DEFYING BAGHDAD, KURDS SIGN MORE OIL DEALS

You might call this defiance. Or you might call it “accommodation without reconciliation:”

“…Michael Gordon, The Times’s top military expert, whose history of the Iraq war, “Cobra II,” is one of the best books on the subject, said the phrase circulating in the military lately to describe the situation evolving in Iraq is “accommodation without reconciliation.” The various parties basically accept the new imbalance of power — Shiites on top, but allowing the Kurds and Sunnis to have a share — and the political struggle continues with lower levels of violence…”
…Tom Friedman, November 21, 2007 (NY Times)

Maybe somebody should go ask George Orwell what to call it.

KRG signs five more PSCs for northern Iraq
November 13, 2007 (Oil & Gas Journal)
and
Reliance-Kurdish Region deals run into trouble
Shirish Nadkarni, November 20, 2007 (Oil & Gas Journal)

WHO
Kurdistan Regional Government (KRG),

Only part of Iraq's oil wealth is in the north. But there's enough to make it worth a fight. (click to enlarge)

WHAT
The KRG has signed five more production-sharing contracts (PSC) approved by its Regional Oil and Gas Council.

WHEN
These contracts are all in violation of the central Baghdad government’s admonition not to finalize oil development deals until its oil law has been written and passed by the Iraqi Parliament. The central government has threatened to ban companies who sign deals with the KRG from activity in the rest of Iraq.

WHERE
The PSCs cover areas near Irbil, Al-Sulaymaniyah, and Dahuk in northern Iraq.

WHY
- The 5 new PSCs are with (1) TNK-BP affiliate Norbest Ltd.; (2 & 3) subsidiaries of Sterling Energy LLC and Aspect Energy LLC of Denver; (4) a Korean consortium headed by Korea National Oil Co.; and (5) HKN Energy, an affiliate of Hillwood International Energy, Dallas.
- Another was recently signed with India's Reliance Industries Ltd. (RIL).
The U.S. State Department has described the KRG’s oil deals as “not helpful” in the absence of action from the federal government in Baghdad.
- The core of the dispute is over ownership and oil rights in the rich oil regions around Kirkuk and Mosul where even under Saddam there was tension between the Kurds and Baghdad.
- The oil companies signing PSCs with the KRG are expected to face legal and political complications.

There has been no substantial exploration for oil in Iraq since before the Iraq-Iran war in the 1980s so there are only estimates of the country's oil wealth. They range from enormous to gargantuan. (click to enlarge)

QUOTES
- Ashti Hawrami, Minister for Natural Resources, KRG: "In Kurdistan, we are setting an example: This is the first post-Saddam framework for oil investment in Iraq which follows the democratic, federal, and free market principles mandated by the Iraq constitution."
- Hussain Al-Shahristani, Iraqi Oil Minister: "Those companies that have signed contracts with the autonomous Kurdish Regional Government have been warned that they will not be allowed to export oil from these blocks…In addition, they may also compromise their chances on future exploration and production contracts. These contracts have no standing with the Iraqi government."