Kurdistan Oil & Gas Development

[Anthea]

Iraqi Kurdistan vs Baghdad: Oil crisis not about money, its about independence

The announcement by Iraqi Kurdistan that they had started exporting oil to Turkey, despite numerous warnings from Baghdad, has sparked yet another crisis. But as various experts suggest, the crisis is not about business, it’s all about politics and Iraqi Kurdistan’s increasing financial independence.

A few days ago the Ministry of Natural Resources in the semi-autonomous region of Iraqi Kurdistan announced that it had resumed sending oil to Turkey. The oil was going through a dedicated, newly completed pipeline straight to Turkey’s Mediterranean port of Ceyhan. Iraqi Kurdistan had already exported 2 million barrels of crude oil to Turkey in January and now says it’s aiming to export between 10 and 12 million barrels per month by the end of the year.

The Iraqi Kurdish move comes despite plenty of pressure from Baghdad, where the Iraqi federal government has been trying to prevent the Iraqi Kurdish from going it alone with oil exports.

“The federal government has made every possible effort to persuade the region to stop any oil exports that have not been approved of by the central government,” a leading MP from the State of Law bloc and adviser to the Prime Minister , Sami al-Askari, told Niqash. “We’re waiting for a reaction to our last attempt to dissuade them. We’re hoping the region will respond positively to Baghdad’s terms and conditions.”

If Iraqi Kurdistan doesn’t respond the way Baghdad wants them to, al-Askari says that the federal government will take legal action and it will also see to it that the semi-autonomous region doesn’t get its share of the national budget;www.Ekurd.net most of Iraq’s income is from the sale of oil and that share is based on how much oil revenue the region itself brings in, among other factors.

Iraqi Kurdistan shouldn’t be twisting the central government’s arm, argued Khalid al-Asadi, another senior member of the ruling State of Law coalition. “There are negotiations taking place to resolve this issue through diplomatic means and with dialogue,” he said.

The latest reports indicate that negotiations are making some progress. The central government had been insisting that the SOMO oil marketing company, the only company legally able to conclude crude oil sales in Iraq, be involved in the Iraqi Kurdish crude sales. However on the weekend, one Iraqi Kurdish MP was quoted as saying that Baghdad’s attitude toward this had been relaxed.

“The export of natural gas and oil is our legitimate right,” the Minister of Natural Resources in Iraqi Kurdistan, Ashti Hawrami, said “We don’t need permission from any party or any authority to export our oil. New oil fields have been discovered in Iraqi Kurdistan and soon we’ll be exporting 1 million barrels a day,” he noted.

“The region will not yield to the pressure put upon it by the central government,” agreed Mohammed Khalil, a senior member of Iraqi Kurdistan’s ruling Kurdish Democratic Party, or KDP.

Still not all of the Iraqi Kurdish politicians agree on the region’s stand – the opposition Change movement, or Gorran, was uncertain that it made sense to intimidate the central government like this.

Local legal expert, Ali al-Tamimi said that the penalties that the central government was talking about imposing on Iraqi Kurdistan had a sound basis in local legislation.

“In all central parliamentary systems, natural resources are always managed by the federal government,” al-Tamimi said. “Which makes the export of oil without the government’s permission illegal.”

Due to the lack of new legislation on oil in Iraq, the old laws dating back to 1967 still stand, al-Tamimi added. “That means that exporting oil or investing in it without the central government’s approval is actually illegal.”

In fact, Iraqi Kurdistan, which has its own military, court system, parliament and legislation, came up with their own version of an oil and gas law some time ago. Baghdad however cannot agree on a national version of this law. Which is why the older law still stands.

“The spat is nothing new,” Shwan Zulal, a London-based expert on the Iraqi Kurdish oil industry, told Abu Dhabi-based newspaper, The National. “But the difference this time is the amount of oil that can be exported by the [Iraqi Kurdish], which could turn the tables on Baghdad in terms of economic dependence. Baghdad will have little or no leverage left if the KRG can sell oil independently.”

“This crisis is not an oil crisis – nor is it even an economic crisis,” former Iraqi oil minister, Ibrahim Bahr al-Ulum, told Niqash. “It is a political crisis. And there will be a solution as soon as the Iraqi Kurdish region achieves its political ambitions.”

By Ahmad al-Rubaie, Baghdad - Niqash

Copyright ©, respective author or news agency, niqash.org

http://www.ekurd.net/mismas/articles/mi ... te7731.htm

[Anthea]

Oil Search provides an update on the Taza 2 well, Kurdistan Region of Iraq

Oil Search reports that at 06:00 hours KRI time on 5 February 2014, the Taza 2 well was at a depth of 1,351 metres.

