| QUOTE |
| Kurds’ oil deals shake Iraq integrity Iraqi Kurds have signed fresh agreements with South Korea and a Canadian company, defying stiff opposition from the Iraqi government and deepening a dispute with Baghdad that is feared to undermine Iraqi unity. In a statement posted on its Web site, the Kurdish administration said yesterday that state-owned Korea National Oil Co. has been awarded two production-sharing contracts for the Qush Tappa and Sangaw South blocks near the cities of Arbil and Sulaimaniya. The deal with South Korea came a day after the Kurdish administration announced the signing of two production-sharing and exploration deals with Canadian Talisman Energy Inc. The new deals came despite strong objections from the Baghdad administration, which has declared the deals illegal. With efforts to pass a national oil law so far unsuccessful due to disputes between the Kurds and Baghdad, the Kurdish administration has been licensing exploration acreage under its own legislation since 2003, and about 20 production-sharing contracts have been signed to date with 15 companies and consortia. Analysts say an agreement governing oil revenue sharing is the glue that will keep Iraq together. Nihat Ali Özcan, a political analyst and a lecturer from the Economic Policy Research Foundation of Turkey (TEPAV), speaking to Today's Zaman yesterday, noted that the issue has three dimensions: legal, economic and political. "The legal aspect of the issue is the ongoing vagueness in absence of a hydrocarbons law; the economic aspect is about interests and profits of the Kurdish administration and the foreign companies involved. The third aspect, the political aspect, is very important because it leads to the creation of long-term expectations that might have certain consequences in the distant future through some advantages gained simply from an economic commodity," Özcan said. "The regional administration aims at indirectly gaining support from political actors in the international community in the future. Companies party to agreements with the regional administration will put pressure on their own governments indirectly on behalf of the Kurdish administration because their interests lie with the administration being politically powerful," he emphasized. Turkey, which has had tense relations with the Iraqi Kurds over their suspected intentions for an independent state over the past few years, has currently taken steps to improve dialogue with Kurdish officials. But new actions by the Kurds in the direction of expanding their economic and political leverage in northern Iraq have the risk to cast a shadow over the fragile prospects for rapprochement. Ankara's ties with the Kurds have been uneasy since the US-led Iraq war in 2003 due to their tolerant stance towards the outlawed Kurdistan Workers' Party (PKK). Iraqi Kurdish leader Massoud Barzani, in recent days, has reiterated once again that the PKK is not a terrorist organization, raising eyebrows in Ankara and throwing into doubt the recent improvement in ties. The signing of the new deals came as officials from the Iraqi central government and the Kurdish administration are holding talks in Baghdad to resolve differences over the national oil law, which has been stalled for more than a year now. In the absence of a national law regulating the sector, the Iraqi Oil Ministry deems oil deals signed by the Kurdish government to be illegal and threatens to exclude and blacklist companies that sign deals with the Kurds. "What matters for us is the implementation on the issue by the central government. Agreements that are not accepted as legitimate by the central government cannot be accepted as legitimate by the international community, and thus by us as well," officials from the Foreign Ministry, who requested anonymity, told Today's Zaman. Hasan Selim Özertem, a researcher from the Ankara-based International Strategic Research Organization (ISRO/USAK), has underlined that all of these developments should be evaluated without ignoring the fact that the United States still cannot maintain order in Iraq although that was its main reason for invading Iraq in 2003. "This situation is particularly reflected in the dispute between the central government and different ethnic and religious groups. Despite intense efforts, the central government is not able to be entirely effective," Özertem, the editor of the USAK Energy Review newsletter, told Today's Zaman on Wednesday. The Kurdish administration contends that provinces or regions with oil reserves have the right to decide development, but wide opposition favors maintaining central government control. Norway's DNO, Canada's Western Oil Sands Inc. and Heritage Oil Corp., Swiss-based Addax Petroleum Corp. and Britain's Febru Sterling Energy PLC are among the foreign companies currently operating in northern Iraq. Turkish company Genel Enerji, a unit of Çukurova Holding A.