06/25/2008, 00.00
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New oil contracts between Kurdistan and Seoul

by Layla Yousif Rahema
The government of the semi-autonomous region signs two more "production sharing" agreements with Korean state oil company KNOC. These are the same kinds of agreements that continue to increase friction between Baghdad and Erbil, and one of the obstacles to awaited national oil legislation.

Erbil (AsiaNews) - South Korea is confirming itself as among the preferred partners of the semi-autonomous region of Kurdistan, where it continues to consolidate its presence in the oil and infrastructure sector.  Yesterday the Kurdish minister of natural resources, Ashti Hawrami, announced the signing of two "production sharing" agreements with the Korea National Oil Corporation (KNOC), owned by the Korean government.  The news comes a few days after the signing of two other oil contracts with Talisman Energy Inc., an independent company headquartered in Calgary, Canada. KNOC had already obtained exploration rights to one of the largest fields in the north, with estimated reserves of one billion barrels.

According to the agreements signed last June 21 in Erbil, KNOC receives a 60% interest in the Sangaw South Block oil field.  The Koreans also receive an 80% interest in the Qush Tappa Block field.  The rest of both projects belongs to Kurdistan. KNOC, moreover, has committed to investing part of its oil profits in building and infrastructure development programmes.  Initial investments are said to total two billion dollars.

Baghdad maintains that these kinds of agreements are "illegal", while Erbil says they are completely constitutional.  In order to halt the increasingly independent Kurdish policy in the oil sector, the central government on December 31, 2007, called off all cooperation with international companies, about 20 of them, that have signed production sharing agreements with the Kurds.  The friction between Baghdad and Kurdistan continues to delay the ratification of the fundamental national oil legislation, which is supposed to regulate foreign investment in the Iraqi oil sector and the distribution of the proceeds from production among the Shiite, Sunni, and Kurdish communities.

This very week, results are expected from meetings between the two governments on the oil question.  It appears that the Kurdish prime minister, Nechirvan Barzani, will have new proposals to submit to Baghdad in order to resolve the impasse, but so far no details are known.  It is certain that the most recent contracts with the Koreans will not improve the climate of the discussions.

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