Thread: Kurdistan Economy

British Foreign Office: Our Companies wishing to invest in Kurdistan

The British Foreign Minister for the Middle East and North Africa, on Thursday, said his visit to the city of Irbil, aimed at strengthening ties with the British province of Kurdistan and Iraq.

He said British Foreign Minister for the Middle East and North Africa, Alistair Burt, at a news conference building, the presidency of the Council of Ministers in Erbil, was attended by the correspondent of news agency Kurdistan (Rn), that "my visit to the Kurdistan region, aimed at strengthening ties between Britain and Irbil, Iraq."

The minister added that Bert "My goal is to develop relations between the two sides," noting that "my visit to the Kurdistan region, comes after the participation of major British companies in the Erbil International Fair in the month (October) the past, and because the region is witnessing a major boom."

He pointed out that "The British government calls for British businessmen to invest and work in the province of Kurdistan," adding that "British companies keen to work here, because the development of the economy in any country needs political stability, and this is available in the region."

He explained that "the name of the Office of the British embassy in the city of Irbil, will become formally to the consulate general in Erbil, because we attach great importance to relations of the Kurdistan region and the UK."

On the issue of forming the Iraqi government, declared that "The British government is pleased that link to Iraqi political parties, after eight months of talks, to form a new government," pointing out that "should the neighboring countries that understand the need for a peaceful Iraq," noting that "the province Kurdistan is a beautiful model of religious coexistence and commitment to the principles of human rights, these phenomena give cause for joy. "

http://www.aknews.com/ar/aknews/2/197733/

Source: Iraqi budget cut affects the financial plans of the region of Kurdistan

The official source at the Ministry of Finance Government of the Kurdistan region, said Saturday that reducing the budget the federal government had a negative impact on all the plans of the provincial government, noting that the province needs more than 20 trillion Iraqi dinars for the next year, if not shrinking budget, there would have been an opportunity to employ 25 thousand people in government institutions of the province.

The financial agent said the region, Rashid Tahir, told the Kurdish news agency (Rn), that "the financial need of the region to 20 trillion Iraqi dinars for 2011 next, but the federal government has allocated half of that amount for the region."

The pure that he "expected by the Council of Ministers to review the province's provincial budget again, as it had been estimated at $ 12 trillion and 500 billion dinars, but after that the Iraqi budget has been reduced recently, the province plans adversely affected by this reduction."

He explained that "if not cut the budget of the province, he could provide about 25 thousand jobs in the institutions of the region, but the downsizing we are reviewing plans," pointing out that "The ministry will meet with the Council of Ministers of the region to review the matter and discuss plans for next year."

For his part, said Undersecretary of the Ministry of Finance of Iraq, Fadel prophet, for (Rn), earlier, that "the general budget for 2011 has shrunk from 102 trillion Iraqi dinars to 92 trillion," noting that "the Kurdistan region will get a rate of 17% with a 10 trillion and 700 billion Iraqi dinars."

The Iraqi Council of Ministers said in a statement, last Wednesday, it approved the draft general budget for 2011 a deficit of $ 12 billion will be covered by the amounts retained from the previous year's budget and borrow internally and externally, between the expected income is estimated at 66.7 billion dollars, while expenditures amounted to 78.7 billion dollars, a shortfall of $ 12 billion.

The Iraqi Finance Ministry announced last month that the finalization of the draft budget for Iraq in 2011, and the new budget allocates a large share of investment, and to support the government's development strategy that will continue for the next four years.

According to the Financial Administration Act, No. 95 of 2004, the government should prepare a budget for the following year, in September of each year, in preparation for discussion at the House of Representatives for approval.

It is said that Iraq's budget for the year 2010 this amounted to 72 billion and $ 400 million, meanwhile, rose in 2011 next to 84 billion and $ 400 million.

http://www.aknews.com/ar/aknews/2/199846/

Turkish ties with N Iraq to continue despite cable revelations, official says
http://www.hurriyetdailynews.com/n.p...ent-2010-12-09

Ankara’s burgeoning relations with northern Iraq are continuing despite Turkey’s efforts to replace Baghdad’s previous Kurdish-Shiite coalition with a more Sunni-based administration, according to a Turkish diplomatic official.

