Baghdad, Erbil agree to some oil exports

By United Press International  |  Nov. 24, 2008 at 4:27 PM
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Two companies developing oil fields in Iraq's Kurdistan region received approval from Baghdad to tie in to the northern Iraq pipeline, a company official said.

An official from the Taq Taq Operating Co., TTOPCO, a joint venture between Turkey's Genel Enerji and Canada's Addax Petroleum, said on condition of anonymity that both TTOPCO and Norway's DNO were given tie-in permission.

News reports from Erbil, the Kurdistan Regional Government's capital, said a visit Monday by Iraqi Oil Minister Hussain al-Shahristani paved the way to proceed with the technical work.

Both the companies signed production-sharing contracts with the KRG to explore and develop blocks of land, but did so prior to a February 2007 cutoff imposed by Baghdad. The two dozen similar deals the KRG signed since that date have been called illegal by Shahristani. Though development continues, their fate in the KRG-Baghdad dispute is unclear, as both sides contend the 2005 constitution puts oil deals under their purview.

The TTOPCO officials said their company has between 30,000 and 40,000 "daily initial production capacity" with mid- and long-term targets to be announced at a later date. The company expects an official letter on the tie-in approval in "coming days."

Iraq exported an average 319,000 barrels per day through the northern pipeline last month. It hit a high of 483,000 in June, and the combined initial addition of TTOPCO and DNO exports could add anywhere between 60,000 to 100,000 bpd depending on technical issues with their respective oil fields and infrastructure.

TTOPCO is currently "working on the tie-in pipeline … from Taq Taq to the Kirkuk main export pipeline," the officials said.

The pipeline from DNO's Tawke project is merely across a dirt road from the northern Iraq pipeline as it winds through the KRG territory in Faysh Kabur near the Turkish and Syrian borders. Less than a half-mile up the dirt road is the Iraqi government's metering station, which counts the crude before it heads into Turkey and on to the port of Ceyhan.

The KRG wants to produce 1 million bpd within five years and says its deals will get them there. The regional government says it's doing its part in helping boost the total exports -- and income -- of Iraq. But Baghdad says it has sole rights to sign deals and the row has held back progress on a new oil law, which could settle the dispute.

The development isn't actually breaking any new ground; UPI reported in June that both Shahristani and KRG Natural Resources Minister Ashti Hawrami were ready to get exports from DNO and TTOPCO under way, including sending a technical team from Baghdad to do the physical tie-in.

During the visit Monday, Shahristani told reporters that in the next few days details for exporting the oil will be ironed out.

What is striking, however, is that Shahristani made a visit to the KRG at a time when disputes between Shahristani and Hawrami -- and the central and regional governments -- appeared most tense. The oil law is being pushed and pulled as members of Parliament attempt to yank it out of the Iraqi Cabinet's hands. Iraqi Prime Minister Nouri al-Maliki went public last week with his criticism of KRG President Massoud Barzani and mentioned the oil deals specifically as a wedge between the two sides.

"All oil contracts signed by Kurdistan's government with foreign companies violate the constitution," Maliki said, Voices of Iraq reports, following a Nov. 15 meeting between KRG and Baghdad leaders that didn't achieve results on oil and other disputes.

--

Ben Lando, UPI Energy Editor

(e-mail: blando@upi.com)

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