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Kurds invite foreign companies to explore Iraqi constitution says each region will control future oil discoveries; Det Norske Oljeselskap found oil in north in December Scheherezade Faramarzi Associated Press Writer
Kurdish officials are inviting foreign oil companies to explore untapped reserves in their northern region, angering Arab countrymen and raising concern about chaos in Iraq’s oil industry.
Kurds, their self-ruled federation firmly enshrined in Iraq’s constitution, believe they are reclaiming their right to control northern oil fields after successive Iraqi regimes purged Kurds from the industry to bring it under exclusive Arab control.
Despite the Iraqi industry’s many problems — falling production, crumbling infrastructure and relentless insurgent attacks — the prospect of drilling in the world’s second-largest proven reserves has led eight small foreign companies to invest in Kurdish-ruled territory.
One of them, Det Norske Oljeselskap, or DNO, of Norway, struck oil in December, less than a month after starting to drill in Zakho near the Turkish border.
Major oil companies have so far shied away from Kurdistan until the new Iraqi parliament elected in December clarifies articles in the constitution on the control of oil, and until security improves.
The constitution stipulates that the federal and regional governments will share management of existing oil fields, as well as strategies for developing future areas and distributing the profits.
The document, however, also makes ambiguous references providing compensation for areas such as the Kurdish and Shiite regions that were “damaged” and “unjustly deprived” under Saddam Hussein.
The constitution, ratified in a referendum in October, defers a decision on the future of Kirkuk, the center of the northern oil fields, which Kurds want to be part of the Kurdish federation. Each region will control discoveries Because each region will control future oil discoveries in its own area, the Sunni minority, which lives in Iraq’s oil-poor center, may not benefit equally from the riches.
However, Western oil officials in northern Iraq say the entire country is floating on unexplored oil reserves, including the central regions.
Iraq is estimated to have 265 billion barrels of unproven reserves and 125 billion barrels of proven reserves.
Of those, an estimated 36 billion barrels are in northern Iraq. Less than 10 percent of the region has been explored, according to Heritage Oil, one of the eight foreign companies carrying out studies in Kurdistan.
Iraq is also estimated to have 100 trillion cubic feet of natural gas.
“Saddam regarded the oil in Kurdistan as his personal property,” said Delshad Abdul-Rahman Mohammed, head of the Oil Projects in the Kurdish regional government of Sulaimaniyah.
“Kurdistan’s share of the profits was the money Saddam received to buy chemical weapons to decimate the Kurdish people.”
Kurdish officials in both Sulaimaniyah and Irbil insist that they will share the oil wealth with the rest of the country and that agreements made with foreign companies are made in coordination with the central government in Baghdad.
“This oil belongs to all Iraqis. Profits from the oil don’t only go into the pockets of Kurdistan,” said Mohammed.
He said oil companies signed a memorandum of understanding with the Kurdish regional governments and the central government “so that the regional government will not have any problems in the future.”
In addition to DNO, oil companies exploring in Kurdistan include Petoil and General Energy Corp., both of Turkey; Woodside of Australia; and Canadian companies Western Oilsands Inc. and Heritage Oil Corp., which has formed a joint venture with Eagle Group of Iraq, based in northern Iraq. Western experts predict friction Western oil experts predict friction between the Kurdish regions and the central government on future oil explorations, but according to Western oil company officials, it’s a risk worth taking.
Iraqi oil experts are not as confident.
“Without a central unified policy it is expected that disharmony and competition ... would be the rule of the day, a situation which is in contrast to that of a unified federated country, and which shall have serious consequences for technical reasons,” said oil consultant Tariq Shafiq in a report.
Iraqi and Western oil experts say Kurds lack technical and managerial skills needed to go it alone. They say officials in the ministry of natural resources in the new Kurdistan regional government are inexperienced in the oil business.
But Kurdish officials are not apologetic and blame the previous regimes for purging the oil industry of Kurdish talent and skills, especially in Kirkuk, and replacing them with mostly Arabs.
“We can buy trained men,” said Mohammed. “Saddam’s ethnic cleansing policy against Kurds drained the region of its best qualified men. There are scores of educated Kurds who currently work with international companies and who can help us.”
The region, he added, will also seek the help of Iraqi Arabs in the field.
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