Al-Shahristani: Baghdad wants changes in oil deals

Feb. 21, 2011
Iraq's Deputy Prime Minister Hussain Al-Shahristani, who oversees energy for the government, said Kurdistan's production-sharing contracts (PSCs) with international oil companies (IOCs) must be turned into service contracts in order to be approved by the central government.

Eric Watkins
Oil Diplomacy Editor

Iraq's Deputy Prime Minister Hussain Al-Shahristani, who oversees energy for the government, said Kurdistan's production-sharing contracts (PSCs) with international oil companies (IOCs) must be turned into service contracts in order to be approved by the central government.

"All the contracts we [central government] have signed were service contracts, and we expect that all these [Kurdish PSCs] should be amended to be service contracts in order to be approved," Al-Shahristani said, contradicting earlier remarks by Prime Minister Nuri Al-Maliki.

Just a day earlier, in an interview with the AFP news agency, Al-Maliki appeared to signal an end to the long-running feud between Baghdad and the Kurdish Regional Government over the status of agreements signed with IOCs.

"The Oil Ministry accepted these contracts because the nature of the extraction in Kurdistan is different from Basra," Al-Maliki told AFP. "There is a need for bigger efforts there, while in Basra it [oil] is closer to the surface. It's difficult to have service contracts in Kurdistan, but it's normal to have them in southern Iraq," he added.

"In fact, this was a misunderstanding and misquoting by the AFP of what the prime minister said," Al-Shahristani told Reuters news service in a later interview.

AFP said it stood by its story, despite the comments by Al-Shahristani. "Mr. Maliki was not misquoted, and we stand by our story in full. In no part of our interview did Mr. Maliki suggest revising the Kurdish contracts into service agreements," said AFP Baghdad Bureau Chief Sammy Ketz, who conducted the interview.

According to analyst IHS Global Insight, it is "virtually impossible" that AFP would have misquoted or misinterpreted Al-Maliki, given the rather extensive arguments he was giving as to why dual contract framework systems were justified.

The analyst suggested that Al-Maliki might have been trying to create facts on the ground, or at least send up a test balloon, by increasingly tying himself to a solution, which is likely to be along the lines of what he has negotiated with the Kurds.

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