Although Turkey’s efforts aimed to weaken the Kurdish-Shiite alliance, Turkish officials remained in constant touch with Kurdish authorities, a Turkish official familiar with the process recently told the Hürriyet Daily News & Economic Review.

Foreign Minister Ahmet Davutoğlu held several phone conversations with northern Iraqi Kurdish leader Massoud Barzani, who said he was to be happy consulted.

“He was happy that this time he was not approached just for security issues,” said the same official.

While recently leaked U.S. secret cables gave details of Turkey’s efforts to support a Sunni-backed alliance headed by a secular Shiite – in the process replacing the Iranian-backed Kurdish-Shiite coalition – Turkish officials are not expecting any negative consequences in Ankara’s ties with the Kurdish administration in northern Iraq.

Recently released U.S. cables indicated Turkey’s discomfort with Iraqi Prime Minister Nouri al-Maliki’s efforts to be reappointed as prime minister. But following eight months of thorny negotiations, al-Maliki was recently reappointed as prime minister.

It is also known that Turkey then tried to replace Iraqi President Jalal Talabani, a Kurd, with a Sunni figure after it became evident that al-Maliki would be reappointed in spite of its wishes.

Talabani was quoted in a Turkish newspaper as saying, “Turkey put its bet on the wrong horse,” but later denied having used those words.

Turkey’s strategy in Iraq is based on having a government that would be as inclusive as possible of Sunnis, who fear being sidelined by the majority Shiite population. Talabani’s very close relations with Iran also seem to have been an irritant for Ankara.

Invitation from northern Iraq

Barzani’s Kurdistan Democratic Party, or KDP, one of the two main political forces in northern Iraq, has now invited ruling Justice and Development Party, or AKP, officials to its 13th congress to be held Dec. 11 in Arbil.

Abdülkadir Aksu and Ömer Çelik, both high level figures of the AKP, will go to Arbil to attend the congress.

Education Minister Nimet Çubukçu is also expected to go to Arbil next week to both attend a conference and visit schools in the area.

Turkey’s foreign, interior and trade ministers have already visited Arbil, but Çubukçu’s visit is significant because it involves neither security nor trade matters.

Trade links growing

Increasing trade volume remains between Turkey and northern Iraq is one of the strongest guarantees of security in the pair’s relations.

Iraq, meanwhile, has become Turkey’s forth trading partner with 70 provinces in Turkey exporting to the southern neighbor. The export volume of the southeastern province of Gaziantep alone reached 900 million dollars between January and October of this year.

Davutoğlu will also go to New York to attend a U.N. Security Council meeting on Iraq on Dec. 15 after receiving an invitation from U.S. Vice President Joe Biden.

Kurdish concessions in Baghdad
http://mideast.foreignpolicy.com/pos...ons_in_baghdad

The Obama administration may view the recent Iraqi power-sharing agreement as a milestone toward creating a ‘unity' government in Baghdad, yet the real litmus test of Iraq's political viability will come when key legislation is presented to the parliament. Two of the most challenging issues for Baghdad-Arbil relations involve territory and oil -- resolving disputed boundaries and passing a national hydrocarbons law. Although the Kurds are pressed to determine the administrative status of the oil-rich province of Kirkuk, nearly all Arab groups -- Sunni and Shia alike -- remain adamantly against such a proposal. Given current trends in Iraq and the Kurdistan Region, the Kurdish Coalition would do best to nuance its highly-charged nationalist agenda and shift its focus from intractable land claims to Baghdad-approved petroleum deals. The region's long-term political and economic prosperity rests on such a compromise.

