Kurds signed nearly 20 production-sharing contracts

IRBIL, Iraq – Iraq's oil minister met with senior Kurdish officials Monday to discuss an oil contract dispute that has stoked tensions between the Shiite-dominated central government and the Kurdish self-rule regional government in the north.

The Kurds have signed nearly 20 production-sharing contracts with international oil companies after drafting their own oil and gas law in August 2007. A national oil law considered important for national reconciliation and foreign investment has been deadlocked in the national parliament.

Those contracts are considered invalid by Iraq's Oil Ministry, which has threatened to exclude and blacklist companies that sign deals with the Kurds.

The prime minister of the semiautonomous Kurdish region in northern Iraq, Nechirvan Barzani, declined to comment on the issue after the two-hour meeting with Oil Minister Hussain al-Shahristani. Barzani said more talks were needed.

The two sides did, however, agree to jointly operate the Khourmala oil field, south of the Kurdish city of Irbil, Barzani said.

The oil field was the site of a daylong standoff this summer when Kurdish security forces prevented an Oil Ministry team from working in the field, claiming the team had no right to operate inside the Kurdish region.

"There was a problem in the past regarding this field and we have solved it today," Barzani told reporters.

Iraq is seeking to attract international oil companies to provide desperately needed investment to help revitalize a nationwide infrastructure devastated by years of U.N. sanctions, Saddam Hussein's ruinous rule, sabotage and war.

Iraq also is suffering from a drop in oil prices. It has had to revise down the price of crude used to set its 2009 fiscal budget to $62.5 per barrel from $80. Oil revenues account for 90 percent of the government's budget.

Whether the Kurds have the right to independently sign contracts with foreign oil firms without approval from Baghdad is at the heart of a public and acrimonious dispute between Prime Minister Nouri al-Maliki and the Kurds.

Al-Maliki has criticized President Jalal Talabani, a Kurd, and his two deputies, saying they ignored his complaint about "constitutional violations" by the Kurdish regional government.

He cited the oil contracts, setting up Kurdish diplomatic representation offices in foreign capitals and offering to host U.S. military bases on its territory as among those violations.

Massoud Barzani, the nationalist president of the Kurdish region, also has complained that the creation of al-Maliki-backed tribal councils meant to support security forces in disputed areas, like the oil rich northern Kirkuk region claimed by the Kurds, was stoking the conflict.