Ş., is also one of the companies. "Deals made by the regional administration are not large in size, while the companies party to these deals are either small or medium sized. Large companies such as Chevron and Exxon Mobil are waiting for the adoption of the hydrocarbons law in order to move into the northern region for business," Özertem said. "As the central government gets stronger, it has a more powerful say in the region and its oil reserves, but there is still a long time before this happens due to the overall situation in our neighboring country. In the meantime, the administration in northern Iraq will continue improving its economic capability and expanding its political activity by taking advantage of the political vacuum," he added. These contracts are governed by an oil and gas law passed by the Kurdish administration that entered into force in August 2007. Kurdish officials say they will adhere to the commitment to forward petroleum revenue from the Kurdish region for Iraq-wide revenue sharing when a federal revenue sharing law is in place. The northern region was largely neglected by Saddam Hussein, but the Kurdish administration's deals have resulted in about 10,000 barrels per day of oil production at present. Iraq sits on an estimated 115 billion barrels and also has an estimated 112 trillion cubic feet of natural gas reserves, making it one of the most petroleum-rich countries in the world. Under the agreement, South Korea's Korea National Oil Co. will own 60 percent of the Sangaw South block and 80 percent of the Qush Tappa block, with the remainder held by the Kurdish government. As for Talisman, the Canadian company has committed to pay $220 million for rehabilitating the communities in which they will operate. The deal calls for Talisman to join a production-sharing contract secured by Canadian-based WesternZagros in 2006 to explore and then produce oil and gas in the Kalar-Bawanoor Block in southern Sulaimaniya province. When the contract was amended last February, Western-Zagros and the Kurdish government were seeking a third party for a 40 percent stake. WesternZagros holds 40 percent and the Kurdish government 20 percent. 26 June 2008, Thursday TODAY'S ZAMAN ANKARA, İSTANBUL |
| QUOTE |
| White House linked to Kurdistan oil deal BUSH Administration officials knew that a Texas oil company with close ties to President George Bush was planning to sign an oil deal with the Kurdistan Regional Government that ran counter to US policy and undercut Iraq's central Government, a congressional committee has concluded. The conclusions were based on email messages and other documents that the committee released on Wednesday. US policy is to warn companies that they incur risks in signing contracts until Iraq passes an oil law, and to strengthen Iraq's central Government. The Kurdistan deal, by ceding responsibility for writing contracts directly to a regional government, infuriated Iraqi officials. But State Department officials did nothing to discourage the deal and in some cases appeared to welcome it, the documents show. The company, Hunt Oil of Dallas, signed the deal with Kurdistan's semi-autonomous Government last September. Its chief executive, Ray Hunt, a political ally of Mr Bush, briefed an advisory board to the President on his contacts with Kurdish officials before the deal was signed. In an email message released by the congressional committee, a State Department official in Washington, briefed about the impending deal with the Kurdistan Regional Government, wrote: "Many thanks for the heads-up; getting an American company to sign a deal with the KRG will make big news back here. Please keep us posted." The document release comes as the Administration is defending help that US officials provided in drawing up a separate set of no-bid contracts, still pending, between Iraq's Oil Ministry in Baghdad and five Western oil companies to provide services at other Iraqi oil fields. In the no-bid contracts, the Administration ultimately conceded that it had provided what it called purely technical help writing the contracts. The US had no role in choosing the companies, the Administration has said. Disclosure of those contracts has provided fuel to critics of the Iraq war who contend that the enormous Iraqi oil reserves were a motivation for the invasion, which the Administration denies. Iraq's Oil Minister, Hussain al-Shahristani, has condemned the Kurdistan deal as illegal because it was not approved by Iraq's central Government and was struck without an oil law. After the deal was signed last year, a State Department official in Baghdad criticised it, saying: "We believe these contracts have needlessly elevated tensions between the KRG and the national Government of Iraq." The State Department said on Wednesday that it had discouraged the deal. Hunt officials declined to comment, and Kurdish Government officials said there was no impropriety. In a letter to the House Committee on Oversight and Government Reform, whose chairman is a Democrat, Henry Waxman, a State Department official said the department had strongly discouraged Mr Hunt from signing the deal until an oil law had been passed. The department told Mr Hunt it continued to advise all companies that they incurred "significant political and legal risk by signing contracts" before Iraq passed the law, wrote Jeffrey Bergner, an assistant secretary at the department, in one of the documents made public on Wednesday. But in a letter to Secretary of State Condoleezza Rice, Mr Waxman wrote that the documents his committee collected told "a different story about the role of Administration officials". In letters obtained by the committee, Mr Hunt informed the President's Foreign Intelligence Advisory Board, of which he was a member, last July and August that he was pursuing serious business interests in Kurdistan. http://www.theage.com.au/world/white-house...88.html?page=-1 |