Baghdad Won't Pay Cos for Kurdish Oil Exports

AMMAN (Dow Jones Newswires), May 15, 2009

International companies that want to pump oil in the autonomous Kurdish region of northern Iraq won't be paid from federal revenues, Iraq's oil minister has said.

"The company won't receive from the oil ministry any dollar or a barrel of oil," Hussein al-Shahristani told Dow Jones Newswires in an interview late Thursday night.

"Those who signed the contracts with these companies are responsible to pay back and compensate them," said Shahristani who is in Jordan to attend the World Economic Forum on the Middle East, which starts Friday.

The minister was clearly referring to DNO International ASA (DNO.OS) and Addax Petroleum Corp which are respectively planning to start crude oil exports from Kurdish Tawke and Taq Taq oil fields in northern Iraq.

The Kurdistan Regional Government said last week that it would start crude oil exports in June to world markets for the first time.

Shahristani declined to say whether Baghdad has given the go ahead to the Kurdish authorities to start the sales.

"Put this way, there is a request from Baghdad that the region should hand produced crude oil to the oil ministry which is in its part would handle its export and marketing."

The minister confirmed that the federal government doesn't recognize oil contracts signed by the Kurds with several foreign companies.

The Kurdish government says drilling contracts with around 25 foreign companies are permitted under Iraq's constitution, which gives the Kurds a high degree of governance over its own affairs, including oil policy.  

Copyright (c) 2009 Dow Jones & Company, Inc.