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New Articles

Wednesday, 07 January, 2009, 22:40 GMT | more >>

Iraqi Kurds agree on oil revenue sharing

By Upstream staff

Kurdish officials said today they had reached agreement with the central government on equitably sharing revenues from Iraq's oilfields but that negotiations would continue on other disputed clauses.

Earlier, Iraqi Oil Ministry spokesman Asim Jihad said all the areas of dispute in a landmark draft oil law had been resolved and the bill had been submitted to parliament.

The draft, crucial to regulating how wealth from Iraq's huge reserves will be shared by its sectarian and ethnic groups, was approved by the cabinet in February but faced stiff opposition from Kurds, who felt they were getting a bad deal.

Most oil reserves in Iraq are in the Kurdish north and Shi'ite south.

Khalid Saleh, spokesman for the Kurdistan regional government, said agreement had been reached yesterday on a revenue-sharing mechanism, Reuters reported.

Under the deal, the Kurdistan region will take 17% of all oil revenue from Iraq. The money will be deposited into a Kurdistan regional account in the central bank.

"This deal is a big victory for the political process in Iraq," Saleh told Reuters.

But, he said the annexes in the draft had not yet been discussed.

The Kurds say the annexes are unconstitutional because they wrest oilfields from regional governments and place them under a new state oil company.

They also cover control over discovered and undiscovered oilfields and who would have the power to negotiate contracts with international oil companies.

Washington has been pressing Iraq's leaders to speed up passage of the oil law and other measures it views as crucial to spurring national reconciliation and ending sectarian violence between majority Shi'ites and minority Sunni Arabs.

Iraq sits on the world's third-largest oil reserves and officials have been struggling since last year to finalise the draft law, which is vital for Iraq to attract investment from foreign companies to boost its oil output and rebuild its economy.

The latest disputes broke out not long after the oil ministry in Baghdad warned regions in late April against signing contracts until the law was passed. The Kurdistan regional government has signed several agreements with foreign companies.