During the week, the 20' casing was set and preparations made to install the blow out preventer prior to drilling ahead in a 17-1/2' hole.

Taza 2 is located 10 kilometres north-west of Taza 1 and will appraise the hydrocarbon-bearing intervals discovered by Taza 1 (Dhiban/Jeribe and Euphrates/Kirkuk Formations), as well as explore deeper Tertiary and Cretaceous targets including the Shiranish Formation.

The participants in Taza 2 are:

Oil Search (Iraq) Limited* 60%
Total E&P Kurdistan Region of Iraq (Taza) B.V. 20%
Kurdistan Regional Government (KRG) 20%
Total 100%

* Oil Search's funding interest is 75%, with the KRG's 20% interest carried by Oil Search and Total E&P Kurdistan Region of Iraq (Taza) B.V.

http://www.oilvoice.com/n/Oil_Search_pr ... 51f11.aspx

[Anthea]

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Click on the GKP block you would like to tour:

Picture of the site



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http://familytrees.genopro.com/harrycap ... tours.html

[Anthea]

Oryx to produce oil from Kurdish Iraq by second quarter

Canadian energy company Oryx Petroleum said its Demir Dagh 2 well in the northern Kurdish region of Iraq is a commercial oil discovery.

Oryx said it submitted a declaration to the semiautonomous Kurdistan Regional Government that the prospect in the Hawler license area was an attractive commercial prospect.

The company said in a statement Monday it was conducting "an extensive appraisal program" to determine how much oil was in the field, but said it was declaring it a commercial prospect now because it was proceeding with the development of production facilities.

"Production [is] intended to commence in the second quarter of 2014," the company said.

It offered no estimate of the reserve potential from Demir Dagh 2.

The Korean National Oil Corp., a minority partner for Oryx at Hawler, said last year yielded 10,000 barrels of oil per day during initial testing in the area.

The central and Kurdish governments in Iraq are at odds over who controls what aspects of the energy sector.

http://www.upi.com/Business_News/Energy ... 392120415/

[Anthea]

Marathon Oil: A formal retraction

KT Statement:

On 4th January 2014 The Kurdistan Tribune published an article by our editor Harem Karem entitled, “The cost of oil – how long can we stay silent”. This article included a reference to Marathon Oil’s operations in Kurdistan which we now accept was inaccurate and which The Kurdistan Tribune and Harem Karem formally retract.

Marathon Oil has stated to us that it “has never cut down 7,000 trees in the Shaqlawa area near Hawler”. We believe this to be true and we retract the contrary claim made in the article. We apologise to Marathon Oil and to our readers for publishing information based on inaccurate sources in this instance.

The article also stated that Marathon Oil “didn’t discover a drop of oil” in the area being explored and we accept that this could be misconstrued to mean that Marathon Oil has not discovered any oil in the Kurdistan Region. We agree that this is not the case.

Finally we accept that Marathon Oil has a Corporate Social Responsibility team based at its Erbil office whose remit it is to listen to the concerns and needs of local stakeholders in the communities in which it operates.

http://kurdistantribune.com/2014/marath ... etraction/

[Anthea]

Kurdistan oil export sparks another crisis with Baghdad

A few days ago the Ministry of Natural Resources in the semi-autonomous region of Iraqi Kurdistan announced that it had resumed sending oil to Turkey. The oil was going through a dedicated, newly completed pipeline straight to Turkey’s Mediterranean port of Ceyhan. Iraqi Kurdistan had already exported 2 million barrels of crude oil to Turkey in January and now says it’s aiming to export between 10 and 12 million barrels per month by the end of the year.

The Iraqi Kurdish move comes despite plenty of pressure from Baghdad, where the Iraqi federal government has been trying to prevent the Iraqi Kurdish from going it alone with oil exports.

“The federal government has made every possible effort to persuade the region to stop any oil exports that have not been approved of by the central government,” a leading MP from the State of Law bloc and adviser to the Prime Minister , Sami al-Askari, told NIQASH. “We’re waiting for a reaction to our last attempt to dissuade them. We’re hoping the region will respond positively to Baghdad’s terms and conditions.”

If Iraqi Kurdistan doesn’t respond the way Baghdad wants them to, al-Askari says that the federal government will take legal action and it will also see to it that the semi-autonomous region doesn’t get its share of the national budget; most of Iraq’s income is from the sale of oil and that share is based on how much oil revenue the region itself brings in, among other factors.

Iraqi Kurdistan shouldn’t be twisting the central government’s arm, argued Khalid al-Asadi, another senior member of the ruling State of Law coalition. “There are negotiations taking place to resolve this issue through diplomatic means and with dialogue,” he said.

