Kurdish region agrees to resume Iraq oil exports

02 August 2012

Tensions with Baghdad continue as Kurdistan Regional Government signs a new exploration deal

The Kurdistan Regional Government (KRG) has agreed to resume its contribution to Iraq’s northern oil exports, ending a four-month dispute with Baghdad over payments.

Exports will resume in early August at 100,000 barrels a day (b/d) in an effort to build confidence with the federal government in Baghdad, according to a 1 August statement from the KRG’s Minister of Natural Resources Ashti Hawrami.

The KRG has no independent export pipeline routes of its own, so its crude is transported through the federally controlled Iraq-Turkey pipeline. The KRG instructed Norway’s DNO, the operator of the Tawke field to halt exports in April, saying it was owed close to $1.5bn in expenses by Baghdad.

“Despite initial reluctance from the producing international oil companies (IOCs) in the region to export without guarantees of payment, the IOCs had been persuaded to restart exporting at 100,000 b/d,” says the statement. 

Exports through the Iraq-Turkey pipeline dropped to as low as 317,000 b/d in June, from a 400,000 b/d in March.

But the agreement comes as the KRG has signed another set of deals for exploration blocks, this time with Russia’s Gazprom, which is also developing the Badra oil field in the south of Iraq.

Gazprom Neft, the exploration arm of the Russian firm, will take a 40 per cent stake of the Garmian block, where it will work alongside Canada’s Western Zagros, which also has a 40 per cent stake.

It will also take 80 per cent stake of the Shakal block. The KRG retains 20 per cent stakes in both blocks.

Gazprom is now the third oil firm working in the south of Iraq to sign deals with the KRG. The signing comes just days after France’s Total acquired stakes in two exploration blocks in the region. Total is a partner in the development of the Halfaya oil field and the Oil Ministry in Baghdad has responded by saying it is working to cancel the contract.

US oil major ExxonMobil was the first developer to make the move, signing six blocks in October 2011. It was subsequently blacklisted from Iraq’s fourth oil and gas licensing round, but has not been removed from its development of the West Qurna Phase-One oil field.

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