Iraqi Kurds to begin solo exports of crude oil

BAGHDAD (AP) -- Iraq's self-ruled Kurdish regional government will export crude oil for the first time by early next year, a Kurdish official said on Wednesday.

Ashti Hawrami, the natural resources minister in the Kurdistan region, said an initial 100,000 barrels per day of crude oil from two northern Iraqi fields would be sent through a pipeline to the Turkish Mediterranean port of Ceyhan. Exports would eventually be ramped up to 250,000 bpd by the end of 2009, he said in a statement.

Hawrami did not say when the exports would begin, but noted they would be coordinated with the Iraqi Oil Ministry.

The announcement appeared to take the national government by surprise, with a ministry spokesman saying the Kurds had not yet received approval to unilaterally begin exports.

An "export license has not yet been granted, and is still under discussion," Assem Jihad told The Associated Press in a phone interview. "Only a technical agreement has been reached on how to link these two fields to the Iraqi strategical export pipeline."

The distribution of Iraq's vast oil reserves has been a major sticking point in the ratification of a national hydrocarbons law, which has been stalled in parliament since February 2007.

That delay has drastically slowed the pace of investments in the country's battered oil sector, hampering Iraq's ability to ramp up production of a resource whose export revenues account for upward of 90 percent of the government's budget.

Iraq, which sits atop the world's third-largest proven oil reserves with more than 115 billion barrels, currently produces about 2.4 million barrels per day. The overwhelming majority is exported through its southern port.

The Kurds, whose territory sits atop vast reserves, argue the Iraqi constitution gives them the right to unilaterally negotiate and sign oil deals, without consulting with the central government in Baghdad. Since the U.S.-led invasion, they have signed nearly two dozen production-sharing contracts with international oil companies.

The oil ministry, however, considers those agreements illegal, and has threatened to exclude and blacklist companies that sign deals with the Kurds.

To ease the dispute, Baghdad has proposed granting export licenses relating to only four deals struck before February 2007. The Kurds, however, have yet to agree to this compromise.

The government's relatively hardline stance stems from concerns that affording the Kurds too much independence in the oil sector could further stoke unrest among the Sunni Muslim population in resource poor central Iraq - a region which had once been the epicenter of the insurgency.

The announcement Wednesday comes two days after Oil Minister Hussain al-Shahristani and the Kurds agreed to link the Tawke and Taq Taq oil fields to the main export pipeline in the north that feeds crude to Ceyhan.

At a press conference after the meeting, al-Shahristani did not provide details on the export mechanism, which Baghdad has insisted previously be handled by SOMO, the state's oil marketing arm.

Tawke is being developed by independent Norwegian oil company DNO, while Turkey's Genel Enerji and Canada's Addax Petroleum Corp. are jointly operating Taq Taq.

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