The Kurdistan Regional Government (KRG) will need to make political concessions because the power-sharing arrangement in Iraq is a façade. The Kurds are not kingmakers or even equal participants, but rather a politically expedient swing vote for the two key Iraq political groups: Nuri al-Maliki's State of Law Party and Ayad Allawi's Iraqqiya. Even though the Kurdish leader, Jalal Talabani retained the presidency position and has been able to use his charismatic personality to give the role more substance, it is still a ceremonial post. The Kurdish Coalition may secure one of the key ministries in Baghdad; however, it will not have control of the crux of political power -- the premiership, security forces, or the Council of Ministers.

Nor does the Kurdistan Coalition have any real ally in Baghdad. Maliki may have expressed support for Kurdish nationalist demands during the transition period; however, he is likely to withdraw from his promises as he consolidates power, much the way previous Iraqi leaders have done during regime changes. Iraqiyya also is likely to frustrate Kurdish territorial demands. The speaker of the parliament, Usama al-Nujaifi, has a reputation for challenging Kurdish nationalist interests and has opposed the idea of resolving the Kirkuk issue (Article 140).

The Kurds also have new challenges at the societal level. Nearly all non-Kurdish communities across Iraq have become increasingly concerned, if not hostile, to what they perceive as an over-reaching of Kurdish rights and discrimination of Arabs in the northern region. Their collective response has been to reassure that Kirkuk is an integral part of Iraq and that it will not become administratively attached to the Kurdistan Region. This is why, despite Kurdish influence in Baghdad, no real progress has been made on key Kurdish nationalist issues since 2005. The census has been delayed, Article 140 is defunct, and the Kurds must now address the findings of the Committee to Review the Iraqi Constitution, which seeks to revise those articles that empower the regions.

Indeed, the Kurds face important obstacles in the petroleum sector as well. Even though the KRG has signed dozens of oil deals with international companies and optimistically projects one million barrels daily within five years, the central government does not recognize the contracts.

Consequently, the oil companies are still unable to export their crude to international markets and have not been fully paid for production. Additionally, despite the larger companies that have recently entered the Kurdish market, the Kurdistan region is likely to face increasing competition from southern Iraq, particularly as the central government attempts to reactive its role in OPEC, develop the mega-fields in Basra, and repair its oil infrastructure, with the hopes of expanding output from 2.6 million to more than 12.5 million in seven years.

Even if Baghdad cannot effectively raise production to the levels it predicts, it would still have control of the Iraqi oil sector, including markets in the Kurdish north. Regional states seeking to profit from Iraqi oil, particularly Turkey, are looking toward Baghdad and not Arbil as the main source of revenue generation. Turkey's Energy Minister recently confirmed that foreign companies will need the central government's approval to sign oil and gas deals. Not surprisingly, despite improved relations between Ankara and Arbil, Turkey recently re-extended its pipeline agreement with Baghdad, indirectly bypassing the Kurdistan region.

Still, the Kurdish elites may have a better chance of negotiating a hydrocarbons law than resolving the Kirkuk issue. In fact, slight progress has been made on the oil conundrum, particularly as the focus shifts from ‘rights to exploration' to ‘transparency of contracts.' In his recent visit to the Iraqi Kurdistan Parliament (IKP), soon-to-be ex-Iraqi Oil Minister Ali Sharistani stated that Baghdad would recognize Kurdish oil contracts only if they were all presented openly to the IKP for approval. Further, the central government has included in its draft 2011 budget a line item for oil exports from the Kurdistan Region, although a relatively small amount. The demand for transparency also has become a mantra for the Goran opposition movement, which has recently withdrawn from the Kurdish Coalition and also demands full public disclosure of all KRG-signed oil deals.

The idea of disclosing oil contracts may challenge the secretive nature of the KRG's Ministry of Natural Resources, a one-man show run by Ashti Hawrami. It also may do little to resolve the long-standing political distrust that runs deep between Arbil and Baghdad or the historical legacies of Kirkuk that shape Kurdish identity, which is tied to the land. Yet, given the new role of oil in driving the Kurdistan region's development and the absence of support from key Sunni and Shia Arab groups for Kurdish control of Kirkuk, the KRG may have little choice but to substitute emotional nationalism for political pragmatism. This option may be the best possible way to realize any political and economic gains in the years ahead.

