pipeline from the refinery carries crude oil through Syria onto ports on the Mediterranean. Shahristani thanked Anbar residents for working to restore peace to the region and said his ministry would continue to work on the Haditha refinery to stimulate exports through Syria, the Iraqi daily Azzaman said.

The Haditha refinery currently is producing around 16,000 barrels of crude per day. That output could rise by 10,000 barrels should the region remain peaceful, Shahristani said.

UAE firms start gas production in Iraqi Kurdistan

Two energy firms from the United Arab Emirates will start production in a natural gas field in Iraqi Kurdistan beginning Aug. 1, officials said.

Crescent Petroleum and Dana Gas said they would start production at the Kurmor field in northeastern Sulaimaniya province. Officials said the production would serve regional energy needs and bring a much-needed economic boost, The Kurdish Globe reported.

"The produced gas of this field will save $2.5 billion for (the) Kurdistan region per year," said Dana Gas chief Hamid Dhia Jaafar. "At the same time, the project will supply more than 4 million Iraqis with electricity and create jobs for thousands of other Iraqis."

Corporate officials say the Kurmor field can produce 75 million square feet of natural gas per day, with 2009 estimates reaching 300 million square feet per day.

The majority of the natural gas will fuel two power stations in Erbil and Sulaimaniya provinces, which are expected to produce 1,250 megawatts of electricity.



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