Iraq Plan to Let BP Develop Oil in Kirkuk Is Illegal, Kurds Say

The Iraqi central government would be acting illegally if it proceeds with a plan to allow BP Plc (BP/) to develop the Kirkuk oil fields in the north of the country, according to the Kurdistan Regional Government.

Federal government policies have prevented the semi- autonomous region from raising its crude-export capacity to as much as 500,000 barrels a day, according to a statement on the KRG website. The Kurdish government won’t relinquish its right to export crude and products and criticized the central government for describing the process as “smuggling.”

“Iraq’s citizens are simply tired of this sort of language of threat and intimidation, which in the cynical pursuit of narrow political agendas serves only to create division and strife,” it said.

The Kurds and the central government are entangled in a feud over disputed land and sharing of energy sales revenue. The KRG halted exports of crude by pipeline last month, with shipments currently limited to volumes being trucked to Turkey to be processed under a tolling agreement.

The nation’s central government is holding talks with BP to develop fields in disputed land in the Kirkuk area, Abdul Mahdy Al-Ameedi, director general of the licensing department at the Oil Ministry in Baghdad, said in an interview today.

“Had it not been for the federal government’s obstructionist policies, the Kurdistan Region could now be exporting 500,000 barrels per day or some $18 billion per year,” the KRG said. “This is in addition to the wasteful, costly and environmentally damaging oil ministry policy of gas flaring which has cost Iraqis an estimated $10 billion in lost revenue every year since 2003.”

The country holds the world’s fifth-largest crude reserves, according to BP Plc’s Statistical Review of World Energy. The nation is the biggest producer, after Saudi Arabia, in the Organization of Petroleum Exporting Countries.

To contact the reporters on this story: Khalid Al-Ansary in Baghdad at kalansary@bloomberg.net; Nayla Razzouk in Dubai at nrazzouk2@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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