Iraqi: KRG To Face Penalties If Oil Exports Fail To Hit Target
http://www.nasdaq.com/aspx/stock-mar...-to-hit-target

LONDON -(Dow Jones)- Iraq's semi-autonomous Kurdish region will face financial penalties should it fail to hit oil production targets, a Baghdad government spokesman said Monday.

Exports from the Kurdistan Regional Government area will be included in the 2011 Iraqi budget, which the cabinet is expected to approve Tuesday, Ali al- Dabbagh said. Starting in 2011 the KRG should produce 150,000 barrels a day and "if it isn't produced it will be deducted from the 17.5%" share of total Iraqi oil revenues which are apportioned to the region, he said.

Dabbagh also said Iraq's next government, expected to be formed before the end of the year, "will honor all contracts signed by the last government."

Iraq has signed a number of large contracts with international oil companies as it attempts a dramatic expansion of output.

Earlier Monday, Iraqi government official Thamir Ghadban said the country's crude production capacity could increase to 8 million barrels within six to seven years, and said when Iraq's production capacity reaches that of Iran-- around 4 million barrels a day--"we will talk about joining the [Organization of Petroleum Exporting Countries] quota system."

= Iraqi Kurds: Oil Laws By June 2011 Or Won't Join Government
http://www.zawya.com/story.cfm/sidZW20101130000112

LONDON (Dow Jones)--The semi-autonomous government of Iraq's Kurdistan region wants new hydrocarbon and revenue-sharing laws by June 2011 as a condition of its participation in a new Iraqi administration, the Kurdistan Regional Government's minister for natural resources said Tuesday.

Speaking at an Iraqi oil conference here, Ashti Hawrami also said there should be no more blacklisting by the Baghdad government of oil companies working in the KRG region, and criticized the government's new oil production target.

Baghdad and the KRG are at loggerheads over production-sharing agreements signed by the Kurds. The federal government argues these deals are illegal because they haven't been approved, while the Kurds say they are in line with the constitution.

Hawrami said eight new oil discoveries have been made in the KRG region in the past two-to-three years, and said the KRG has signed 37 contracts with 40 companies, resulting in $10 billion investment in the oil sector, notably in exploration and production. He also said three refineries have been commissioned, with a total capacity of 200,000 barrels a day, and three power plants have been built, providing over 80% of the region's power needs.

Kurdish oil production "can reach 1 million barrels a day by January 2014," Hawrami said, adding there is "between 100-200 billion cubic feet of [non-associated] natural gas in the KRG." However, he criticized Iraq's oil production target of 12 million barrels a day in the next 10 years.

"Let's be mindful of the market, let's be mindful of our OPEC partners," he said. "Let's make it 4 million, let's make it 6 million."

Hawrami later held a news conference in which he said the KRG is ready now to start exporting 100,000 barrels a day, to increase to 150,000 barrels a day by the end of 2011 or early 2012.

"We are happy to start with 100,000 barrels a day," he told reporters.

He said the crude oil would be exported from two Kurdish fields, Taq Taq and Tawke. The latter is already connected by the Iraqi northern export pipeline to Turkey's Mediterranean port of Ceyhan, while oil will be shipped by trucks from the former to the delivery point.

The KRG exported oil from the two fields for around four months last year but suspended the flow pending the central government agreeing to pay back contracting foreign companies.

Around 40 companies, including Norway's DNO International (DNO.OS), have invested in Kurdistan but their revenues have been curtailed by being unable to sell oil for export because Baghdad has previously deemed the contracts illegal.

Iraqi Kurd leader says Kirkuk belongs to Kurdistan
http://af.reuters.com/article/energy...101211?sp=true

* Kirkuk non-negotiable, Kurdish leader says

* Maliki says Iraq government will be formed by deadline

By Shamal Aqrawi

ARBIL, Iraq, Dec 11 (Reuter) - Iraqi Kurdish leader Masoud Barzani said on Saturday that his semi-autonomous region has the right to self-determination and to the disputed city of Kirkuk, which is located above some of Iraq's largest oil reserves.