The latest reports indicate that negotiations are making some progress. The central government had been insisting that the SOMO oil marketing company, the only company legally able to conclude crude oil sales in Iraq, be involved in the Iraqi Kurdish crude sales. However on the weekend, one Iraqi Kurdish MP was quoted as saying that Baghdad’s attitude toward this had been relaxed.

“The export of natural gas and oil is our legitimate right,” the Minister of Natural Resources in Iraqi Kurdistan, Ashti Hawrami, told NIQASH. “We don’t need permission from any party or any authority to export our oil. New oil fields have been discovered in Iraqi Kurdistan and soon we’ll be exporting 1 million barrels a day,” he noted.

“The region will not yield to the pressure put upon it by the central government,” agreed Mohammed Khalil, a senior member of Iraqi Kurdistan’s ruling Kurdish Democratic Party, or KDP.

Still not all of the Iraqi Kurdish politicians agree on the region’s stand – the opposition Change movement, or Gorran, was uncertain that it made sense to intimidate the central government like this.

Local legal expert, Ali al-Tamimi told NIQASH that the penalties that the central government was talking about imposing on Iraqi Kurdistan had a sound basis in local legislation.

“In all central parliamentary systems, natural resources are always managed by the federal government,” al-Tamimi said. “Which makes the export of oil without the government’s permission illegal.”

Due to the lack of new legislation on oil in Iraq, the old laws dating back to 1967 still stand, al-Tamimi added. “That means that exporting oil or investing in it without the central government’s approval is actually illegal.”

In fact, Iraqi Kurdistan, which has its own military, court system, parliament and legislation, came up with their own version of an oil and gas law some time ago. Baghdad however cannot agree on a national version of this law. Which is why the older law still stands.

“The spat is nothing new,” Shwan Zulal, a London-based expert on the Iraqi Kurdish oil industry, told Abu Dhabi-based newspaper, The National. “But the difference this time is the amount of oil that can be exported by the [Iraqi Kurdish], which could turn the tables on Baghdad in terms of economic dependence. Baghdad will have little or no leverage left if the KRG can sell oil independently.”

“This crisis is not an oil crisis – nor is it even an economic crisis,” former Iraqi oil minister, Ibrahim Bahr al-Ulum, told NIQASH. “It is a political crisis. And there will be a solution as soon as the Iraqi Kurdish region achieves its political ambitions.”

http://www.middle-east-online.com/english/?id=64249

[Anthea]

Baghdad-KRG Negotiations: Closer Than Ever to a Fair Deal

On February 16, the Iraqi central government and the Kurdistan Regional Government (KRG) will hold another round of negotiations on oil exports and revenue sharing, the fifth such meeting since December 25. With passage of Iraq's 2014 budget delayed by the talks, all parties have a strong interest in striking a deal. Fortunately, such an agreement now stands a better chance of sticking than ever before.

NOT JUST ABOUT OIL

When discussing oil contracts and revenue sharing, Iraqi Kurds often begin by noting that the dispute with Baghdad "is not just about money." Kurds suffered decades of brutal oppression by the Iraqi government that far exceeded the cruel norms of internal repression in the Middle East. From the 1960s to the fall of Saddam Hussein's regime, many Kurdish areas witnessed complete destruction of all villages, with every structure demolished and all people and livestock removed from rural areas or killed.

This deep trauma was partially salved by the significant administrative and fiscal decentralization built into the 2005 Iraqi constitution, which committed to sharing national revenues on the basis of both population distribution and the level of damage inflicted on different parts of the country. Drawing on their interpretation of the constitution, Kurdish leaders in Erbil have since claimed the right to manage the development of KRG oil fields in northern Iraq and conduct sales through their embryonic Kurdistan Oil Marketing Organization (KOMO). They have also sought to keep the resultant revenues in accounts they control to ensure that international contractors receive their entitlements, since the KRG has signed fifty-plus production-sharing contracts that Baghdad does not endorse.

BAGHDAD'S LATEST OFFER

Late last year, culminating years of autonomous oil-sector development, the KRG threatened to export large volumes of oil via Turkey without Baghdad's involvement. The threat became more credible when Erbil signed a private agreement with Ankara in November to bring Turkish-backed companies into the Kurdish oil sector, and when an improvised pipeline became partially operational in December between KRG oilfields and Turkish export terminals at Ceyhan. These factors -- along with U.S. and Iranian encouragement of Baghdad-KRG reconciliation ahead of Iraq's April 30 elections -- have driven the Maliki government to propose a new mechanism for exporting and monetizing KRG oil. Key elements include:

Marketing. The federal State Oil Marketing Organization (SOMO) and KOMO will jointly market KRG crude, with details such as price and end users preapproved by a joint high committee. Although this would represent a blow to Erbil's aspirations of independent marketing, it would have few tangible costs for the Kurds.

