Iraq awaits KRG response to export proposal: Shahristani

29.1.2014 – Kurdpress – Iraq is awaiting a response from the country’s semi-autonomous Kurdish region on a proposal for exporting the area’s crude, and will impose penalties if the oil is sold without Baghdad’s approval, Iraq’s Deputy Prime Minister for Energy Affairs Hussein al Shahristani said.

Kurdish crude should be exported by Iraq’s State Oil Marketing Organization, known as SOMO, while international oil companies operating in the enclave should be paid from the Kurdistan Regional Government’s share of the national budget, Hussein al Shahristani was quoted byBloomberg as saying yesterday.

“Oil that’s being produced should be exported by SOMO,”Shahristani said in on-record remarks at the Chatham HouseMiddle East and North Africa Energy conference in London. The “KRG is part of a federal system. Oil and gas in any part of Iraq – KRG or any other part of the country – is according to the constitution, the property of the Iraqi people,” he added.

Shahristani went on to say that the conflict in Syria has resulted in a higher rate of terrorist attacks in the west of Iraq, hindering exploration of oil resources there.

“Conflict in Syria has resulted in an increase in terrorists using territories between Syria and Iraq for bases,”he said. “Attacks have focused on oil pipelines, power and transmission lines,” Shahristani said. Iraq’s Kurds have announced plans to sell, at the end of this month, crude that has been pumped through a pipeline from the Kurdish region to the border with Turkey. The KRG halted flows via the central government’s export line to Turkey in 2012 because of a dispute over how to share revenues. Authorities in Baghdad have said contracts independently signed between the KRG are international oil companies are illegal.

There are “fiscal” actions Iraq can take if oil is sold outside of SOMO’s control, Shahristani said. Baghdad has also warned Turkey it will impose penalties if the KRG’s crude is sold. The central government has yet to see any of the agreements signed between the KRG and foreign companies, he said. The KRG’s 300,000 barrel-a-day link connects to the main Iraqi export pipeline at Fishkabur, near the Turkish border. The central government in Baghdad is waiting for the KRG to agree that it will contribute 400,000 barrels a day to the national oil export total in 2014 before they can pass this year’s budget, Shahristani said.Holder of the world’s fifth-largest oil reserves, Iraq plans to increase oil production capacity to 4.7 million barrels a day next year, from about 3 million in 2013, and reach 9 million in 2020, Shahristani added.