Oil Company near Settling over Contract in Kurdistan

A Norwegian oil producer announced Monday that it would probably have to pay between $12 million to $144 million in an upcoming arbitration settlement to the former American diplomat Peter W. Galbraith and a Yemeni businessman.

Mr. Galbraith, who helped negotiators in the Kurdish regional government figure out how oil revenues are shared under the current Iraqi Constitution, spent part of 2004 as a private dealmaker. He helped bring together the Kurdish government and the Norwegian oil company DNO that year to sign an oilfield exploration and production contract that bypassed the central Iraqi government in Baghdad

Mr. Galbraith has said that he thought the deal would advance the cause of Kurdish autonomy, which he favored. But it also held the promise of making him wealthy, a prospect reinforced by the announcement in Oslo about the coming settlement.

The final sum will be determined in London shortly. The  DNO is required by stock market rules to make the potential payout public.

“The claimants’ submission for damages is approximately $144 million,” DNO said in a statement. “DNO has responded that the damages should be at a level of approximately $12 million.” A hearing on the arbitration proceedings is scheduled for the end of February, the company said, and a final decision is expected in the spring.

The case stems from complications in the original deal that arose after DNO struck oil in Kurdistan’s Dohuk region in 2005. DNO had originally granted Mr. Galbraith and a Norwegian businessman, Endre Rosjo, conditional rights to 10 percent of future oil production for helping to put the contract together, according to Mr. Rosjo and other people familiar with the arrangement.

The arrangement was later changed, and now the contract between DNO and the Kurdish regional government includes neither Mr. Galbraith nor the Yemeni businessman, who was identified by the newspaper Dagens Naeringsliv as Shaher Abdulhak. According to the newspaper, he now controls Mr. Rosjo’s former share.

Mr. Galbraith declined in a telephone interview to answer most questions, but he said his company’s claim in the arbitration is not the same as that of the Yemeni company. DNO’s chief executive, Helge Eide, declined to name the claimants but said the range of possible payouts provided Monday represents their combined claims.

The upper figure, $144 million, is equal to about one-sixth of DNO’s total market value. After the numbers were announced, the price of DNO’s shares on the Oslo Stock Exchange fell by more than 4 percent.

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