Revenue management. The proceeds from the marketed crude will be processed using conventional accounting methods at the Federal Reserve Bank of New York (FRBNY). KRG crude revenues will enter the Oil Proceeds Receipt Account, with 5 percent remittance made to Kuwait via the UN Compensation Committee as required by UN Security Council Resolution 1511. Baghdad will then transfer the remainder of the KRG revenues each month to Erbil's control via a subaccount of the Iraqi Central Bank account at FRBNY, with the understanding that Baghdad would withhold this amount from its routine monthly transfers to the KRG (see below). This offer goes some way toward meeting Erbil's demand to maintain stewardship of KRG-derived oil revenues, even though the process would not be entirely under KRG control.

Revenue sharing. The new upside for Erbil comes in the form of enhanced revenue sharing. Baghdad is offering to reduce strategic expenses by excluding $15 billion of federal petroleum costs incurred in the southern oil fields, thereby raising the value of the KRG's 17 percent "take" of monthly national revenues by an incremental $2.5 billion this year.

Budget revision. The draft budget currently requires the KRG to produce 400,000 barrels of oil per day for the federal government or see deductions from its monthly transfer. This provision would be removed if the Kurds take the deal outlined above.

IMPLICATIONS FOR U.S. POLICY

Washington deserves significant credit for consistently pushing Baghdad toward compromise. Energetic U.S. engagement has helped keep the current negotiations on track, with Washington smartly leveraging its influence as a provider of intelligence, weapons, and diplomatic support in the fight against al-Qaeda affiliates in Iraq. U.S. officials need to keep up the pressure to get the current deal over the finish line.

Ongoing high-level lobbying is vital because a near-term deal is not assured. The latest proposal may give the KRG billions of additional dollars and a means of reassuring its international oil company partners, but Kurdish leaders would also have to explain to their constituencies why they are apparently taking a step backward from marketing oil with Turkey -- an important symbol of Iraqi Kurdistan's desire for economic independence. At this point in the negotiations, key Turkish and Kurdish stakeholders continue to argue against Baghdad's offer, either for parochial economic reasons or because they believe the KRG can get a better deal during the government formation negotiations after the April elections.

Meanwhile, the central government's current flexibility could disappear if the KRG withholds its assent too long. No amount of lawyering on Baghdad-KRG agreements or Iraqi laws will sustain the negotiations if political agreement breaks down: in reality, the airtight deal that the Kurds are seeking is unattainable, so they should not allow the perfect to become the enemy of the good. There are no real downsides if they take the current proposal as an interim agreement and monitor its implementation. This would secure the KRG's monthly allowances under the 2014 budget and head off a major financial crisis in the Kurdish region. And Erbil would have future opportunities to renegotiate the deal if it believes it has a better hand to play at a later point -- whether during post-April government formation, the 2015 budget negotiations, or the eventual debate over a permanent revenue-sharing law.

The United States should also continue to reassure the Kurds that taking this interim deal does not mean caving on longer-term issues such as disputed territories or revenue-sharing legislation -- two initiatives on which Washington can actively support the pursuit of a fair deal. In addition, the U.S. government should explicitly guarantee that it will respond sternly if Baghdad attempts to interfere with automatic fiscal transfers to the KRG. Delisting the Kurdistan Democratic Party and Patriotic Union of Kurdistan as Tier III terrorist groups would be another timely way to underline Washington's sincerity as an old friend and a true ally.

More broadly, success in the current Baghdad-KRG negotiations could improve Iraq's outlook in many ways. It would allow the Iraqi budget to pass and serve as the first step in bringing to market up to a million barrels per day of KRG oil. It could also defuse tensions in the run-up to the April elections and the months of government formation that will follow. Improvements in Iraq could in turn have potentially far-reaching geostrategic significance: a more united Iraqi effort against al-Qaeda affiliates and a tentative step toward a Baghdad-KRG-Turkey rapprochement would provide welcome relief from the generally negative trends visible across the region. Such a turn for the better under U.S. leadership would be widely appreciated and applauded.

http://www.washingtoninstitute.org/poli ... 7Q.twitter

[Anthea]

Shafaq News

Kurdistan Alliance said on Saturday that the oil differences between Baghdad and Erbil is expected to end this week , noting that a " big convergence " took place during the past few days by " internal and external pressures " to end the crisis .

The Presidency of the parliament held in the presence of representatives from the federal government a meeting to discuss the budget crisis and oil export file from Kurdistan region .

Kurdistan Region’s oil proposals include exporting oil through (KUMO) company in Kurdistan , instead of SOMO national proposal or deduct the region's share from the region 's oil sales and the remainder goes directly to the federal government .

