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Baghdad, Arbil fail to reach deal on oil sharing

ISTANBUL - Hürriyet Daily News | 11/18/2011 12:00:00 AM | İPEK YEZDANİ - ipek.yezdani@hurriyet.com.tr

Baghdad and Arbil have failed to reach a deal on oil sharing while a top Iraqi official slams an oil agreement signed between northern Iraq and Exxon Mobil

Tensions related to oil sharing between Baghdad and the Kurdistan Regional Government (KRG) is rising in the wake of the latter’s decision to sign a new deal with Exxon Mobil on hydrocarbon exploration.

Iraq’s deputy prime minister for energy, Hussain al-Shahristani, said the Iraqi government did not recognize the oil agreement signed between the KRG and Exxon Mobil in northern Iraq.

“The Iraqi government has made it very clear that any contract not approved by the Iraqi government is not legal. Companies have no right to work in Iraqi territory without the approval of the Iraqi government. This position has been made very clear and the prime minister and minister of oil have also reflected this opinion to the company,” al-Shahristani told the Hürriyet Daily News in an interview on Nov. 17 on the sidelines of the Black Sea Energy and Economic Forum in Istanbul, which was organized Nov. 17 and 18.

Asked whether or not Exxon Mobil could operate in southern Iraq after signing the contract with the KRG, al-Shahristani said: “I am not going to make a prediction on that. I am just saying this contract is not approved by the Iraqi government and is not legal.”

The KRG has rejected a draft oil and gas law approved by the Iraqi government in August as the region believes the proposal gives too much power to the federal government to manage the country’s oil wealth.

Al-Shahristani said the new hydrocarbon law, drafted in 2007, had not yet been legislated. “The Iraqi government, after four years of waiting, has revised that draft and added some amendments to it, approved the law and sent it to parliament,” said al-Shahristani. ”In the past, it took four years to revise it; I hope this time it will be faster.”

Royal Dutch Shell has pulled out of oil-development talks with the KRG in an effort to protect lucrative investments in southern Iraq, the Financial Times reported Nov. 17. “Shell always stated that they respect the Iraqi laws and they will not sign an agreement without the approval of the Iraqi government,” al-Shahristani said.

[HH] Shell, Mitsubishi to look for Basra gas

Iraq’s Cabinet has approved a proposal by Royal Dutch Shell and Japan’s Mitsubishi Corp. to jointly develop natural gas facilities in the country through a joint venture dubbed Basra Gas Co., al-Shahristani said.

Most of the natural gas in Iraq is flared because the country lacks the technology to contain the resource.

Shell will focus on the capture of the flared natural gas at facilities near Iraq’s southern port in Basra, he said. “Iraqi government will have the majority share and 49 percent of the company will be divided between Shell and Mitsubishi,” he added.

[HH] Iraq to sell gas to Turkey in the future

Al-Shahristani said Turkey was Iraq’s major trading partner. “We supply a significant portion of the Turkish demand for oil, and, in the future, gas will be available from Iraq,” he said.

“We know Turkey depends on Iraq for energy, and Iraq is determined to be a partner in supplying the energy and developing of the Middle East region into a very prosperous region,” al-Shahristani said.

“Saddam [Hussein] left Iraq destroyed. We have undertaken massive construction. We strongly advise all Turkish companies to look at investment opportunities in all parts of Iraq,” he said.

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