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Breaking News: Progress in KRG-Baghdad oil talks

TrinityeXchange

By TrinityeXchange,
in Iraq & Dinar Related News

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TrinityeXchange Newbie

TrinityeXchange

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i am hoping someone here has a paid subscription to Iraq Oil Report. i can't get to the rest of the article. this is very very good information!

Progress in KRG-Baghdad oil talks

Oil Minister Abdul Karim Luaibi. (BEN VAN HEUVELEN/Iraq Oil Report)

By BEN LANDO of Iraq Oil Report

Published September 13, 2012

Key officials from the central and Kurdish governments signed an agreement Thursday that will increase Kurdistan's exports and re-start Baghdad's payments to contractors, according to an official who was at the meeting.

"An agreement was made in principle to pay the entitlements" to the companies producing oil under contracts awarded by the Kurdistan Regional Government (KRG), said the official. "Certain steps will take place, to pay the entitlements in installments, and then for Kurdistan t...

Here is an article highlighting events that must have been a precursor to the agreement being reached. Could this mean a possible HCL is reached?! I'm trying to stay grounded here but it is very very difficult.

Iraq Kurds to Resolve Oil Issue

8:05 AM ET on Thursday, September 13, 2012

The Kurdistan Regional Government, or KRG, in northern Iraq is sending a delegation to the federal government in Baghdad to resolve issues relating to payments made to foreign contracting companies producing crude oil in the region, the KRG's prime minister said in a statement Thursday.

"A delegation from the Kurdistan region will travel to Baghdad shortly to discuss payment by the federal government to foreign contracting companies working in the oil sector in Kurdistan," Nichervan Barzani said.

The KRG suspended crude oil exports of nearly 100,000 barrels a day in April, protesting that Baghdad was delaying payment of $1.5 billion it gathered in revenues from those exports. It restarted them, however, on Aug. 7, in what it said was a "goodwill gesture," but said flows would halt if no payments were forthcoming by Aug. 31. It later extended its deadline to Sept.15.

"The central government needs to pay the due money to contracting companies," Mr. Barzani said.

The KRG last year received payments totaling $514 million to cover producing firms' past cost, but stopped supplying oil for exports in April this year citing a $1.5 billion backlog owed by Baghdad.

The central government said earlier this year that it was preparing to pay another $560 million this year to foreign oil companies in Kurdistan but it was waiting for the KRG to send documents to support the costs.

A federal oil ministry-led government committee has since raised the stakes by warning that in excess of $3 billion could be cut from the KRG's budget share over its failure to supply 175,000 barrels a day of oil for exports as agreed under Iraq's 2012 budget.

"The region rejects Baghdad's threats to cut part of KRG's share of the budget and use that as a pressure card against Kurdistan," Mr. Barzani said.

The central government and the KRG are at loggerheads over issues including Kurdistan's refusal to seek approval from Baghdad for oil contracts it has awarded to foreign firms, and over a swathe of disputed territory in northern Iraq.

Tensions between Baghdad and the KRG have risen since last year when U.S. energy giant Exxon Mobil Corp. (XOM) announced a deal with the KRG to explore for oil in Kurdistan. Recently companies such as Total SA (TOT), Chevron Corp. (CCX) and Gazprom Neft (GZPFY) have followed Exxon in defying Baghdad, and signed deals with the Kurds.

Write to Hassan Hafidh at hassan.hafidh@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

September 13, 2012 08:05 ET (12:05 GMT)

Copyright © 2012 Dow Jones & Company, Inc.

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amhvl
amhvl

Stryker sent me a text about an hour ago regarding a conversation with his translator. His translator told him he watched on Arab TV an announcement that the HCL had been agreed upon and is being sent

TrinityeXchange
TrinityeXchange

i am hoping someone here has a paid subscription to Iraq Oil Report. i can't get to the rest of the article. this is very very good information! Progress in KRG-Baghdad oil talks Oil Minister Abdu

easyrider
easyrider

Thanks and its what i have heard as well i dont think its coincidence neither. We can only hope they have finally agreed they need to move forward.

Bandit795 Contributor

Bandit795

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http://news.yahoo.com/iraq-kurdistan-end-oil-dispute-exports-continue-151704533.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=DTN+Iraq:

BAGHDAD (Reuters) - Iraq's central government and the country's autonomous Kurdistan agreed to end an oil payment dispute after Kurdistan pledged to continue exports and Baghdad said it would pay foreign companies working there, a senior Iraqi official said on Thursday.

The decision resolves part of a broader feud between Baghdad and Kurdistan about control over oil and territory that has involved major companies including Exxon Mobil , Chevron and Total .

Deputy Prime Minister Rosh Nuri al-Shawish, a Kurd who is part of the central government negotiating team, said Kurdistan would keep pumping its share of national oil exports, and Baghdad would pay foreign companies in the Kurdish region.

"The two delegations agreed to resolve all disagreements and pay the foreign oil companies working in Kurdistan based on the budget law," Shawish's office said in a statement.

"The two sides agreed to continuing oil exports from the region through the Iraqi oil pipeline and to work to increase production to 200,000 barrels per day as a first stage."

Current shipments from the Kurdistan region as part of national oil exports are around 120,000 bpd, though Baghdad says the agreed amount should be 175,000 bpd. The statement gave no details on when the increase to 200,000 bpd would occur.

Kurdistan in April halted shipments of its oil in protest over what it said were payments due from the central government to companies in the Kurdish region. It restarted shipments later, but said it would cut them off again by September 15 if there was no agreement on payment.