"The convergence in positions happened between the federal government and the regional government during the past few days about the crisis, the export of oil will take place this week in the form of a final agreement after the arrival of a delegation from the region to attend the joint meeting,” The member of the bloc and the decision maker of the parliamentary oil and energy Commission , Qassim Mohammed told “Shafaq News”.

"The agreement came after pressure from the federal government to reduce the annual cash flow to the region if the region goes ahead in exporting oil without Baghdad agree on granting the region the constitutional right to export oil in accordance with the federal government”.

“The current crisis between Baghdad and Erbil delayed the approval of the federal budget for three consecutive weeks,” he added.

It is worth mentioning that this year budget is about 160 billion dinars, which is the biggest budget in the history of Iraq that aim at energizing the industrial and service sector of infrastructure projects .

http://www.shafaaq.com/en/politics/8918 ... hdad-.html

[Anthea]

Kurdistan’s Oil Pipedream About to Come True

Kurds are about to cross a long-cherished milestone: Their own oil exports.

After weeks of roller-coaster Kurdish diplomacy, during which Baghdad lowered all the stops to prevent Erbil to sell oil to and via Turkey, there has been official silence from all sides.

But Qassim Mohammed, a Kurdish-bloc MP in the Iraqi parliament, said on Saturday that the oil differences between Baghdad and Erbil are expected to end this week.

There had been a “big convergence” to resolve the oil crisis, he told Shafaq News.

“The convergence in positions happened between the federal government and the regional government during the past few days about the crisis,” he said. “The export of oil will take place this week in the form of a final agreement after the arrival of a delegation from the region to attend the joint meeting."

Another indication that things were on track came from Mehmet Sepil, the president of Anglo-Turkish firm Genel Energy and the man who the Reuters news agency described as someone “who has knowledge of the talks.” He said he saw a deal approaching.

“We have never been this close to a deal," he told Reuters in an interview. "The issues that caused an impasse have been identified. There's been quite a bit of progress made."

Then there was news that Kurdish Prime Minister Nechirvan Barzani was in Istanbul on Friday for a meeting with his Turkish counterpart, Recep Tayyip Erdogan. Barzani had his energy minister in tow. So did Erdogan.

All of this means that the Kurds appear very close to their dream of underwriting their own economic future. Soon, oil revenues could turn Kurdistan’s economic boom into a rocket.

The oil row has been over the Kurds saying they have liberal legal rights over their vast energy resources and the Arab government in Baghdad fearing that greater economic independence could energize calls for Kurdish independence.

But from the very beginning of the row it was obvious that, one way or another, Kurdish oil would flow overseas.

It was obvious in October 2011, when ExxonMobil became the first US company to begin projects in Kurdistan, even after Baghdad threatened to blacklist all firms working under direct agreements with the Kurdistan Regional Government (KRG).

Soon after, other companies followed, including Chevron, Total of France and Gazprom Neft of Russia. These companies are so powerful that they can change national policies. They had come to Kurdistan because it was obvious there was money to be made.

At a major oil and gas conference in Erbil in December, Premier Barzani noted that foreign oil companies, “with full confidence have come here and invested with their own capital to search for oil.”

For all its complexities, the reality of Kurdish oil is very simple:

-The oil and gas is in the hands of the Kurds, not the central government. Baghdad can issue writs, but the Kurds can get their hands on the oil.

-There has never really been any doubt that the Kurds will sell their own oil and gas, and Turkey next door will buy them. After all, Turkey’s entire policy appears to be underwritten by achieving economic parity with Europe, making industrial growth a prerequisite.

-The Kurdistan Region remains the only stable portion of violence-torn Iraq. There is no guarantee for steady supplies of Iraqi oil. There are greater guarantees of steady supplies from Kurdistan.

-Baghdad can only do so much to stop Kurdish oil. Excessive force would only push the Kurds toward the same independence that is Baghdad’s greatest fear.

Turkey, a regional power of no mean might, has decided on Kurdish oil. This was plainly said by Turkish Energy Minister Taner Yildiz in an interview with Rudaw in December.

“I would say frankly that Turkey will not sit idly about its nearby sources (of energy),” he said.

http://rudaw.net/english/kurdistan/160220142

[Anthea]

Pipeline blast halts oil deliveries from northern Iraq to Turkey

KIRKUK, Iraq - Oil deliveries from the northern Iraqi city of Kirkuk to Turkey through the Ceyhan marine transport terminal on Turkey`s southeastern coast were suspended on Monday following an explosion that targeted an oil pipeline, an Iraqi official said.

