KurdistanObserver.com

Chalabi: Kurds Must Work With Baghdad On Oil Deals

LONDON, Feb 24, (Dow Jones)--Iraq's Deputy Prime Minister Ahmad Chalabi reiterated Friday that oil deals cut between companies and provinces such as Kurdistan need to be co-ordinated and approved by the Baghdad government.

In a statement sent to Dow Jones Newswires, Chalabi said, "The regions and provinces, including the Iraqi Kurdistan region, can negotiate contracts with other parties, in coordination and consultation with the federal government for the benefit of all the Iraqi people."

His remarks follow news that Norwegian oil company Det Norske OljeselskapDNO ASA (DNO.NS) will continue drilling operations in Iraq's Kurdistan region in the north.

DNO Managing Director Helge Eide told Dow Jones Newswires earlier this month that drilling that began in November would continue, and that contact with the central government over the matter would be handled by the Kurdistan Regional Government.

The KRG has already signed production sharing agreements with companies including Turkey's PetOil and General Energy and Australia's Woodside Petroleum (WPL.AU). It has also signed a memorandum of understanding for a field study and further negotiations towards a PSA with Heritage Oil.

But Chalabi said Iraq's oil policy is shaped by its constitution, which states that "oil and gas in Iraq are the property of all the Iraqi people in all the regions and provinces."

It also states that "the producing regions and provinces jointly with the federal government will draft strategic policies for the development of the oil and gas wealth to achieve the highest benefit for the Iraqi people," Chalabi added.

Therefore, "any such negotiations should be conducted in a framework of openness and transparency in accordance with the Constitution and the laws of Iraq," he said.