The fate of Kirkuk is one of the main issues of contention between the Kurdish region and the central government in Baghdad, which are locked in disputes over land and some of the world's richest oilfields.

Barzani told a congress of his Kurdistan Democratic Party in Arbil that Kurdistan's right to Kirkuk was non-negotiable.

"The Kurdish identity of Kirkuk is not a matter of bargaining," he said.

At the same event, Iraqi Prime Minister Nuri al-Maliki said he would meet the constitutional deadline to form Iraq's new government. He was charged on Nov. 25 with putting together a cabinet and had 30 days to deliver.

Iraq has been without a new government for more than nine months after a March election failed to produce a clear winner.

Shi'ite, Sunni and Kurdish factions squabbled for months over position and power before finally reaching a compromise last month that would include all the major political blocs in the next government.

KIRKUK'S HOME?

Barzani's region and Iraq's central government have argued for years whether Arbil had the right to sign oil development contracts with foreign oil companies. Baghdad says Iraqi oil resources are under its jurisdiction and calls the Kurdish region's contracts illegal.

The disagreement shut down oil exports from the region last year and they have yet to restart, although the oil ministers of both sides have said recently that exports should begin early next year.

Central to the territorial disputes is the fate of Kirkuk, which U.S. officials say may be sitting on 4 percent of the world's reserves. The city's population is a mix of Kurds, Arabs, Turkmen and others.

Iraq recently postponed a national census that could determine what percentage of Kirkuk's population is Kurdish, a key step toward resolving whether the city should be part of Kurdistan.

Tensions surrounding the census have escalated recently. Some Arab families have said they are being ordered to leave the city before the population count.

Barzani sought to dispel concerns about Kirkuk's future.

"If there were fears that the Kurds would rule unilaterally in case Kirkuk is joined to Kurdistan, I would like to reassure everyone that we want to make Kirkuk an example of coexistence," he said.

While previous party congresses had discussed and "confirmed the right to self-determination" for Kurdistan, Barzani said this year it would be a fundamental issue on the agenda.

Maliki's pledge to name his new government by the constitutional deadline could be a sign of the difficulty of reaching agreement with rival political blocs on specific nominees for cabinet posts. He had previously said he would name a cabinet by mid-December.

"The government will see the light in this constitutional period and before the limit of 30 days," Maliki told the KDP congress.

"I call upon all the blocs to accelerate submitting their nominees and not to stop long for minor issues," he said. (Additional reporting by Waleed Ibrahim and Muhanad Mohammed; writing by Jim Loney)

Kurdish oil demands to Maliki revealed
http://www.iraqoilreport.com/politic...revealed-5215/

