Kurdistan PM Barzani Says Oil Talks with Baghdad to Continue

DUBAI (Zawya Dow Jones), Jun 03, 2008

Kurdistan's Prime Minister Nechirvan Barzani said Tuesday talks with Baghdad about a long-awaited new federal oil law would continue within two weeks.

"We will be traveling to Baghdad to start negotiations on the oil law in two weeks. It's important that we agree on the law otherwise foreign companies won't come to invest in our region," Barzani told reporters on the sidelines of a press conference in Dubai.

Disputes between the semiautonomous region of Kurdistan and Iraq's central government have delayed the law for more than a year.

Barzani said the Kurds were proposing a single package covering oil law, revenue sharing law, Iraqi oil ministry and an Iraqi national oil company to be presented to parliament.

"Baghdad has different views. It's not about Kurdistan and Baghdad, it's an economic matter. It's about state-run and private. We're supporting private and a free-market economy," he added.

Talks with Baghdad will also revolve around deals struck between the Kurdish Regional Government, or KRG, and Austria's OMV AG (OMV.VI) and South Korea's SK Energy (096770.SE) after Baghdad said the deals were illegal, Barzani said.

The KRG has signed 15 oil and gas contracts with 20 international companies since it passed its own hydrocarbons law in August, causing tensions with the Iraqi government, which is seeking centralized control over the country's oil resources.

The Kurds maintain the deals are in line with the Iraqi constitution.

However, the contracts are considered illegal by the Iraqi Oil Ministry, which has threatened to exclude and blacklist participating international oil companies from future opportunities elsewhere in Iraq.

Iraq's Oil Ministry has already ended crude oil supply contracts with SK Energy and OMV.

"We will discuss the OMV and SK issue with Baghdad when we go there. We don't think it has the right to stop the deals," Barzani said.

The Kurdish PM also said Iraq should boost crude oil export capacity to 6 million barrels a day, three times the amount the country is exporting presently.

"We think Iraq needs to export more oil. Iraq has capacity to export 6 million barrels a day, but they're happy with 2 million," Barzani said.

Kurdistan's own plans involve boosting crude output to 1 million barrels a day, Barzani said.

"We are ready to pump 150,000 barrels a day, but we hope to increase this to 1 million barrels a day in two years," he said.

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