BAGHDAD Jan 10 Iraq's Oil Ministry expressed
"deep regret and astonishment" on Friday over plans announced by
the autonomous Kurdish region to begin piping oil to Turkey
without central government approval.
The first crude has begun to flow and exports are expected
to start at the end of this month before rising in February and
March, the Kurdistan Regional Government (KRG) said on
The ministry in Baghdad expressed astonishment at the move
and described it as a "flagrant violation of the Iraqi
It also rebuked the Turkish government for allowing the
Iraqi-Turkish pipeline system to be used to pump and store crude
oil produced in Kurdistan without Baghdad's approval.
The ministry in a statement said the planned oil exports
breached a Dec. 25 agreement between the Iraqi government and
the KRG. That called for experts from both sides to discuss how
crude from Kurdistan could be exported under the auspices of
Iraq's State Organisation for the Marketing of Oil (SOMO).
Kurdistan's bid to sell oil and gas independently has
infuriated officials in the Iraqi capital as Baghdad has long
insisted that the central government retains sole authority over
managing Iraq's energy resources.
Iraq's constitution mandates that all Iraqi oil revenues go
through the central government in Baghdad, and the Kurds then
receive 17 percent, although they frequently complain that they
have received less than that.
The ministry on Friday threatened legal action against any
companies that trade in "smuggled" oil or gas from Kurdistan
without going through SOMO.
Companies that have taken the risk of exploring for oil in
Iraqi Kurdistan welcomed the KRG announcement as a signal they
might begin to generate export income from their investments,
despite Baghdad's objections.
"We've been waiting to read these words and hear these words
since 2007," said Todd Kozel, chief executive of Gulf Keystone
which has Kurdish government approval to exploit what it
says is one of the world's largest onshore exploration fields.
"It's music to any operator's ears in Kurdistan. It's the
monetisation of our assets," he told Reuters on Thursday.
Shares in several oil companies involved in Iraqi Kurdistan
rose on Thursday, including London-listed Genel Energy,
Norway's DNO, Hungary's MOL and Britain's
Petroceltic and Afren.
Iraqi Kurdistan has blossomed economically under self-rule
as the only part of Iraq to escape the violence unleashed after
the U.S. invasion that toppled Saddam Hussein in 2003.
Although the early flows are predicted to be modest, its oil
exports have the potential to redraw export routes across the