The Kurdistan Regional Government in northern Iraq will resume oil exports in early 2011, Kurdish Natural Resources Minister Ashti Hawrami said.
Oil supplies from the semi-autonomous area halted a year ago as it failed to reach an agreement with Iraq’s government on how to pay operators such as DNO International ASA and Addax Petroleum Corp. Iraq’s main political factions are forming a coalition to end eight months of deadlock following inconclusive elections. A cabinet will be appointed before Christmas, government spokesman Ali Al-Dabbagh said yesterday.
Hawrami said the 38 contracts signed by the KRG with foreign oil companies will “stand” under Iraq’s new oil law, likely to be enacted by June. Legislation to be passed will incorporate, possibly amend and legitimize the KRG’s contracts, previously considered invalid, according to Al-Dabbagh.
“Iraq needs to be rebuilt,” Hawrami said in a speech at the Iraq Petroleum conference in London. “We need to put the past four years of dogma behind us.”
The KRG’s deals allocate a share of the oil produced to foreign companies while those adopted by the national Oil Ministry pay a per-barrel fee. Hawrami said that the KRG will consider adjustments to its agreements.
Kurdistan can supply 100,000 barrels a day to Iraq’s northern export pipeline to Turkey and aims to boost production to 1 million barrels a day over the next three years. Iraq’s 2011 budget assumes exports of 150,000 barrels a day from Kurdistan, Al-Dabbagh said.
In June, Hawrami had said that Kurdish exports would resume soon following a provisional accord on payments between the KRG and Baghdad.
Before exports halted last year, revenue for oil pumped by firms in Kurdistan were collected by the national government’s State Oil Market Organization. The companies are still owed $400 million to $500 million in unpaid revenue, Hawrami said today.
Iraq aims to more than double its current oil output of 2.4 million barrels a day over the next four years and has said it has potential to reach 12 million a day during the next seven years.
Hawrami said that a “realistic” production target is between 4 million and 6 million barrels a day.