BAGHDAD - In exchange for the decisive support they gave to Prime Minister Nouri al-Maliki’s bid for a second term, the political bloc representing the Kurdistan region demanded measures that would give it significant autonomy within Iraq’s oil sector.
In a previously undisclosed communiqué to Maliki, Kurdistan Regional Government (KRG) President Massoud Barzani called for the passage of a specific revenue sharing law sometime “in the 2011 financial year” and an oil law “at the beginning of next year, 2011.”
The Kurdistan Alliance, which has 57 seats in the 325-member Parliament, also wants the KRG’s laws to trump federal laws in any dispute over the legality of the 37 oil deals signed by the KRG with foreign oil companies, in defiance of Baghdad.
The demands were issued on August 21, 2010, and remained in force as the Kurds pursued a coalition-building dialogue with Maliki in October and November, according to a source familiar with the Kurdish side of the negotiations. Those talks culminated in second terms for Maliki and President Jalal Talabani, a Kurd.
For the past four years, the KRG’s leaders in Erbil have been at odds with Baghdad over key issues, including the proper boundaries of Kurdish territory and the region’s level of control over its oil sector. Maliki’s administration has condemned the KRG’s contracts with foreign oil companies as illegal – a dispute which has effectively locked in a prospective 150,000 barrels per day (bpd) of potential oil exports. The KRG Ministry of Natural Resources Minister Ashti Hawrami said fields in the region could export one million bpd in a few years.
According to officials involved in the government formation negotiations, a final agreement that would sanction the KRG contracts will not be reached until the government is fully formed and the Parliament revisits legislation to govern the oil sector, which has been stalled since 2008.
“It’s a demand (for) recognition of the KRG oil deals and pay the companies,” said independent Kurdistan Alliance Parliamentarian Mahmoud Othman. “All the problems will be solved when there is a hydrocarbons law.” The draft law calls for a federal oil and gas council, “and that council will decide on the (legality) of the contracts,” Othman said. “It will take time.”
Maliki has until Dec. 26 to finalize the formation his government, which includes a tense allocation of key positions to winning parties, including leadership of the ministries of Oil and Finance.
As that deadline looms, nearly all of Iraq’s elected officials are refusing to disclose details of the political jockeying. Maliki ally Abbas al-Bayati ended an interview when questions turned to Kurdish-Arab relations, including Barzani’s recent public statements asserting Kurdistan’s rights to oil-rich and disputed Kirkuk. (KRG officials have said the comments were taken out of context and misunderstood.)
“We will look to the (KRG oil) contracts in a way that will dismiss all the differences,” Bayati said. He wouldn’t get into specifics but alluded to a general agreement that key oil-related laws would provide the path to reconciliation.
Despite pre-government-formation gestures that trend toward political harmony, the underlying disputes that stalled these laws in 2008 have not been resolved.
Iraq’s 2005 Constitution leaves unanswered several key oil-related questions, and calls for a suite of definitive legislation to structure the oil sector. Those laws were pushed hard by the U.S. government and various Iraqi officials beginning in 2006, but faltered first in the cabinet and then in Parliament over two key issues: the federal Oil Ministry’s exclusive right to sign contracts, and the extent to which foreign companies will be allowed into the country’s oil sector.
That stalled legislation seems likely to serve as the starting point for future negotiations. The package comprises four laws: the hydrocarbon law, which would provide a framework for managing the oil sector in Iraq; the revenue sharing law, which determines a mechanism for redistribution of funds; a law reorganizing the Oil Ministry into a purely regulatory body; and a law re-establishing the Iraqi National Oil Company.
Barzani’s communiqué is titled “Kurdistan Region’s negotiation conditions regarding resources and the oil and gas sector,” and it insists on the passage of particular versions of the hydrocarbon framework law and the revenue sharing law.
It calls for “passing the agreed upon draft (revenue sharing) law dated 20/06/2007… This law should be enacted in the 2011 financial year.”
As for the framework law – also known as the hydrocarbons law or the federal oil and gas law – Barzani called for “legislating this law according to the draft dated 15/02/2007… so that this law is to be enacted at the beginning of next year, 2011.”
The communiqué mentions specific amendments to both laws, but the content of those amendments has never been made public. An April 2007 annex to the oil law by Oil Minister Hussain al-Shahristani that divided Iraq’s oil fields into four development and control categories caused the KRG to withdraw support back then.
Barzani also demanded one change to the draft oil law. All KRG oil deals should be considered valid “assuming that they comply with the Iraqi Constitution,” according to Barzani’s recommended language. His provision continues: “Should there be a case where there is a discrepancy with the constitution, then this should be resolved by the relevant authorities in the Kurdistan Region.”
Such language opposes the existing policy of Maliki’s government, which has fought hard to centralize authority over Iraq’s oil sector.
The tug of war between Baghdad and Erbil was particularly strained last year over exports from the Tawke field, which has been developed by Norway’s DNO, and Taq Taq, developed by a joint venture between Turkey’s Genel Enerji and China’s Sinopec. Those fields briefly exported around 50,000 bpd for four months, but that arrangement imploded. The KRG wanted the federal government to pay the companies, while the Oil Ministry contended that the signator of the contract – that is, the KRG – was required to pay from its own budget.
Since then, numerous meetings have taken place, and a nominal deal was even reached by which the Ministry of Finance would assess the KRG’s deals and contractors’ expenditures in order to certify compensation. This didn’t happen for political reasons, and because the Finance Ministry has lacked the capacity to perform such an assessment.
There also remains a possible showdown over the 2011 budget, which in its draft form requires the KRG to send 150,000 bpd through the export pipeline or risk paying that lost revenue through a reduction of its 17 percent cut of the federal budget. The budget legislation also mentions an audit of 2004-2010 revenues that the KRG should but might not have sent to the central government.
The nearly $79 billion budget, which includes a nearly $12 billion deficit, is funded almost entirely by oil exports, as well as loans from the International Monetary Fund, World Bank and Central Bank of Iraq. It remains to be seen whether the budget will force the sides to compromise or drive a wedge deeper in the dispute.

