UPDATE 1-Iraq says Kurdish contracts not legal

CAIRO Fri Nov 28, 2008 3:45pm EST

CAIRO Nov 28 (Reuters) - Oil contracts signed by the Kurdish regional government (KRG) with foreign oil companies are not recognised by central government in Baghdad, Iraqi Oil Minister Hussain Shahristani said on Friday.

The comments come despite an initial agreement on Thursday between the central Iraqi oil ministry and the largely autonomous Kurdish authorities to allow exports from Kurdistan to Turkey.

Norwegian oil company DNO (DNO.OL) has a concession with the KRG from which it hopes to start exports of 100,000 barrels daily in the first quarter of next year.

But Shahristani said the revenues from oil produced anywhere in Iraq belonged to central government for redistribution around the country.

"Those contracts have not been reviewed by the ministry of oil and have not been recognised by the federal government," he told reporters in Cairo.

"The decision is that any oil that is produced in any part of the country has to be handed over to the federal government and the ministry of oil will export it. The revenues will go to the central budget for distribution inside the country."

Shahristani was speaking to reporters before a Saturday OPEC meeting.

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