Nusier Mahmoud of the state-run North Oil Company told Anadolu Agency that militants had blown up the pipeline in southern Mosul.

The blast seriously injured a number of oil workers, Mahmoud said, adding that he expected the pipeline to be up and running again within 48 hours.

North Oil Company workers are often targeted when carrying out maintenance work on the firm`s pipelines.

http://www.turkishpress.com/news.asp?id=389844

[Anthea]

Baghdad-Erbil Fail in Breakthrough Over Oil Dispute



Erbil and Baghdad failed in a breakthrough over an agreement that would allow the autonomous Kurdistan Region to export its own oil through a pipeline to Turkey, sources said following a fifth round of talks.

However, Baghdad and the Kurdistan Regional Government (KRG) both vowed to continue talks to resolve differences.

“Iraq’s Prime Minister Nuri al-Maliki and KRG Prime Minister Nechirvan Barzani emphasized the importance of reaching an agreement over the outstanding issues between the Kurdistan Region and Iraq," said a statement from the Iraqi premier’s office in Baghdad.

Barzani led a Kurdish delegation to Baghdad for talks with federal officials to resolve issues over the controversial exports and the autonomous enclave’s portion of the annual national budget.

Before the meeting in Baghdad, Barzani visited Turkey over the weekend to discuss the oil row and possible solutions with Turkish Prime Minister Recep Tayyip Erdogan in Istanbul.

According to reports, Turkey reaffirmed its commitment to the comprehensive energy deal signed last year with the KRG.

Iraq's Oil Minister Abdul Karim Luaibi said, “We will continue our negotiations with the KRG for resolving the oil issue.”

Barzani held talks in Baghdad with Luaibi and deputy prime minister for energy affairs, Hussein Shahristani.

Meanwhile, Turkey’s Daily Milliyet newspaper quoted anonymous Kurdish sources as saying that the first batch of Kurdish oil had been sold through the Trans Petroleum Company in Singapore, worth $90 million.

Baghdad has warned foreign companies buying Kurdish oil in Turkey that they would be liable to legal action.

Turkish Energy Minister Taner Yıldız rejected claims that any Kurdish oil had been sold through Turkey.

“If there will be a sale, it will be with the knowledge of Baghdad and its revenues will be conveyed to them. We always say this is not Turkey’s oil, it is Iraq’s,” the newspaper quoted him as saying.

Taner has acknowledged that 425,000 barrels of Kurdish oil have been received through the pipeline in the Turkish port of Ceyhan. But he has stressed that none will be sold without an agreement with Baghdad.

http://rudaw.net/english/kurdistan/170220141

[Anthea]

Turkey defers to Baghdad on oil from Iraqi Kurdistan

With hundred of thousands of barrels of its oil stuck in the Turkish Mediterranean port of Ceyhan, unable to be sold on the world market because of its continuing row with Baghdad, the Kurdistan Regional Government (KRG) is discovering just how landlocked and boxed in it is in terms of utilizing the vast oil reserves under its control.

KRG Prime Minister Nechirvan Barzani shuttled between Istanbul and Baghdad again in the last few days in a fresh attempt at overcoming the problem, but with little apparent success. Baghdad appears determined to stick to its guns and prevent the KRG from selling oil from northern Iraq unilaterally, saying this violates Iraq’s Constitution.

Baghdad also has support from Washington, where administration officials fear the energy cooperation between Turkey and the KRG will increase the risk of splitting up Iraq — already in the throes of sectarian strife — and are consequently putting pressure on Ankara over its energy dealings with the Iraqi Kurds.

Iraq's Constitution says oil revenues, regardless of where the reserves are located in the country, have to go through Baghdad and allocates the autonomous Kurdish region 17% of total revenues.

Nouri al-Maliki's government argues that the KRG can only export its oil after an agreement is reached between Erbil and Baghdad on how to proceed in this matter.

Baghdad has also threatened to cut the KRG out of its share of Iraq’s vast oil revenues, should it go ahead and sell its oil unilaterally.

Iraqi Oil Minister Abdul Kareem Luaibi told Reuters in January that the government would take legal action against Turkey and consider canceling all contracts with Turkish firms if Ankara enabled the exporting of KRG oil before an agreement between Erbil and Baghdad is reached.

Such an agreement, though, has been elusive because of Kurdish claims of sole ownership over oil reserves discovered in northern Iraq after the region gained political autonomy from Baghdad following the US invasion in 2003.

KRG officials are disappointed that a comprehensive package of agreements they signed with Turkey in November 2013 has not become fully operational yet.

The package includes an agreement on multibillion-dollar oil pipelines connecting northern Iraq with Turkey, which would enable the KRG to eventually export up to 2 million barrels of oil per day when fully implemented, making it an important regional energy player independent of the central government.