Kurdish oil demands to Maliki revealed
http://www.iraqoilreport.com/politic...revealed-5215/

BAGHDAD - In exchange for the decisive support they gave to Prime Minister Nouri al-Maliki’s bid for a second term, the political bloc representing the Kurdistan region demanded measures that would give it significant autonomy within Iraq’s oil sector.
In a previously undisclosed communiqué to Maliki, Kurdistan Regional Government (KRG) President Massoud Barzani called for the passage of a specific revenue sharing law sometime “in the 2011 financial year” and an oil law “at the beginning of next year, 2011.”
The Kurdistan Alliance, which has 57 seats in the 325-member Parliament, also wants the KRG’s laws to trump federal laws in any dispute over the legality of the 37 oil deals signed by the KRG with foreign oil companies, in defiance of Baghdad.
The demands were issued on August 21, 2010, and remained in force as the Kurds pursued a coalition-building dialogue with Maliki in October and November, according to a source familiar with the Kurdish side of the negotiations. Those talks culminated in second terms for Maliki and President Jalal Talabani, a Kurd.
For the past four years, the KRG’s leaders in Erbil have been at odds with Baghdad over key issues, including the proper boundaries of Kurdish territory and the region’s level of control over its oil sector. Maliki’s administration has condemned the KRG’s contracts with foreign oil companies as illegal – a dispute which has effectively locked in a prospective 150,000 barrels per day (bpd) of potential oil exports. The KRG Ministry of Natural Resources Minister Ashti Hawrami said fields in the region could export one million bpd in a few years.
According to officials involved in the government formation negotiations, a final agreement that would sanction the KRG contracts will not be reached until the government is fully formed and the Parliament revisits legislation to govern the oil sector, which has been stalled since 2008.
“It’s a demand (for) recognition of the KRG oil deals and pay the companies,” said independent Kurdistan Alliance Parliamentarian Mahmoud Othman. “All the problems will be solved when there is a hydrocarbons law.” The draft law calls for a federal oil and gas council, “and that council will decide on the (legality) of the contracts,” Othman said. “It will take time.”
Maliki has until Dec. 26 to finalize the formation his government, which includes a tense allocation of key positions to winning parties, including leadership of the ministries of Oil and Finance.
As that deadline looms, nearly all of Iraq’s elected officials are refusing to disclose details of the political jockeying. Maliki ally Abbas al-Bayati ended an interview when questions turned to Kurdish-Arab relations, including Barzani’s recent public statements asserting Kurdistan’s rights to oil-rich and disputed Kirkuk. (KRG officials have said the comments were taken out of context and misunderstood.)
“We will look to the (KRG oil) contracts in a way that will dismiss all the differences,” Bayati said. He wouldn’t get into specifics but alluded to a general agreement that key oil-related laws would provide the path to reconciliation.
Despite pre-government-formation gestures that trend toward political harmony, the underlying disputes that stalled these laws in 2008 have not been resolved.
Iraq’s 2005 Constitution leaves unanswered several key oil-related questions, and calls for a suite of definitive legislation to structure the oil sector. Those laws were pushed hard by the U.S. government and various Iraqi officials beginning in 2006, but faltered first in the cabinet and then in Parliament over two key issues: the federal Oil Ministry’s exclusive right to sign contracts, and the extent to which foreign companies will be allowed into the country’s oil sector.
