Iraq's KRG in Nabucco Supply Talks

LONDON (Dow Jones), Feb. 3, 2010

Iraq's Kurdistan Regional Government is in talks with three companies to supply natural gas to the Nabucco pipeline, the region's oil minister said Tuesday.

Speaking to reporters, Ashti Awrami said "it is our right" to negotiate the use of gas from the region, adding "the revenue is for Iraq."

Nabucco, which will bypass Russia by carrying gas from the Caspian region to Europe, has faced concerns it may struggle to find the quantities needed to fill the pipeline.

The minister wouldn't disclose the companies involved, but Austria's OMV AG (OMV.VI) and Hungary's MOL Nyrt. (MOL.BU) are both investors in both the KRG and the Nabucco consortium.

The KRG estimates its soil could hold 200 trillion cubic feet of recoverable gas reserves.

A final investment decision for the 3,300-kilometer pipeline is due by year end with completion expected in 2015.

While Iraq's central government struggled to expand its oil projects amid political uncertainty and insecurity, the semi-autonomous Kurdish region signed up a string of foreign companies contracts in recent years. But in October, the KRG let local operators interrupt exports after Baghdad refused to compensate for their production.

Iraq's oil ministry has deemed the KRG contracts invalid. Awrami suggested he wasn't aware of any progress since Iraqi Prime Minister Nouri al-Maliki contacted the KRG to settle the dispute last month.

Asked when exports could resume, he said "the answer is in Baghdad," adding "we are ready to resume exports within 24 hours" if a solution is found. Despite this, he stuck to a previous target of exporting 100,000 barrels a day early 2011 and one million barrels a day in 2014.

In addition, the minister said the KRG would add 150,000 barrels a day of refining throughput within two years to 60,000 barrels a day currently produced or close to come on stream.

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