Oil export ban costs Iraq dearly, Kurds say

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Iraqi oil ministry still seen as a major barrier for export of oil.
Iraq, hungry for investment after six long years of war, is losing millions of dollars a day due to Baghdad's refusal to permit the Kurdish north to export oil, a top official in the largely autonomous region told Reuters.

Iraq is losing millions and millions of dollars a day. We lost several billion dollars last year by not exporting from Kurdistan, Ashti Hawrami, Iraqi Kurdistan's natural resources minister, said in an interview.

Who is responsible for that? Not us. We are ready for that oil to be exported, he said.

Iraq, where insurgent attacks persist even as U.S. and Iraqi officials hail a falling sectarian bloodshed from the dark days of 2006-07, is struggling to boost oil output and clinch deals with major global firms to develop its massive reserves.

But a dispute over where Kurdistan's boundaries lie is at the heart of ominous strains between Arbil and the government of Shi'te Arab Prime Minister Nuri al-Maliki in Baghdad.

As Kurds complain of what they see as Maliki's increasingly authoritarian ways, some fear the rift could undermine Iraq's growing security. Especially sensitive is a Kurdish quest for control of disputed areas like the strategic oil city of Kirkuk.

The Iraqi Oil Ministry has repeatedly condemned oil contracts Kurdistan has signed with foreign companies as illegal, pitting Iraqi Oil Minister Hussain al-Shahristani against Hawrami in a public war of wills.

'World class reserves'
Hawrami, from his residence in the town of Masif Salahuddin, perched on a hilltop outside the Kurdish capital Arbil, spoke of mismanagement and flawed strategy in Shahristani's steps to reinvent an underperfoming oil sector and make new deals.

Iraqi output is 2.3-2.4 million barrels per day, below what it was before the 2003 U.S.-led invasion to oust Saddam Hussein.

On principle, Baghdad has spurned production-sharing deals investors prefer as it seeks long-term oil and gas deals. Hawrami called that impractical and inefficient-a failed model.

It is a dogma-driven process, this nationalistic approach ? It's done for political reasons. Once you politicize the contracts you're asking for trouble. You're asking for reduction of state revenue and you frighten the contractors, he said.

Hawrami had an indignant response to Shahristani's suggestion in a recent interview that partners in Kurdish deals, like DNO International of Norway, were

They are professionals with excellent track records, but even if they are fourth rate or fifth rate companies as the ministry of oil may wish to label them, they have discovered world class reserves, first class operations, at the minimum cost possible. There are few signs Baghdad is poised to end a long-running spat and let Kurdistan export oil through a national pipeline.

Hawrami said Shahristani reneged on promises last year to do so. Shahristani has said Kurdistan is holding back its own oil.

Such rancor bodes poorly for hopes for a swift end to Kurds' and Arabs' long impasse over a national oil law, needed to ease investors' concerns about hunkering down billions of dollars in an unproven democracy still mired in violence.

It may be even harder to render tough concessions as politicians of all stripes look to December's national polls.

I'm not very optimistic at the moment,» Hawrami said.

The need to leverage Iraq's oil resources becomes all the more urgent as the government, which relies on oil for more than 95 percent of its revenue, grapples with low oil prices.

The drop from a record of $147 a barrel last year to near $50 threatens plans to buy weapons, build schools, pave roads and much more.

We need to rebuild the country now-this year, not next year ... We wasted all that time and should not waste any more.

© The Kurdish Globe 2009