Iraq's Kurdish oil: Kurdistan goes glug glug

This is from the economist.

Strange most mainstream media are saying nothing about this. Note that the famous Iraq oil law that was once an important benchmark has completely faded from mainstream radar even though the law is still languishing in the Baghdad parliament for about three years!
Kurdistan has made an end run around the central govt. having its own oil law and in effect sharing with the central govt. on its own terms. It remains to be seen if the central government is able to do anything about all this except for the sort of rhetorical rants cited in this article.
Given the new foreign investments in Kurdistan no doubt there will be western support for any attempts to limit Kurdistan autonomy. Even Turkey is on board it would seem!

Iraq's Kurdish oil
Kurdistan goes glug glug
May 28th 2009 ERBILFrom The Economist print edition
The federal government is letting Iraq’s Kurds export from their new oilfields
ON JUNE 1st a man in a hard hat in the blazing sun will ritually turn a switch to let oil flow through a pipeline. In oil-rich Iraq that should not warrant comment. But this operation, at the Tawke oilfield near Iraq’s northern frontier with Turkey, will be beamed live to a giant screen in a new conference centre in Erbil, capital of Iraq’s self-ruling Kurdistan region. Hundreds of leading Kurds will cheer as they watch pictures of oil being offloaded from tankers at an export facility at Khurmala, south-west of Erbil, from which it will be pumped to Baiji and into the same northbound pipeline (see map).
The reason for the excitement is that the crude is being extracted from the first newly developed oilfield to have come on stream since the Americans invaded Iraq in 2003—indeed, the first to have come on stream anywhere in Iraq for 30-odd years. It is also the first instance of exploration leading to extraction and export by private companies in Iraq since oil was nationalised in 1972. Iraq’s Kurds, who have signed a string of controversial production-sharing agreements (PSAs) with private companies, are proud that the oil is flowing anew from fields that they control.
The oil ready for export comes from two fields. One is at Tawke, developed by DNO International, a small Norwegian firm. The other is at Taq-Taq, where Addax Petroleum, listed in London and Toronto, runs a joint venture with Turkey’s Genel Enerji, which also has a stake in the Tawke show. Ashti Hawrami, the Iraqi Kurds’ natural-resources minister, praises the Turkish companies involved. Relations between Turkey’s government and the Iraqi Kurdish regional one are plainly improving.
The Tawke field will start by pumping 60,000 barrels a day (b/d). A new pipeline will carry the crude from the wells east of Zakho to join the main northern pipeline on the Iraqi side of the Turkish border. Meanwhile 40,000 b/d will be trucked from the Taq-Taq site to Khurmala. The crude from both fields will flow through Turkey to the Mediterranean port of Ceyhan. Mr Hawrami says the new fields should produce 450,000 b/d by 2011 and 1m b/d by the end of 2012. That would represent 42% of Iraq’s production, if output from the rest of the country stays the same.
The operations at Taq-Taq and Tawke are run under PSAs whereby private companies get 10-20% of the profit. The rest goes to the federal government in Baghdad before being distributed across the rest of Iraq. But Iraq’s oil ministry and its trade unions dislike PSAs. A long row between the Kurds and the authorities in Baghdad over rules for the north has yet to be resolved. Baghdad wants to approve all oil deals. The Kurds say the federal constitution lets them run—and profit from—their own oil industry, though they accept that revenue should somehow be shared. The Kurds’ parliament passed a hydrocarbons law in 2007. But a new national oil law has been stalled in the federal parliament in Baghdad for at least three years.
The Kurds say they have shown up the decrepitude of Iraq’s oil establishment. Despite billions of dollars of investment since 2003, production is still just over 2m b/d, about what it was when Saddam Hussein was toppled. The federal oil minister, Hussein al-Shahristani, loathes the Kurds’ success and has tried to stop them running their own oil industry, declaring all deals (now at least 20) signed by them to be illegal. He has also threatened to blacklist any oil company that does business up north from applying for licences down south.
But the global recession may be helping the Kurds. The fall in the oil price has played havoc with the central budget. Iraq needs cash quickly. That, presumably, is why the federal government was forced to let the Kurds export oil off their own bat.


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