Iraqi government, Kurds reach settlement over oil deals dispute

Baghdad (Platts)--20Dec2006

The Iraqi government and the Kurds in the north have reached a new
settlement to an old dispute over authority to sign oil deals by the Kurds
with oil companies, said Kurdish Prime Minister Najervan al-Barzani.
Barzani said the talks he held earlier in the week in Baghdad were
positive and culminated in overcoming thorny issue like oil, the budget of the
region and others.
In a press conference late Tuesday in Arbil after a short visit to
Baghdad where he met Iraq's Prime Minister Nuri al-Maliki and other officials,
Barzani said his talks were fruitful.
"After lengthy discussions, we reached positive and new outcome and it is
decided that the Iraqi cabinet would start in the coming days to discuss the
oil law and pass it to the parliament for endorsement," he said at Arbil
airport.
On the mechanism of control over oil issues, Barzani said: "The Kurdish
government has the right to discuss the issue of oil investment with foreign
companies and oil revenues shall be distributed to regions in accordance to
population."
"According to the law, the regional government may discuss oil projects
with foreign oil companies with the participation of a representative from the
Iraqi government," he said. "The initial signing on oil contracts shall be in
Kurdistan. (The contracts will) then be sent to Baghdad to be revised by a
higher expert committee to be formed in the future. After revisions on the
contracts are made, the final signing shall take place in the Kurdish region,"
he added.
He said this committee will have 60 days to revise the contracts and give
its opinions on the terms. "The objective of this measure is to give
transparency and prevent corruption. (It will prevent) granting contracts to
companies not up to standard," he said.
As on the budget issue, Barzani said he and Al-Maliki reached an
agreement to get 17% of Iraq's budget into the Kurdish region. He said the
draft decision shall be sent to the Iraqi parliament on Tuesday. "We expect
this problem to be solved with no hiccups," he said.
Barzani also said that the government will dispatch $364 million--the
remaining amount from the 2006 budget allocated for Kurdistan. He said this
amount remained in Baghdad as a result of "accounting error." The amount shall
be sent before the end of the year.
He also said all Iraqi officials, including Maliki "showed preparedness
to apply article 140 of the Iraqi constitution related to normalization of
relations in Kirkuk."
As related to the Kurdish militia dubbed as "the Pershmerga," Barzani
said a budget should be allocated from that of the Iraqi defense ministry as
"they are part of a defensive force in Iraq and guards of the Kurdistan
region."
"We have not reached a settlement on that issue but we are insisting to
that allocation," he said.
On December 12, the country's former oil minister, Ibrahim Mohammed Bahr
al-Olum, said the Iraqi parliament had approved a fund for the appropriate
distribution of revenues generated by the country's oil sector among Iraq's
provinces. However, the issue of Kurdistan signing its own development deals
with foreign companies, independent of Baghdad, was still under discussion, he
said.
Under the new fund, revenues are assigned as quotas reflecting the
population and the percentage of deprivation the regions suffered under the
former Iraqi regime, he said. According to the Iraqi constitution, all parts
of Iraq receive a proportion of revenue from oil sales, the country's main
hard currency earner.
In recent years, a few consortia of small oil companies have announced
substantial finds in the three northern Kurdish provinces of Iraq and have
signed deals with the local government, something Baghdad has branded illegal
until new oil legislation has been passed. International experts estimate the
Kurdish region may contain oil reserves of 3.6 billion barrels.

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