Baghdad slams oil deal between Russia's Rosneft and Kurds

The Iraqi oil ministry reacted angrily on Thursday after Russian energy giant Rosneft signed a production sharing deal with the authorities in the autonomous Kurdish region without its approval.

The agreement came hot on the heels of Baghdad's recapture from Kurdish forces of five oil fields in disputed territory outside the autonomous region in retaliation for an independence vote last month.

"This department and the Iraqi federal government are the only two bodies with whom agreements should be reached for the development and investments in the energy sector," the ministry said in a statement, without mentioning Rosneft by name.

Oil Minister Jabbar al-Luaybi condemned the "irresponsible announcements coming from certain officials in Iraq or abroad, or from foreign companies about their intention to conclude deals with parties in Iraq without the federal government being aware."

"The federal government and the oil ministry are the only bodies responsible for developing oil and gas strategy and authorised to sign agreements with foreign countries and companies," he said.

Rosneft announced on Wednesday it had signed production sharing agreements for five oil blocks in Iraqi Kurdistan.

The state-controlled giant said it would pay up to $400 million (340 million euros) for 80 percent in the venture as part of the deal with the Kurdistan Regional Government, although up to half the sum could be paid in crude from the blocks.

Rosneft boss Igor Sechin on Thursday insisted that the company strictly followed the law and said that "if there are problems between the government of Iraq and Kurdistan then they need to solve the problems themselves."

"I am not a politician, my job is to produce oil," Sechin, a top ally of President Vladimir Putin, was quoted as saying by Russian news agencies.

A joint exploration programme and pilot production is to start next year. If successful, Rosneft said it would start full-field development of the blocks in 2021.

Recoverable oil reserves at the five blocks are around 670 million barrels, Rosneft said, calling the estimate "conservative".

Rosneft and Iraqi Kurdistan are already cooperating on crude purchases and sales, but the new deal "will allow us to talk about full-fledged entry of the company in one of the most promising regions" of the developing global energy market, Rosneft said.

Source: AFP