By United Press International
South Korea was granted the lead role in two northern Iraq oil projects and increased interest in six others, United Press International has confirmed.
The Korean National Oil Corp. has also pledged $2.1 billion in infrastructure projects in Iraq’s Kurdish region as part of the deal, but $1.5 billion will be withheld until oil exports begin.
Iraq’s central government has called most of the 20-plus oil deals signed by the Kurdistan Regional Government illegal and is pledging to confiscate any oil produced.
The KRG and KNOC have confirmed leaders signed a massive Implementation Agreement for Oil & Gas Infrastructure Projects Thursday in Seoul.
In exchange for the investment in electricity, water, road and other infrastructure — the remaining $1.5 billion will come from KNOC’s earnings from oil exports — KNOC was granted two production-sharing contracts.
The state-owned firm will have an 80-percent ownership of the Qush Tappa block PSC and 60-percent ownership of Sangaw South.
KNOC was also granted interest in existing production contracts: a 15-percent stake in each of Norbest Limited’s K15, K16 and K17 blocks; a 15-percent interest in block K21; and a 20-percent stake in Sterling Energy Ltd.’s Sangaw North block. It also was given 20 percent more of the Bazian block, of which KNOC is the lead company in a consortium that was granted a 60-percent stake last November.
The agreement was seven months in the making, when a memorandum of understanding was reached between the two sides. In June, contracts for oil stakes were agreed to, as well as an investment project. All of the details were negotiated since then and the deals made official Thursday.
Iraq Oil Minister Hussain al-Shahristani, in a June interview in his Baghdad office, told United Press International all but the four KRG contracts signed before February 2007 would be regarded as illegal.
“That oil will be confiscated; they have no right to work in that part of the country,” he said. “We’ll use a number of measures to stop any violation of Iraqi law. Those contracts have no standing with us, we don’t recognize them and they have no right to do that.”
A draft version of a new oil law for Iraq was approved in February 2007 by the Iraqi Cabinet but was scuttled after changes were made and interpretations varied.
KRG Prime Minister Nechirvan Barzani urged Baghdad to concentrate on passing the law instead of condemning the regional government’s contracts.
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Ben Lando, UPI Energy Editor