Wednesday, 23 January 2008, 01:50 GMT
KRG heads to Baghdad for oil discussions

KRG Minister of Resources, Dr. Ashti Hawrami.

By Qassim Khidhir
The Globe

KRG delegation meets with Baghdad officials to discuss contentious oil issue.

The KRG delegation not expected to speak with Shahristani.

KRG delegation meets with Baghdad officials to discuss contentious oil issue as U.S. plays mediator between the two.

A Kurdistan Regional Government (KRG) delegation, headed by the Minister of Natural Resources, Dr. Ashti Hawrami, arrived in Baghdad to discuss the Oil and Gas Law and the issue of oil contracts signed by the KRG with a number of foreign oil companies.

The KRG delegation said the U.S. Department of State Secretary Assistant for Oil Affairs, Robin Jeffery, will attend the meetings in an attempt to mediate between Baghdad and Kurdistan.

The delegation plans to meet with Oil Ministry officials and other Baghdad government officials. It is not certain, however, whether the delegation will sit with Hussein Shahristani, Baghdad's Oil Ministry, since KRG's chief of foreign relations, Falah Mustafa, refuses to sit with Shahristani. He has agreed to sit with other Baghdad officials to solve the issue.

"The oil companies operating in Kurdistan Region insist on working in the region and don't pay any attention to Shahristani's threats," said Mustafa.

Meanwhile, Mahmud Othman, a prominent Kurdish lawmaker in Baghdad Parliament, said this visit is crucial and will most likely be the final visit by a Kurdish delegation to Baghdad to work out the oil issue.

Last month, a high-ranking Kurdish delegation headed by Kurdistan Region Prime Minister Nechirvan Barzani visited Baghdad to discuss several controversial issues, including Kirkuk, Peshmerga, oil contracts, and the region's 2008 budget.

In a recent press conference, Kurdistan Region President Massoud Barzani expressed his regret over the visit. "Sadly, the Kurdish delegation returned without achieving any results," Barzani said.

The Iraqi Oil Ministry has as of late decided to stop cooperating with international oil companies participating in production-sharing contracts with the Kurdish regional administration.

The decision is considered the first step toward implementing the ministry's threats to blacklist and exclude these companies from any future deals with Baghdad if they refuse to abandon their oil deals with the self-ruling Kurdish government.

Four companies are thought to have agreements with both the Oil Ministry and with Kurdistan: the United Arab Emirates' Crescent, Canada's Western Oil Sands and Heritage Oil, India's Reliance Industries, and Austria's OMV.

While the national Oil and Gas Law has been stuck in a dispute between the Kurds and Arab leaders over who has the final say in managing oil and gas fields, the Kurds have signed 15 production-sharing contracts with 20 international oil companies. The Oil Ministry considers those contracts illegal.

As of December 31, the Oil Ministry ended the contract of South Korea's SK Energy to import Basra crude oil because it refused to abandon its exploration project in Kurdistan as part of a consortium led by the state-run Korea National Oil Corp.

"The Oil Ministry's repeated threats to prevent these companies from investing in Iraq are politically motivated," said Abdul Khaleq Zangana, a Kurd belonging to the Kurdistan Coalition.

Describing the ministry's handling of the situation as improper, Zangana called for resolving the issue through dialogue.

Meanwhile, Kurds are calling for a new Iraqi Oil Minister. They believe it will be hard to find solutions to oil-related problems between the Iraqi Kurdistan Region and the central government as long as Hussein al-Shahristani remains as Oil Minister.