Oil Report

Iraq's Kurdish region approves four new oil deals

ARBIL, Oct 3 (Reuters) - Iraq’s Kurdish regional government (KRG) has approved four new oil and gas deals that will attract around $500 million of investment in exploration, the KRG said in a statement on its Web site.

The semi-autonomous KRG has struck five production sharing agreements (PSAs) this year, despite objections from Baghdad. Iraq’s oil minister said last month that oil deals that the KRG had signed since February were illegal.

The KRG rejects Baghdad’s claims that the deals breach the country’s laws. The region’s government is in talks with a number of international and local companies for further upstream and downstream projects, it said in the statement.

The KRG said it signed a PSA with a subsidiary of Toronto-listed Heritage Oil and Gas HOC.TO for its Miran block. It signed another with a subsidiary of French oil exploration and production company Perenco for the Sindi/Amedi block.

Heritage signed a memorandum of understanding with the KRG for exploration in 2005 that analysts had expected to result in a PSA.

The KRG’s oil and gas council has approved two more deals with international companies that would be signed shortly, it said in the statement. The KRG did not give the names of the two companies.

Holders of the PSAs would take 15 percent of the profits, while 85 percent would go to Iraq, the KRG said. A deal signed with Hunt Oil in August was agreed on the same terms, the KRG said.

Iraq’s cabinet agreed a draft law for dividing the world’s third-largest oil reserves in February, but rows with the KRG as well as objections from some Shi’ite and Sunni Arab politicians have slowed its progress.

Frustrated by Baghdad’s delays, KRG approved its own oil law in August. It plans to boost production to 1 million barrels per day (bpd) in about five years from just a few thousand now.

The KRG oil and gas council has also approved projects to build two new 20,000 bpd refineries worth a total of around $300 million.

Heritage will build one in the Miran area. Toronto-listed Addax Petroleum AXC.TO and its Turkish partner Genel Enerji will build another in the Taq Taq oilfield area.

Addax holds a PSA with the KRG for the Taq Taq oilfield. It plans to submit a $1 billion field development plan for the field that could bring output to 200,000 bpd by 2010.