Baghdad and Kurdistan are still caught in a dispute over major oil companies like Exxon Mobil and Chevron who have agreed to sign exploration deals with the Kurdistan Regional Government, contracts the central government says are illegal.

Kurdistan, autonomous with its own regional authority and armed forces since 1991, gets central government funding and uses national pipelines to ship its oil. Baghdad says only the central government has the right to ship oil and gas produced in the country.

The Kurdish region has been looking for more energy autonomy. Already Kurdistan is shipping liquid fuel bi-products to Turkey in exchange for diesel and kerosene for the region's power plants.

A draft national oil law that aims to resolve the disputes over crude has been caught in political infighting for years, though both Baghdad and Kurdistan say that there is progress on reaching an agreement on that legislation.

Pressure is mounting on Kurdish PSCs as Iraq’s Cabinet approves Hydrocarbon Law

http://www.investorsiraq.com/showthread.php?226080-Iraq-Hydrocarbon-law-passed&p=1216733#post1216733

By: Shwan Zulal-The Iraqi Cabinet has finally approved the draft Hydrocarbon law and will soon be read in parliament. This latest development comes on the backdrop of another draft oil law, which was introduced by the Iraqi Parliamentary committee for energy pushed, by Iraqiya List and the Kurds.

Incumbent MPs walked out of parliament when the draft was supposed to have its first reading accusing the energy committee for not consulting with the government and calling the draft law weak and insubstantial. The first Hydrocarbon Bill surfaced in 2007 and due to political differences between the competing interests of the political factions and disputes over the legality of the Kurdish contracts, it was delayed since.

The parliamentary committee has always been calling for the enactment of a hydrocarbon law before holding any further hydrocarbon auctioning rounds. However, the Government has not made it its priority to try to push for the law and concentrated on developing the oil and gas sector with little progress. Commentators believe the law might be passed before the January auction. And the Iraqi government is adamant that the 4th round of auction should go ahead regardless of the enactment of the law.

This legal conundrum has created a tremendous amount of uncertainty for Kurdish Region and oil and gas companies operating there. Moreover, other companies operating in the south of the country feel vulnerable too as the Iraqi government does not yet appears to be consistent as some contracts has been renegotiation after nearly two years and deals Shell and Mitsubishi in the south of the country have been delayed.

The enactment of the Oil and gas law -either draft- may give some investors a sense of security and encourage other to come to the country, but unless the law is reached by political consensus and the parties involved willingly agree to adhere to it, the status quo does not change.

Kurdistan Region has been at the forefront of the parliamentary melee for the hydrocarbon law and along with the Iraqiya list have managed to push Al-Maliki’s government to speed up the introduction of government version of the hydrocarbon law. The main aim of the KRG is to make sure that the contracts they entered into stay in place and if they are revised, KRG officials will have a say.

Information coming out of the Wikileaks files suggests that the US state department has advised companies against investing in Kurdistan and especially in the oil sector due to the legality of the contracts. However, some companies have ignored the advice and could not resist what was on offer in Kurdistan. Hunt oil being one example, they bought into Dhok block despite such warning. Furthermore, more talk of potential takeover is emerging in Kurdistan as Tony Hayward, investment vehicle Vallares said to be in final stages of making an offer for Turkish Genel Energy and there has rumours of British listed GKP (Gulf Keystone Petroleum) being up for sale, although denied by the company. These activates can only be an indicator that interest in the region is on the up and investors are cottoning on to the fact that the KRG would not budge to Baghdad. It is also becoming apparent that KRG will make sure the PSCs it has awarded will be honoured as failing to do so make KRG irrelevant.

With the issue of the Kurdish oil contracts becoming the focus of the Iraqi lawmakers and Kurdistan region being shelled and bombed by both Iran and Turkey. The Iraqi government has acted with impunity and so far failed to defend its “citizens” in the north of the country. The Iraqi government’s lack of response could only confirm that Baghdad has very little to do with Kurdistan Region and the impasse between Baghdad and Erbil is ever greater. In recent weeks, the KRG have looked weaker and appeared to be losing authority, but Kurdish politicians including the President has come out fighting and condemned the attacks. The massage has been clear to everyone that the Kurdistan Region is here to stay and threatening behaviour from neighbouring countries will not dent her resolve.

Edited by Bandit795
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TrinityeXchange Newbie

TrinityeXchange

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Thanks TrinityXchange, this sounds very promising, I hope you're right about the HCL maybe being done.

i don't think it could be any planer than this. what are your thoughts?

"The two delegations agreed to resolve all disagreements and pay the foreign oil companies working in Kurdistan based on the budget law," Shawish's office said in a statement

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TonyDownTheShore Newbie

TonyDownTheShore

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i don't think it could be any planer than this. what are your thoughts?

"The two delegations agreed to resolve all disagreements and pay the foreign oil companies working in Kurdistan based on the budget law," Shawish's office said in a statement

By reading what you posted this can be nothing but good news, just to be able to say they agreed on something is a big deal, now to say they signed an agreement is great news that can only lead to more agreements and hopefully the end this standoff between the blocs, and finally get all the issues settled by the time Talabani returns, thanks again TrinityXchange.

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TrinityeXchange Newbie

TrinityeXchange

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Whoa!!! I've never seen you this way before... you're making me giddy!

i know. i am a pretty calm and reserved person. this news really has my goat. it is probably because my speculation (and this is just my opinion of which i cannot corroborate with policies, laws, agreements etc) is that the payment to the contractors comes out of the 2011 budget which is the same budget i believe funds our revaluation. purely speculative but i believe the payment to the contractors will open up the $0.86. we will see however...

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