Currently the KRG is using the existing pipeline from Kirkuk — which technically remains under Baghdad’s control — to Ceyhan where Turkey has a storage capacity of 2.5 million barrels set aside for Kurdish oil. As of December, when the KRG’s connection to the Kirkuk pipeline was opened, the 425,000 barrels of Kurdish oil has been stored in Ceyhan waiting to be sold on world markets.

In the meantime, the KRG has been trucking small amounts of crude to Turkey for domestic consumption, but this is considered to be negligible compared with the potential that exists if the proposed system of pipelines is fully up and running.

There has been little love lost between the predominantly Sunni government of Prime Minister Recep Tayyip Erdogan and the predominantly Shiite Maliki government because of Turkey’s cooperation with the KRG in the energy field, as well as sectarian-based differences over Syria.

Ankara nevertheless appears reluctant to aggravate the situation with Iraq further given the increasing instability and turmoil in the region due to the Syria crisis, which has also left the two countries facing similar threats, especially from radical jihadist groups such as the Islamic State of Iraq and al-Sham (ISIS).

There is also the estimated trade of about $12 billion annually between Turkey and Iraq which experts say has to be factored in by Ankara. Foreign Minister Ahmet Davutoglu visited the Iraqi capital in November for talks designed to smooth the path for a rapprochement between the sides and to lay the groundwork for a visit by Erdogan to Baghdad and Maliki to Ankara.

Those visits have yet to occur, however, and this may be an indication that differences remain which still have to be ironed out. Meanwhile, Iraqi officials are said to be still suspicious of Turkey’s intentions.

"Turkey must now choose either to turn its back on Baghdad and go ahead with its deal with the Kurds, or suspend direct exports from the region until an agreement is reached between the central government and Erbil," Reuters quoted an unnamed Iraqi official as saying in January.

"Unfortunately, facts on the ground show that Ankara eventually will go ahead with its deals with the Kurds at the expense of its relations with Baghdad," the official added.

Iraqi suspicions increased after media reports in Turkey indicated that the first batch of KRG oil in Ceyhan, worth $90 million, had been sold through the Trans Petroleum Co. in Singapore without approval from Baghdad.

Ankara, however, has denied these reports. “Even if a barrel of oil had passed through Ceyhan, Baghdad would have been informed of this and a daily receipt would have been given to the central government noting how much of a sale was made,” Turkish Energy Minister Taner Yildiz told members of the Petroleum Platform Association in the city of Kayseri on Feb. 17.

“This is Iraq’s oil, not Turkey’s. Thus Baghdad will be informed, because it is an issue related to Iraq’s income. So far, there has not been any oil that has gone through Ceyhan, but this does not mean it won’t be transferred in future. We’ll share all information with Baghdad,” Yildiz added.

Barzani arrived in Istanbul on Feb. 14, where he held talks with Erdogan and Yildiz to see how the problem could be overcome. Two days later, he was in Baghdad for talks on the topic, which reportedly produced little, if any, results.

The KRG and the central government have failed to resolve their differences despite a US-sponsored “seven-point agreement” signed between Barzani and Maliki in April 2013.

Tellingly, though, the sides were not prepared to given the impression of a breakdown in talks after Barzani’s failed mission to Baghdad this week. “Iraq’s Prime Minister Nouri al-Maliki and KRG Prime Minister Nechirvan Barzani emphasized the importance of reaching an agreement over the outstanding issues between the Kurdistan Region and Iraq," a statement from Maliki’s office in Baghdad said later, indicating that the talks would go on.

Meanwhile, there are those who argue that the KRG and Baghdad are actually making progress. Reuters quoted Mehmet Sepil, the president of Anglo-Turkish firm Genel Energy, on Feb. 6 as saying, “We have never been this close to a deal." Sepil added, "The issues that caused an impasse have been identified. There's been quite a bit of progress made."

While the KRG and Baghdad remain locked in tough negotiations, the Kurdish media are reporting that the KRG is ultimately relying on the presence in northern Iraq of giant international oil companies, including ExxonMobil of the US, Total of France and Gazprom Neft of Russia, to alter the picture to the KRG’s advantage.

“These companies are so powerful that they can change national policies,” the English-language edition of the Kurdish daily Rudaw reported Feb. 17, also indicating that “from the very beginning of the row (with Baghdad) it has been obvious that, one way or another, Kurdish oil will flow overseas.”

The Financial Times, in a report on Jan. 26 bound to have displeased the Kurdish leadership, indicated, however, that although Kurdish crude is now flowing to Ceyhan, where it is being stored, major oil companies are shying away from responding to the KRG’s call for bids for this oil.

