November 7, 2007

BAGHDAD -- Iraq's Kurdish region has defiantly signed seven new foreign oil deals in a move sure to anger Baghdad, which opposes the unilateral sell-off of crude blocks in the absence of a national oil law.

The autonomous Kurdish Regional Government (KRG) said in a statement posted on its Web site Wednesday that two production sharing contracts have been signed with OMV Petroleum Exploration, a wholly-owned subsidiary of Europe's OMV Aktiengesellschaft.

The deals relate to the Mala Omar and Shorish blocks in the province of Arbil, the statement said.

Separately, the Akre-Bijeel block in the Dohuk province has been awarded to Kalegran Ltd, a wholly-owned subsidiary of MOL Hungarian Oil, and Gas Plc and Gulf Keystone Petroleum Ltd, a subsidiary of Britain's Gulf Keystone.

The Shaikan block, also in Dohuk, has been awarded to Gulf Keystone, Texas Keystone, and Kalegran.

The Rovi and Sarta blocks were granted to India's Reliance Energy Ltd, it said, without specifying where the blocks are located.

Another block in Dohuk province has been awarded to a Western company, the statement said without giving any further details.

It added that four strategic blocks in Sulaimaniyah and Arbil provinces were granted to the Kurdistan Exploration and Production Company, a government-owned firm.

The regional administration said that 85 percent of the returns from the foreign deals would be for Iraq, and the rest would go to the contractor.

The KRG's minister for natural resources Ashti Hawrami said that, with the signing of the latest contracts, 20 international oil companies were now working in the region.

"A further 24 blocks in the region are the subject of intense interest from international companies. There will be more announcements soon," he added.

The latest contracts bring to 15 the number of deals finalized by the regional government since it passed its own oil law in August.

The statement said the KRG has also inked a deal with a state company to set up an integrated oil refinery that can handle 50,000 barrels of crude a day, from the Khurmala oil field.

Hawrami said all these contracts will help the KRG achieve its goal of producing 1 million barrels of oil a day.

"This new level of exploration and production activity in the Kurdistan Region will also galvanize investment interest for the rest of Iraq, once a transparent, investor-friendly, and unambiguously constitutional oil and gas law for Iraq is in place," he added.

Prime Minister Nuri Al Maliki's government has urged the KRG not to sign any deals until the new national oil law is passed in parliament.

Oil minister Hussein Shahristani has previously said that all oil contracts signed before the passing of the oil law would be considered "illegal."

In September, the Kurdish government signed a contract with Texas-based Hunt Oil Company, the first major contract awarded by any Iraqi authority to a foreign company since UN sanctions were imposed on Iraq in 1990.

Shahristani had termed that contract "illegal," incurring the wrath of the Kurds, who demanded his resignation.

The Iraqi hydrocarbons law is stalled before parliament due to bitter differences between warring political factions over the sharing of lucrative revenues from the crude, the third-largest proven reserves in the world.

The bill opens up the long state-dominated oil and gas sector to foreign investment, and assures that receipts will be shared equally between Iraq's 18 provinces, a measure Washington regards as key to uniting the rival communities.

Iraq's former elite Sunni Arab community fears it could be robbed of a share of the oil wealth, as the country's crude reserves are concentrated in the Kurdish north and Shiite south.

The Kurds say they have agreed to a revenue-sharing deal with the Iraqi government, under which only 17 percent of revenues from oil operations in their region will be retained by them, the rest being transferred to Baghdad.