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Baghdad, KRG yet to agree deal on resuming northern oil output, exports

Iraq’s oil minister said he is optimistic a deal to resume oil exports can be reached with the Kurdistan Regional Government (KRG) in the coming days, but oil officials said more time is needed to resolve lingering issues with Baghdad and Erbil.

Hayan Abdel-Ghani said foreign companies’ production sharing contracts need to be studied further by the ministry to decide how to modify them to bring them into line with Iraqi law.

“We will return to Baghdad to study and analyse these contracts. God willing, we will reach an agreement in the coming days to resume export,” Abdel-Ghani told Erbil-based Rudaw TV.

“We are serious with our brothers in the region to resume production and export as quickly as possible,” he added.

The Iraqi oil minister’s statements on Tuesday indicate that meetings over the past two days between Baghdad, KRG and foreign companies working in the region have failed to reached a deal to resolve differences to resume oil exports.

The minister said on Sunday from Erbil he expected to reach a deal with the KRG and foreign oil companies to resume output from the Kurdish region’s oilfields within three days.

Differences over KRG contracts and debt repayments owed to oil companies in the region are the major obstacles delaying a final deal, a senior ministry official briefed on the Erbil meetings said.

“More time is needed to settle lingering financial and contractual issues and definitely we wont see oil exports flowing anytime soon,” the official said.

Hayan Abdel-Ghani told Rudaw that KRG production sharing contracts are “not acceptable”, saying he proposed to the KRG and foreign oil companies operating in Iraq’s semi-autonomous Kurdistan to change current contracts to profit-sharing ones.

Abdel-Ghani said the federal constitution precluded output sharing contracts in the region. “This is why we proposed changing the contract formula to profit-sharing contracts.”

The minister said recent contracts between the federal oil ministry and international energy companies following Iraq’s fifth oil and gas bidding rounds were “all based on a profit-sharing formula and not sharing production”.

“We agreed with the regional government to hold further meetings. We’re hopeful to reach solutions that satisfy everyone,” he said before returning to Baghdad on Tuesday.
Source: Reuters (Reporting by Ahmed Rasheed, Editing by Louise Heavens and David Evans)

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