May 8, 2009 / 11:30 AM / 9 years ago

UPDATE 4-Kurds say will launch oil exports, Iraq denies

* Exports from Tawke field to start June 1 - regional govt

* Kurdish deputy PM: no export without Baghdad agreement

* Baghdad says there is no deal with Kurds to export (Adds Kurdish deputy PM, lawmaker, edits)

By Waleed Ibrahim

BAGHDAD, May 8 (Reuters) - Iraq’s largely autonomous Kurdish region said on Friday it would start exporting oil next month, but the Oil Ministry in Baghdad cast doubt on the plan, denying it had given them permission to use national pipelines.

The Kurdistan Regional Government (KRG) heralded the start on June 1 of oil exports from the Tawke field, saying they would start at an initial rate of 60,000 barrels per day (bpd).

Shares in DNO International (DNO.OL), the Oslo-listed firm developing Tawke, surged on the news, up more than 18 percent on the day.

Natural Resources Minister Ashti Hawrami also said that 40,000 bpd of exports from another field, Taq Taq, would begin, travelling by truck and through an Iraq-Turkey export pipeline.

But the Iraqi Oil Ministry in Baghdad denied that the central government, which has long refused Kurdistan permission to export via the national pipeline, had agreed to this.

“So far no deal has been concluded between the two parties,” ministry spokesman Asim Jihad told Reuters, but he declined to say whether such a deal could be reached by June.

Other officials in Prime Minister Nuri al-Maliki’s ruling Shi‘ite Arab-led government could not be reached for comment.

“The government of Kurdistan will not export the oil without the approval of the government of Iraq,” Kurdistan Deputy Prime Minister Imad Ahmed told Reuters, casting doubt on the plan.

The long-running feud over oil is part of a larger dispute between Maliki’s government and Iraq’s Kurds, one that has held up national energy legislation and cast a shadow over a country struggling to emerge from six years of sectarian bloodshed.

LOOMING KURD-ARAB FEUD

Hawrami said Iraq’s State Oil Marketing Organisation (SOMO), controlled by the Oil Ministry, would handle the oil sales.

“The exported crude oil from both fields will be marketed by (SOMO) and the revenue will be deposited to the federal Iraq account for the benefit of all Iraqi people,” Hawrami said.

That was news to Falah Alamri, who heads SOMO.

“So far we are not aware of anything like this. Normally we receive instructions about such things from the oil minister, but we haven’t gotten anything from him,” he told Reuters.

Samuel Ciszuk, an analyst at IHS Global Insight in London, said the announcement could be an attempt to increase pressure on the Oil Ministry from its many critics in parliament, so that it moves more quickly to boost oil production.

Iraqi Oil Minister Hussain al-Shahristani is seeking long-term contracts with the world’s largest oil firms, which he hopes will help Iraq double daily output from around 2.3-2.4 million bpd now. But he has been criticised for not moving more quickly to raise production with shorter term deals.

“The Kurds ... are basically saying: ‘there is crude to be exported if you allow us to do that’,” Ciszuk said. “The audience is Iraqi parliament and ... by making this fight overt they are trying to foment support in parliament and (from) all who are critical of Shahristani and his oil policies.”

Iraq has the world’s third largest oil reserves, but it desperately needs investment to boost output and repair infrastructure damaged by decades of sanctions, war and neglect.

The country, which relies on oil imports for more than 95 percent of its state revenues, needs exports more than ever as it faces a budget crisis due to the plunge in oil prices.

Baghdad’s pipeline position has meant oil from Kurdistan, largely independent since 1991, has gone only to supply a small Kurdish market. Small amounts have been smuggled abroad.

Kurdish officials, who estimate reserves of at least 40-45 billion barrels in the area now recognised as Kurdistan, have also struck deals with other firms including Addax Petroleum.

Those contracts are deemed illegal by the Oil Ministry.

“Everything is in deadlock,” said Mahmoud Othman, a Kurdish lawmaker from Baghdad’s parliament. “I blame both sides, but more the central government because the ball is in their court. They should take initiative. They don’t seem to be in a hurry.”

British oil explorer Heritage Oil said on Wednesday it had found up to 4.2 billion barrels of oil in Kurdistan. Ciszuck said that may have emboldened the KRG.

Growing Kurd-Arab tensions raise fears that the divide over energy resources could feed renewed conflict even as the violence unleashed by the 2003 invasion subsides.

Arabs reject Kurdish ambitions to absorb the oil-rich region of Kirkuk, home to Kurds, Arabs and Turkmen, into Kurdistan. (Additional reporting Tim Cocks and Muhanad Mohammed in Baghdad, Sherko Raouf in Sulaimaniya and Alex Lawler in London; Writing by Missy Ryan and Tim Cocks; editing by Jim Marshall)

Our Standards:The Thomson Reuters Trust Principles.
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