Baghdad Seeks To Get A Grip On Oil Deals

As senior politicians in Baghdad get more enraged about oil majors circumventing them to make “illegal” oil deals with Kurdistan in the north of the country, Iraqi newspaper Azzaman believes the oil majors have finally got the message, or have at least started to take it seriously.

Just 50 companies have attended an oil expo in Erbil, Kurdistan, which was meant to draw lots of attention to the oil-rich region. Mohammed Sharif, one of the organizers, said: “The reason for the unexpected low attendance is due to the current differences between the (Kurdish) region and Baghdad.”

In comparison, 500 companies are attending the broader construction and environmental technology expo in Erbil, starting on 17th September, and a similar number are due to attend the oil expo in Basra, in southern Iraq, towards the end of the year.

The central government in Baghdad has been playing a tough game to prevent oil companies investing in the autonomous region of Kurdistan in northern Iraq until it has resolved its dispute with the regional government on oil and oil revenues.

Last year it prohibited Exxon from an exploration tender after it circumvented Baghdad to do business directly in Kurdistan. This July it banned Chevron from signing deals in the rest of Iraq after the oil giant bought stakes in oil businesses in Kurdistan.

But Total and Gazprom quickly followed suit, and Norway’s Statoil has also been widely reported to be looking to sign deals with the Kurdistan Regional Government.

The companies are being drawn to the more lucrative profit-sharing agreements being drawn up by the regional government in the north, and analysts believe they are deliberately playing the central and regional powers off each other to get better deals. We reported last week: Iraq To Make Gas Exploration Deals More Attractive.

Royal Dutch Shell pulled out of talks with the Kurdistan Regional Government last November to protect its considerable interests in the south but, of the oil majors scorning the central government, only Exxon has any significant investment in southern Iraq, and the government needs the revenues being generated from it.

However, this summer, deputy prime minister for energy, Hussain al-Shahristani, had an incensed meeting with Exxon. Baghdad has also warned oil companies that they face having all oil contracts made throughout Iraq rescinded if they do business directly with the north.

 

 

Sources: Azzaman; Reuters; Bloomberg

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