That stalled legislation seems likely to serve as the starting point for future negotiations. The package comprises four laws: the hydrocarbon law, which would provide a framework for managing the oil sector in Iraq; the revenue sharing law, which determines a mechanism for redistribution of funds; a law reorganizing the Oil Ministry into a purely regulatory body; and a law re-establishing the Iraqi National Oil Company.
Barzani’s communiqué is titled “Kurdistan Region’s negotiation conditions regarding resources and the oil and gas sector,” and it insists on the passage of particular versions of the hydrocarbon framework law and the revenue sharing law.
It calls for “passing the agreed upon draft (revenue sharing) law dated 20/06/2007… This law should be enacted in the 2011 financial year.”
As for the framework law – also known as the hydrocarbons law or the federal oil and gas law – Barzani called for “legislating this law according to the draft dated 15/02/2007… so that this law is to be enacted at the beginning of next year, 2011.”
The communiqué mentions specific amendments to both laws, but the content of those amendments has never been made public. An April 2007 annex to the oil law by Oil Minister Hussain al-Shahristani that divided Iraq’s oil fields into four development and control categories caused the KRG to withdraw support back then.
Barzani also demanded one change to the draft oil law. All KRG oil deals should be considered valid “assuming that they comply with the Iraqi Constitution,” according to Barzani’s recommended language. His provision continues: “Should there be a case where there is a discrepancy with the constitution, then this should be resolved by the relevant authorities in the Kurdistan Region.”
Such language opposes the existing policy of Maliki’s government, which has fought hard to centralize authority over Iraq’s oil sector.
The tug of war between Baghdad and Erbil was particularly strained last year over exports from the Tawke field, which has been developed by Norway’s DNO, and Taq Taq, developed by a joint venture between Turkey’s Genel Enerji and China’s Sinopec. Those fields briefly exported around 50,000 bpd for four months, but that arrangement imploded. The KRG wanted the federal government to pay the companies, while the Oil Ministry contended that the signator of the contract – that is, the KRG – was required to pay from its own budget.
Since then, numerous meetings have taken place, and a nominal deal was even reached by which the Ministry of Finance would assess the KRG’s deals and contractors’ expenditures in order to certify compensation. This didn’t happen for political reasons, and because the Finance Ministry has lacked the capacity to perform such an assessment.
There also remains a possible showdown over the 2011 budget, which in its draft form requires the KRG to send 150,000 bpd through the export pipeline or risk paying that lost revenue through a reduction of its 17 percent cut of the federal budget. The budget legislation also mentions an audit of 2004-2010 revenues that the KRG should but might not have sent to the central government.
The nearly $79 billion budget, which includes a nearly $12 billion deficit, is funded almost entirely by oil exports, as well as loans from the International Monetary Fund, World Bank and Central Bank of Iraq. It remains to be seen whether the budget will force the sides to compromise or drive a wedge deeper in the dispute.

Turkish bank plans to open branch in Arbil

Bank intends to "leave the pond," Turkey's opening a branch in Arbil, capital of the Kurdistan region of Iraq early next year.

Reliable sources told the Kurdistan News (Rn) that "the bank officials reviewed Arbil to obtain the approvals of fundamentalism to open a branch there."

The sources pointed out that it "will be the announcement of the results that come out of the formal reviews by the media."

The banks, "Fraser Bankasi" and "Zraat Bankasi" and "stop Bankasi" had earlier announced its intention to open branches in Arbil.

It is expected to start its activities in Arbil banks in the coming months.

http://www.aknews.com/ar/aknews/2/202623/