Kurds press ahead with oil strategy

10 March 2006

The Kurdistan Regional Government (KRG) is pressing ahead with an oil development programmes in the north despite the growing political paralysis in Baghdad. K Petroleum Company (KPC), a subsidiary of the local/Canadian Heritage Erbil Oil, signed in early March a second memorandum of understanding (MoU) with the Oil, Gas & Petrochemical Establishment (OGE) of the government of Kurdistan covering field development studies in the northeast (MEED 14:10:05). Heritage Erbil is a joint venture of Canada's Heritage Oil Corporation and the local Eagle Group. The JV began field work on the first MoU in January, which covers a 120-day collection, field mapping and gravity survey of a concession adjacent to the Taq Taq oil field. In total, the MoUs cover an area of about 1,300 square kilometres. KPC has also started negotiations with OGE for production sharing agreements, which it expects to conclude within three months.

The agreement with KPC came just days after Iraq's deputy prime minister Ahmed Chalabi stressed that regional authorities needed to co-ordinate with the central government in Baghdad to conclude contracts with international oil companies (IOCs).

A production sharing agreement (PSA) signed in 2004 between Norway's DNO and the KRG has raised questions over such deals without federal government approval.

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