Iraq Mulls Kurdistan Expense Claims

The federal government could end up paying for exploration and extraction costs of oil companies working in Iraqi Kurdistan on a cost only basis said Iraqi Oil Minister Hussain Shahristani today.

"We will not pay any profits to the companies but we will look into the bills for the work they carried out," Reuters quoted Shahristani as telling al-Salam television station.

He added he continued to have reservations about the contracts signed by the Kurdistan Regional Government (KRG) with oil companies, especially production-sharing elements of the deals, but that would not stop the resumption of exports soon.

Kurdistan and Baghdad have been at loggerheads for months over oil deals Kurdistan signed independently with foreign companies, a move the central government in Baghdad considers illegal.

The Arab-led government in Baghdad refuses to pay the companies, and oil exports from Kurdistan stopped last year.

Shahristani said recently that exports from Kurdish oil fields would resume soon.

He said that the first exports would come from the Tawke field, operated by Norwegian oil producer DNO International and Turkey's Genel Enerji.

DNO was the first foreign company to drill for oil in Iraq after the 2003 US-led invasion.

Exports from Tawke and another field, Taq Taq, resumed last year in a brief signal of detente between Kurdish authorities and Baghdad, but halted when the Iraqi government refused to pay DNO and the other companies.

Both sides have made overtures to each other in recent weeks to end the impasse.

Baghdad's hand has been strengthened by a series of deals for oilfields outside the semi-autonomous Kurdish region that could turn it into one of the world's top three crude producers.

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