KURDS, HUNT OIL PARTNER IN DISS TO IRAQ GOV’T

Nevermind General Petraeus’ testimony and endless interviews. Nevermind the onslaught of speeches from Bush, Cheney, Reid, Pelosi and the thundering hordes of candidates for the presidential nominations. Aside from the murder of the Sunni leader-crucial US ally (who could not be protected in the supposedly safe Al-Anbar region?), THIS is the most telling news about Iraq this week.

According to related reports, Alan Greenspan might think so too: Alan Greenspan claims Iraq war was really for oil

Hunt Oil Skirts Baghdad, Signs deal With Kurds
Chip Cummins (w/Philip Shishkin and Hassan Hafidh), September 9, 2007 (Wall Street Journal)
and
Iraqi oil minister says Hunt Oil deal with Kurd regional government illegal
September 10, 2007 (AP via International Herald Tribune)

WHO
Hunt Oil Co. (Ray Hunt, CEO); Kurdistan Regional Government (KRG) (Ashti Hawrami, Kurdish minister for natural resources); Hussain Al-Shahristani, Iraq Oil Minister

click to enlarge

WHAT
Hunt Oil and the KRG will proceed with oil exploration in Kurdistan without waiting for an oil law to emerge from political infighting in Baghdad. The central government contends any such deals are illegitimate.

WHEN
- This is the first deal signed under terms of the new Kurdish oil law, passed by the regional government to circumvent the absence of a national provision.
- Geological surveys and seismic work will begin by the end of 2007. Hunt expects to drill its first exploration wells in 2008.

Iraqi Kurdistan (click to enlarge)

WHERE
Exploration will be in the autonomous region of Iraqi Kurdistan.

WHY
- An oil law has been drafted by representatives of the central government and, like other important final provisions of the final Iraq constitution, awaits ratification.
- The oil law dispute is between factions who want more central government control and factions like the Kurds who want more regional control. Another dispute is between those who want to allow more multinational oil company presence and those who want to restrict Iraqi oil development to the Iraq National Oil Company.
- The major multinational oil companies remain on the sidelines in Iraq, considering exploration too physically dangerous, too legally tenuous or both.
- Iraq has known oil reserves of 115 billion barrels and because strife has made much of the country unavailable to exploration for more than 3 decades many think there is much more oil there.
- Hunt Oil is privately held and will not have to answer to stockholders if things get ugly.
- Hunt Oil is a long time financial contributor to the political campaigns of George Herbert walker Bush and George W. Bush.

Some estimates put Iraq's oil reserves at nearly 3 times the typically cited figure of 115 billion barrels, moving them from 2nd or 3rd largest in the world to number 1. (click to enlarge)

QUOTES
- Hunt: “[Hunt Oil is pleased to be] participating in the establishment of the petroleum industry in the Kurdistan region of Iraq."
- Hawrami: “[The new Kurdish law] has created a supportive and transparent business environment [for international oil companies]…”
Hunt spokeswoman: “[The Kurdish government has] provided all of the necessary processes to begin work and we were ready to go."
- WSJ: “A Shell spokeswoman said her company would only consider working in Iraq when living and working conditions in the country improve. A BP spokesman said the company would consider it only when the security and political situation stabilizes.”
- Oil Minister Al-Shahristani: "Any oil deal has no standing as far as the government of Iraq is concerned…All these contracts have to be approved by the Federal Authority before they are legal. This (contract) was not presented for approval. It has no standing."