BAGHDAD (AFP) — Iraq’s oil ministry has declared all crude contracts signed by the Kurdish regional authorities with foreign companies null and void, a government official said on Saturday.
“The ministry has nullified all contracts signed by the Kurdistan Regional Government,” the official told AFP, asking not to be named. “They will not be recognised.”
The government in Iraq’s northern autonomous Kurdish region has signed 15 exploration and exportation contracts with 20 international companies since it passed its own oil law in August, infuriating the Baghdad government.
Oil Minister Hussein Shahristani has in recent weeks angrily denounced the Kurdish authorities for signing the contracts before the national parliament approves a new oil and gas law, declaring them “illegal”.
The government official said the minister had now gone further and nullified all the contracts and had warned the foreign companies involved that they would be blacklisted.
“Minister Shahristani had warned companies who sign contracts without taking the advice of the oil ministry that the ministry would … blacklist them from any future deals with Iraq,” the government official said.
“The minister had told them the oil ministry in Baghdad is the only institution authorised to sign oil contracts before the approval of the oil law.”
Shahristani told Monte Carlo radio on Friday that countries neighbouring Iraq would prevent the Kurdish authorities from exporting oil.
“There is an understanding between Tehran, Ankara, Damascus and Baghdad,” he said.
“The Iraqi government had warned these companies of the consequences of entering into these contracts,” the minister added. “And the consequence is that Iraq will not allow these companies to extract the oil.”
The Kurdish authorities reacted sharply on Saturday, saying Shahristani should take the matter to the federal tribunal which deals with disputes between the provinces and the central government.
“The Kurdistan Regional Government (KRG) signed contracts according to laws passed by the Kurdistan provincial parliament which comply with the Iraqi constitution,” said a statement on the KRG website.
“The KRG considers that the minister is exceeding his authority in making these statements,” it added. “His statements will not affect our contracts with foreign companies.”
It said his comments were reminiscent of the Arab chauvinism of Saddam Hussein’s regime.
“We are sorry to hear such statements, which are close to Baathist ones,” it said, referring to the Baath party of the ousted dictator.
Regarding the minister’s comments on preventing oil being exported, the statement said: “Who said we are exporting oil? We said we signed oil contracts to explore and produce oil — we know that there must agreement with the federal government on the issue of exporting oil.”
The regional government says the contracts will benefit all Iraqis as 85 percent of the returns from the deals would be for Iraq and the rest would go to the contractor.
Iraq’s oil and gas bill is stalled in the national parliament amid bitter differences between rival factions.
When approved, the new law will open up Iraq’s long state-dominated oil and gas sector to foreign investment.
It will also stipulate that receipts be shared equally between Iraq’s 18 provinces, a key concern for the Sunni Arab minority that Washington says has fuelled the anti-American insurgency.
Iraq’s oil reserves — the world’s third largest — lie in the Kurdish north and Shiite south and the Sunnis fear the two communities could monopolise future income.