“We will not be involved in KRG tenders until we have a much better understanding of the ramifications for our relationship with Iraq,” the paper quoted an unnamed senior executive from what it said was one of the world’s largest energy companies.

It's “obvious that, one way or another, Kurdish oil will flow overseas,” as Rudaw put it, but it seems that this will not be exclusively on Kurdish terms if the emerging picture is anything to go by.

http://www.al-monitor.com/pulse/origina ... m=twitter#

[Anthea]

Iraq says Kurds agree to export oil via central marketing body

Iraqi Kurdistan has agreed to export crude via the country's main oil marketing body, Deputy Prime Minister for energy Hussain al-Shahristani said, potentially removing a major sticking point in a resource row with the central government.

The autonomous region's prime minister and top energy official travelled to Baghdad earlier this week, intensifying efforts to settle the long-running dispute over exports of oil from Kurdistan via a new independent pipeline to Turkey.

The region has previously insisted it will export crude on its own terms, bypassing Iraq's State Oil Marketing Organisation (SOMO), but Shahristani said the Kurds had finally relented.

"After hours of meetings, we have agreed that our brothers in the region will be represented in SOMO and agreed that this is the sole national outlet responsible for exporting oil," Shahristani said in an interview on Iraqi state television late on Wednesday. "This is an important step forward".

Baghdad has repeatedly threatened to sue Ankara and slash Kurdistan's share of the national budget if exports go ahead through the pipeline without its consent.

The pipeline was completed late last year, and oil has since been pumped through it into storage tanks at Turkey's Ceyhan, but exports from the Mediterranean port are on hold to give diplomacy a chance.

Negotiations have carried on for months with little progress and Shahristani said differences remained over revenue-sharing.

"The second issue that is still unresolved is that they want the revenue from oil exports to be deposited in a private account for the region in the DFI (Development Fund for Iraq)," Shahristani said.

Revenue from the sale of Iraq's oil is paid into the DFI in New York for Baghdad to disburse.

Kurdistan is entitled to a 17 percent share, but says it in fact receives far less than that, and in recent weeks has accused Baghdad of withholding funds, leaving civil servants in the region unpaid.

Shahristani said the finance ministry had now sent enough cash to cover the salaries of Kurdish government employees for January, but faced a liquidity crisis and would not be able to pay in February or after that unless the region resumed oil exports.

"The Finance Ministry said it will not be able to keep paying salaries whilst the region is still not delivering oil," he said. "The ministry has stopped payments to the region and the only solution for this real problem if for the region to start exporting oil"

Crude from Kurdistan used to reach world markets through a Baghdad-controlled pipeline, but exports via that channel dried up due to a row over payments for oil companies operating in the northern enclave.

Since then, the Kurds have been exporting smaller quantities by truck across the border whilst building the pipeline to Turkey and negotiating a multi-billion dollar energy deal with Ankara.

http://www.reuters.com/article/2014/02/ ... Q420140219

[Anthea]

Very strange - very strange indeed

What has happened to the multi-billion dollar energy deal Kurdistan was negotiating with Ankara - they were building a pipeline

Has Kurdistan been persuaded to change it's mind due to the possible internal conflict within Turkey over the forthcoming elections

[Anthea]

Kurds say have not agreed to export oil via Iraq's SOMO

ARBIL, Iraq, Feb 20 (Reuters) - Kurdistan has not agreed to export crude via Iraq's State Oil Marketing Organisation (SOMO), a spokesman for the autonomous region's government said on Thursday, contradicting earlier comments by a top energy official in Baghdad.

Iraq's Deputy Prime Minister for Energy Hussain al-Shahristani said in a televised interview late on Wednesday that the Kurds had agreed to export through SOMO, which would have removed a major sticking point between them over oil exports.

Kurdistan's prime minister and top energy official travelled to Baghdad earlier this week, intensifying efforts to settle the long-running dispute over exports of oil from the region via a new independent pipeline to Turkey.

But Kurdistan Regional Government spokesman Safeen Dizayee said on Thursday that was not the case. "Absolutely we have not reached any agreement to export oil via SOMO. The dialogue and discussions are still underway".

Dizayee described the talks as "useful" and said Kurdistan now awaited a written response from Baghdad to unspecified proposals made by the Kurdish delegation.

Baghdad has repeatedly threatened to sue Ankara and slash Kurdistan's share of the national budget if exports go ahead through the pipeline without its consent.

The pipeline was completed late last year, and oil has since been pumped through it into storage tanks at Turkey's Ceyhan, but exports from the Mediterranean port are on hold to give diplomacy a chance.

Negotiations have carried on for months with little progress.

http://www.zawya.com/story/Kurds_say_ha ... 6N0LP1GO2/