Iraq’s Kurds to make Baghdad new offer on oil law

DUBAI (Reuters) – Iraq’s Kurdish regional government will make fresh proposals to Baghdad in two weeks to iron out differences over the federal oil law, the region’s prime minister said on Tuesday.

Disputes between the largely autonomous northern region of Kurdistan and Baghdad have delayed the law for over a year. Iraq needs billions of dollars to modernize the oil industry and raise output after decades of sanctions and war, but uncertainty over the law has stalled international investment.

“Very soon, about two weeks from now, we will start negotiations to finalize the agreement,” Barzani told reporters at a news conference in Dubai.

The two sides will discuss a package of proposals covering the oil law, revenue sharing, the functions of the oil ministry and the national oil company, Barzani added.

“It is important for all of Iraq,” he said. “Without that law oil companies cannot come into Iraq.”

Earlier, the Kurdish region’s top energy official Ashti Hawrami said he hoped Iraq’s parliament would pass the law this year.

Barzani said he would also hold talks with the federal government over Baghdad’s decision to halt oil exports to Austria’s OMV and South Korea’s SK Energy after the companies signed oil deals with the Kurdish region. Baghdad claims the deals were illegal.

“We don’t think they have the right to stop these deals,” Barzani said.

Baghdad controls Iraq’s export pipelines, and until the Kurdish region reaches an agreement with the federal government it is unable to produce more oil.

The Kurdish region was ready to pump 150,000 barrels per day (bpd) of oil, Barzani said. Actual output is just a few thousand bpd for the local market.

Norwegian producer DNO is producing from wells in the Kurdish region and has built a pipeline to hook up to Iraq’s main northern export route to Turkey, but has yet to receive an export license from Baghdad.

Barzani said that the region was not exporting oil without Baghdad’s consent. “We are not selling oil to anybody,” he said.

The Kurdish region aims to raise output to 1 million bpd in around five years.

Iraq has the world’s third largest oil reserves at around 115 billion barrels, although the country’s deputy prime minister Barham Salih said in April reserves could be as much as 350 billion barrels.

Little exploration has been carried out in areas such as the Kurdish region. Hawrami estimated potential oil reserves in the region at around 45 billion barrels.