Iraq warns Turkey over 'illegal' Kurd oil exports

(MENAFN- Arab Times) Turkey must stop accepting "illegal" transfers of crude oil from the autonomous Kurdistan region of northern Iraq or risk damaging bilateral ties, government spokesman Ali Dabbagh warned on Sunday. His remarks were the latest sign of cooling ties between Ankara and Baghdad, as well as between the central government and the autonomous Kurdish region over oil exports. "Turkey must stop the unauthorised export of oil through its land," Dabbagh said in an e-mailed statement. "Exporting oil from the Kurdistan region to Turkey is illegal." He warned that Turkey was contributing to the "smuggling of Iraqi oil" and said: "This matter will affect relations between the two countries, especially economic relations, which will be damaged." Dabbagh added: "This oil and gas is the property of all Iraqis and it must be exported by, and its revenues go to, the federal government, which represents all Iraqis." Sending A Kurdish official said a week ago that Iraqi Kurdistan had begun sending oil produced in its three-province region out of Iraq without the express permission of the central government. "We started exporting limited quantities of crude oil to Turkey a few days ago," Seerwan Abubaqr, an adviser to the Kurdistan regional government's natural resources ministry, told AFP. He said the crude was being exported to Turkey so it could be refined into various products before being brought back to Iraqi Kurdistan. "If we need to, we will export oil to Iran," Abubaqr added. "We will continue exports of crude oil until the central government provides the region with oil products." "The central government has pushed us to do this." Kurdish officials say the central government has barred the dispatch of petroleum products to the northern region, but the oil ministry in Baghdad has persistently denied those allegations. Ties between Iraq and Turkey, which had been improving, have cooled considerably since December, particularly over Turkey's refusal to extradite Iraq's fugitive Vice President Tareq al-Hashemi, who is currently on trial in absentia on charges he ran a death squad. The extradition spat added to a deterioration of ties between the two countries, which summoned Ankara's envoy to Baghdad twice in a single month to complain over different incidents. And a dispute over oil between Baghdad and the Kurdish government in Arbil has also worsened, with Kurdistan looking to ramp up oil production and export capabilities, and the region has also cut off oil exports to Iraq in a payment row. Arbil has signed dozens of contracts with foreign oil firms aimed at boosting its oil sector. But the central government, which says all oil contracts must go through Baghdad and regards any that do not as illegal, has strenuously opposed such deals. Also: BAGHDAD: Iraq signed an initial gas exploration contract with Pakistan Petroleum on Sunday as part of its push to attract more foreign investment to develop its energy sector following years of war and sanctions. The contract gives the Pakistani company the right to explore gas block 8 in Diyala and Wasit provinces in eastern Iraq, as reported by Reuters last month. Iraq will also sign an initial contract with a consortium led by Kuwait Energy for oil block 9 on July 16 and a deal to explore oil block 10 will be signed with a group led by Russia's Lukoil on July 17. The OPEC member state is expected to be the world's biggest source of new oil supplies over the next few years. It plans to open up more rounds for oil and gas blocks for auction. Pakistan Petroleum, Kuwait Energy and Lukoil won their bids in May at Iraq's fourth energy auction, which had a poor showing because of tough contract terms drawn up by Baghdad. Iraq has offered foreign companies less attractive service agreements â€" where they are paid a fee â€" rather than production-sharing deals that allow them to profit jointly from the output. The country is slowly rebuilding nine years after the US-led invasion that toppled dictator Saddam Hussein. Officials say it needs foreign investment in virtually every sector to improve its infrastructure. Britain's Premier Oil PLC is teaming up with Russia's Bashneft to develop Iraq's oil block 12, an Iraqi oil official said on Sunday. Last month Iraq awarded Bashneft rights to develop the field. Bashneft has now chosen Premier Oil as a partner, Abdul-Mahdy al-Ameedi, head of the oil ministry's contracts and licensing directorate, told reporters. Bashneft will hold 70 percent and Premier Oil 30 percent in the project, he said. "If another partner entered, we would not object and we would welcome this on the condition that the partner is one of the qualified companies," he added. OPEC member Iraq holds the world's fourth largest oil reserves and is expected to be a major source of future oil supplies. In May, a group comprising Premier Oil, Bashneft and Petro Vietnam initially rejected a government offer to develop the block in Iraq's fourth energy bidding round. Baghdad has signed a series of contracts with foreign oil companies that target total oil production capacity of 12 million barrels per day (bpd) by 2017, up from about 3 million bpd. Most analysts see 6 million to 7 million bpd as a more realistic goal.