Iraq oil showdown
In an email to Iraq Oil Report, responding to a recent article about the oil dispute with Oil Minister Hussain al-Shahristani, the top oil official in the Kurdistan region issues a written assault in an already tense war of words.
The Kurdistan Regional Government has signed two dozen contracts with international oil companies to explore for and produce oil. It cites the 2005 Constitution as giving it such authority. Two projects are ready to begin export, which would be added and needed income, but wrapped into a larger dispute over authority and revenue.
But the KRG’s moves are controversial, despite their technical success. Iraq has yet to determine crucial issues: to what extent foreign oil companies will be allowed into Iraq’s still nominally nationalized oil sector and how to rebuild, if at all, a leading national oil sector. The Ministry of Oil in Baghdad has signed half dozen agreements in the past six months and is readying deals both directly negotiated and two rounds of bidding for oil and gas fields, all aimed at increasing output. Shahristani says the 2005 Constitution maintains the oil strategy as a right of the state, and claims KRG deals are a unilateral usurpation of such authority.
While both Shahristani and Ashti Hawrami, the KRG minister, move forward with their projects, this new showdown over exports from two fields in the KRG highlights a third crucial issue that transcends oil: in the “new” Iraq, how much authority does Baghdad wield?
“If Dr. Shahristani is calling actions taken under the acts of the Kurdistan Parliament to be “illegal and illegitimate,” Hawrami writes to Iraq Oil Report, “then he is acting unconstitutionally and as a member of the government nominated in the name of that constitution he should rethink his position again.”
He goes on to challenge directly Shahristani: “If he disagrees with our contracts or he really thinks that they are illegal, then go and do something about it.”
“Finally, before he has said many times that we will never be permitted to export, so what has happened to make him change his mind now? The answer is clear that he has no authority and he cannot do anything to prevent it, hence agreeing with the decision made by the KRG,” he concludes, referring to two alleged letters from the North Oil Co. giving the exports the green light.
Below is the response, unedited, in full:
"I am responding to the article appeared on the Iraq Oil Report stating that [Shahristani called the production-sharing agreements (PSAs) between the KRG and IOCs “illegal and illegitimate”]. In response to that I would like to offer the following:http://www.iraqoilreport.com/the-biz...showdown/1474/
1. Dr. Shahristani is stating a personal view only, his views do not reflect the views of the Federal Government, or the Federal Parliament or the Federal Energy Committee of the Parliament. Indeed, his views are not even shared by most of his own Oil Ministry staff.
2. Dr. Shahristani’s authority in the Kurdistan Region is not recognized, nether constitutionally nor in practice, and he is not in a position to influence what we are legally and constitutional doing.
3. His old slogan of “illegal and illegitimate” is becoming a very boring. This message and his “blackmail list” of companies are unproductive and embarrassing for Iraq as a country. No one is paying any attention about what he saying.
4. We are acting according to the laws of the Kurdistan Region, passed by the constitutionally recognized Regional Parliament. The laws of KRG authorized us to sign contracts and develop the regional petroleum resources for the benefit of all of Iraq. If Dr. Shahristani is calling actions taken under the acts of the Kurdistan Parliament to be “illegal and illegitimate”, then he is acting unconstitutionally and as a member of the government nominated in the name of that constitution he should rethink his position again.
5. He is politicizing the situation for personal reasons, and his attacks on KRG’s achievements are aimed at shifting the attention away from his own Ministry’s poor performances and failures.
6. Perhaps he can explain why MoO has failed to increase the production? Why MoO has not been able to develop at least one of many readily available giant oil discoveries to arrest the decline despite $8 Billion funding made available to him? And why MoO continues to flair all the associated gas valued at least at $10 billion per year?
7. If he disagree with our contracts or he really thinks that they are illegal, then go and do something about it. There is a constitutional process that he should adopt to solve the problem, rather that staging media events to repeat his boring political message, which is harming Iraq.
8. Finally, before he has said many times that we will never be permitted to export, so what has happened to make him change his mind now? The answer is clear that he has no authority and he cannot do anything to prevent it, hence agreeing with the decision made by the KRG. The backdated letter sent to us on 10th May (2 days after our announcement) confirming agreement to the export are appreciated. For now that is what matters to us, the rest is irritation and will go away soon.
Regards
Ashti Hawrami"