WATCHING THE WORLD: Kurdistan deal riles officials

Oct. 8, 2007
Government interference in any business is rarely a good thing, especially when it is the oil and gas business.

Government interference in any business is rarely a good thing, especially when it is the oil and gas business. Consider the case of Hunt Oil Co., which apparently has unsettled the views of several governments about Iraq’s oil industry.

The Kurdistan Regional Government (KRG), Hunt Oil Co. of the Kurdistan Region, and Impulse Energy Corp. recently announced the signing of a production-sharing contract covering the Duhok, Kurdistan, area of Iraq (OGJ, Oct. 1, 2007, p. 36).

Iraqi Oil Minister Hussein al-Shahristani was quick to intervene, saying the deal had no standing with Iraq’s federal government. Any contracts agreed with the KRG need to be approved by the federal authority before they can be considered legal, he said.

The Kurds had a ready response. Indeed, on Sept. 12, the semiautonomous Kurdish government in northern Iraq said that al-Shahristani’s remarks on Hunt’s agreement with the Kurds were out of line.

‘No authority’

“Shahristani’s recent remarks about the legality of the [KRG’s] oil and gas contracts are totally unacceptable,” a KRG spokesman said, adding, “Shahristani has no authority to question the legitimacy of contracts awarded by the KRG.”

But governments around the world support Baghdad’s position, especially when it comes to the laws of the land. That was certainly the position of the US Department of State, which Sept. 28 said Iraq’s national oil law will supersede Hunt Oil’s deal with the KRG.

Deputy Spokesman Tom Casey said, “These kinds of contracts don’t contribute to a resolution that is in the best interest of the Iraqi people, and they do elevate tensions between the Kurdish regional government and the government of Iraq. And to the extent that they detract from an ability to get a national oil law completed...aren’t particularly helpful.”

Enter King Abdullah

The importance of Iraq’s unity was also stressed on Sept. 30 by Jordan’s King Abdullah II, who called for the preservation of Iraq’s territorial integrity following talks he had with visiting Iraqi Vice-President Adil Abdel-Mahdi in the Jordanian capital.

The king called for an agreement on reconciliation among the leaders of Iraq’s Sunnis, Shiites, and Kurds to be reached as “a serious step to maintaining unity and the solidarity of Iraqis,” which would enable “all segments of Iraqi society to participate more widely in the political process.”

King Abdullah, of course, had good reason to support the central government in Baghdad. After all, the Jordanian king is once again the beneficiary of oil supplies from Iraq, which arrived on Sept. 28 after a 4-year hiatus. And it was also arriving at less than market rates.

Oh, and lest we forget! The supplies of Iraqi crude oil which arrived in Jordan came from the country’s northern Kirkuk fields-the very fields that are located in Kurdistan and which the Kurds would like to call their own. How dare Hunt Oil try to intrude on geopolitics?