Turkish Co: Iraq Needs Oil Law to Spur Investment

ANKARA, March 19, 2008 (Dow Jones Newswires)

Iraq would need to pass its long-delayed oil and gas law to attract much-needed funds to enhance its oil industry, a Turkish company with oil investments in northern Iraq said Wednesday.

Orhan Duran, the general manager of Turkey's Genel Enerji, said the Cukurova Group-owned company has invested nearly $200 million to drill six wells in a joint effort with Geneva-based Addax Petroleum.

There is enough oil to make the venture profitable, but the oil cannot be exported before the central government passes the oil and gas law, Duran said.

Iraq's central government approved a U.S.-backed draft oil bill early last year and forwarded it to parliament only to see it sent back on technicalities. The bill -- meant to strike a balanced share of oil and gas revenues among the nation's Shiite, Sunnis and Kurds -- has been bogged down in negotiations ever since.

"If they want to see foreign investment in their country, they have to pass the oil law," Duran said at an oil and gas conference in Ankara.

With national legislation stalled, Kurdish authorities have signed more than a dozen contracts with foreign companies over the objections by Oil Ministry officials in Baghdad, who consider the deals illegal.

Genel Enerji are among companies the Kurdish authorities clinched deals with and they plan to extract up to 200,000 barrels of oil a day when the oil law is passed.

Iraq has recently reached a daily oil production of 2.5 million barrels a day -- the level of output before the U.S.-led invasion toppled Saddam Hussein's regime. Tens of billions of dollars are needed to increase the output to 6 million barrels a day within the next 10 years.

ANKARA, March 19, 2008 (Dow Jones Newswires)