The Failure Game Of Iraqi Oil

Baghdad finally allows exports from new Kurdish fields, but until it improves contract terms for foreign companies, its energy crisis will continue.

Sitting on some of the largest and most unexploited oil reserves in the world, embattled Iraq continues to reel from falling production and the delay in passing a national hydrocarbons law.
But at the second Iraq Oil and Gas Summit here Wednesday, petroleum industry investors were buzzing about the announcement that the Oil Ministry in Baghdad and the government of the Kurdish territory in northern Iraq had put aside their animosity and struck a deal to export 100,000 barrels of crude oil a day from the first new fields to be drilled and developed since the fall of Saddam Hussein.

The oil will come from the Tawke field, developed by Norwegian company DNO, and the Taq Taq field, drilled by Swiss-Canadian Addax Petroleum. The Oil Ministry still considers the contracts signed between the Kurds and those companies to be illegal because they weren’t negotiated through the ministry. For years Baghdad has refused to grant the companies an export license for the high-quality crude.

Why the change in heart? “The need for development and security in Iraq cannot be met on the current production,” Ibrahim al-Oloum, Iraq’s former oil minister, told a crowd of 200 people at the summit. With oil royalties footing most of the federal budget, each day the country doesn’t tap into its production potential, he says, “the Iraqi people pay the price.”

Forbes