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Iraqi Kurds sign seven new oil contracts

by Jay Deshmukh 39 minutes ago

Iraq's Kurdish region has defiantly signed seven new foreign oil deals in a move sure to anger Baghdad, which opposes the unilateral sell-off of crude blocks in the absence of a national oil law.

The autonomous Kurdish Regional Government (KRG) said in a statement posted on its website Wednesday that two production sharing contracts have been signed with OMV Petroleum Exploration, a wholly-owned subsidiary of Europe's OMV Aktiengesellschaft.

The deals relate to the Mala Omar and Shorish blocks in the province of Arbil, the statement said.

Separately, the Akre-Bijeel block in the Dohuk province has been awarded to Kalegran Ltd, a wholly-owned subsidiary of MOL Hungarian Oil and Gas Plc and Gulf Keystone Petroleum Ltd, a subsidiary of Britain's Gulf Keystone.

The Shaikan block, also in Dohuk, has been awarded to Gulf Keystone, Texas Keystone and Kalegran.

The Rovi and Sarta blocks were granted to India's Reliance Energy Ltd, it said, without specifying where the blocks are located.

Another block in Dohuk province has been awarded to a Western company, the statement said without giving any further details.

It added that four strategic blocks in Sulaimaniyah and Arbil provinces were granted to the Kurdistan Exploration and Production Company, a government-owned firm.

The regional administration said that 85 percent of the returns from the foreign deals would be for Iraq and the rest would go to the contractor.

The KRG's minister for natural resources Ashti Hawrami said with the signing of the latest contracts, 20 international oil companies are now working in the region.

"A further 24 blocks in the region are the subject of intense interest from international companies. There will be more announcements soon," he added.

The latest contracts bring to 15 the number of deals finalised by the regional government since it passed its own oil law in August.

The statement said the KRG has also inked a deal with a state company to set up an integrated oil refinery that can handle 50,000 barrels of crude a day, from the Khurmala oil field.

Hawrami said all these contracts will help the KRG achieve its goal of producing a million barrels of oil a day.

"This new level of exploration and production activity in the Kurdistan Region will also galvanise investment interest for the rest of Iraq once a transparent, investor-friendly and unambiguously constitutional oil and gas law for Iraq is in place," he added.

Prime Minister Nuri al-Maliki's government has urged the KRG not to sign any deals until the new national oil law is passed in parliament.

Oil minister Hussein Shahristani has previously said that all oil contracts signed before the passing of the oil law would be considered "illegal".

In September, the Kurdish government signed a contract with Texas-based Hunt Oil Company, the first major contract awarded by any Iraqi authority to a foreign company since UN sanctions were imposed on Iraq in 1990.

Shahristani had termed that contract "illegal", incurring the wrath of the Kurds who demanded his resignation.

The Iraqi hydrocarbons law is stalled before parliament due to bitter differences between warring political factions over the sharing of lucrative revenues from the crude, the third-largest proven reserves in the world.

The bill opens up the long state-dominated oil and gas sector to foreign investment and assures that receipts will be shared equally between Iraq's 18 provinces, a measure Washington regards as key to unite the rival communities.

Iraq's former elite Sunni Arab community fears it could be robbed of the oil wealth as the country's crude reserves are concentrated in the Kurdish north and Shiite south.

The Kurds say they have agreed to a revenue sharing deal with the Iraqi government under which only 17 percent of revenues from oil operations in their region will be retained by them, the rest being transferred to Baghdad.

Source: Yahoo

Oil Prices: It Gets Worse

By Vivienne Walt/PARIS

Oil prices hit a record high of $97 a barrel on Tuesday, but the next generation of consumers could look back on that price with envy. The dire predictions of a key report on international oil supplies released Wednesday suggest that oil prices could move irreversibly over the $100 a barrel threshold in the not too distant future, as the global economy faces a serious energy shortage.

This gloomy assessment comes from the International Energy Agency, the Paris-based organization representing the 26 rich, gas-guzzling member nations of the Organization for Economic Cooperation and Development (OECD). The agency is not known for alarmist warnings, and its World Energy Outlook is typically viewed by policy wonks as a solid indicator of global energy supplies. In a marked change from its traditionally bland, measured tones, the IEA's 2007 report says governments need to make urgent, bold decisions on energy policy, or risk massive environmental and energy-supply crises within two decades — crises and shortages that could spark serious global conflicts.

"I am sorry to say this, but we are headed toward really bad days," IEA chief economist Fatih Birol told TIME this week. "Lots of targets have been set but very little has been done. There is a lot of talk and no action." .

The reason for the IEA's alarm is its expectation that economic development will raise global energy demands by about 50% in a generation, from today's 85 million barrels a day to about 116 million barrels a day in 2030. Nearly half that increase in demand will come from just two countries — China and India, which are electrifying hundreds of cities and putting millions of new cars on their roads, most driven by people who once walked, or rode bicycles and buses. By 2030, those two countries will be responsible for two-thirds of the world's carbon gas emissions, which are the primary human activity causing global warming .

India and China have argued against enforcing strict emission controls in their countries, on the grounds that these could hinder their economic growth and prompt a global economic slowdown. But the new IEA report says working with China and India on alternative energy sources and curbing emissions is a matter of global urgency.

The bad news is not only environmental. As the world scrambles to boost energy supplies over the next two decades, an ever-greater percentage of its supplies of oil and gas will come from a dwindling number of countries, largely arrayed around the Persian Gulf, as the massive North Sea and Gulf of Mexico deposits are finally exhausted. That will leave the industrialized countries far more dependent on the volatile Middle East in 2030 than they are today, and the likes of Saudi Arabia, Kuwait and Iran will dictate terms to companies like ExxonMobil and Chevron, which increasingly operate as contractors to state-run oil companies in many producer nations.

"Most of the oil companies are going to be in an identity crisis, and need to redefine their business strategies," Birol says. The soul-searching may have already begun, as oil executives begin sounding the alarm about the supply crunch that lies ahead. Last week, Christophe de Margerie, CEO of the French oil giant Total, told the Financial Times that even the target of 100 million barrels a day is an optimistic one for an industry that currently produces 85 million — far short of the 116 million barrels a day the IEA projects will be needed by 2030 to fuel the global economy.

And in a sharp departure from the usually reassuring comments offered by Big Oil executives, De Margerie said companies and governments now realize that they have overestimated the amount of oil that could be extracted from places difficult to reach and costly to explore. "It is not my view, it is the industry view," he said. In other words, the message is that the current sky-high oil prices may not be a temporary burden on the world economy.

Forecasting prices, however, has become an increasingly inexact science for analysts, as prices in recent months have galloped ahead of their worst predictions. Says Oswald Clint, a London-based analyst for Sanford Bernstein: "A year ago, our predictions for November 2007 were about $50 to $62 dollars a barrel" — at least $35 short of Tuesday's price. The oil-research firm predicts that expanded production will bring oil prices back to $70 a barrel by 2010. But to Birol, that sounds optimistic.

"If you want to lower prices you have to slow down oil demand growth in China and India, use cars more efficiently, use biofuels, and also convince producing countries to pump more oil," says Birol. But he is uncertain any of that will happen. "I don't see the political will." Then again, nothing fuels political will like a soaring price at the gas pump.

Source: Time