KRG Ministry of Natural Resources

10 April 2011 

Statement by Prime Minister Salih, 
Kurdistan Regional Government, 
following Federal Finance Minister’s visit to Erbil 

Today the Kurdistan Regional Government (KRG) Prime Minister Barham Salih, following the visit to Erbil of Iraqi Federal Finance Minister Rafie al-Issawi, welcomed the new efforts made by all parties in the federal government on Iraq’s planned oil and gas legislation. 

“We have had excellent discussions with Finance Minister al-Issawi,” said Prime Minister Salih. “The formation of the new government in Baghdad under the premiership of Dr Maliki has clearly been an opportunity to address these important oil and gas issues. The planned legislation will address oil and gas revenue distribution policy and improved oil exports.” 

Federal legislation 

Prime Minister Salih confirmed that the KRG has received from the federal government proposed drafts of an Iraqi National Oil Company (INOC) law and a revenue sharing law from Baghdad for the KRG’s review. 

On the progress made on the advancement of much needed federal legislation, Prime Minister Salih stated, “It is essential that all the inter-related laws of the INOC, Federal Hydrocarbon Law and the Ministry of Oil Restructuring Law are presented to the Parliament as a package to ensure consistency and to avoid further delays.” 

On cooperation with Baghdad, Prime Minister Salih said, “The KRG believes that close cooperation on oil and gas strategy and export policies is vital to the security and well-being of the people of Iraq.” 

He added, “The KRG Ministry of Natural Resources has accepted an invitation to support the advisory office of the federal Prime Minister and its international consultants on an integrated energy strategy for all of Iraq.” 

KRG oil export and contractor payments 

Oil exported from newly discovered fields in the Kurdistan Region is currently being marketed by the federal government’s State Oil Marketing Organisation (SOMO), with a percentage of the revenues to be allocated to the contractors via the KRG, according to the recent agreement between Erbil and Baghdad. 

Prime Minister Salih stated, “The federal government had previously committed itself to the payment of KRG oil contractors. These contractors are now adding significant volumes to Iraq’s oil exports.” 

“Under the management of the KRG Ministry of Natural Resources and the leadership of our Minister Dr Ashti Hawrami, we are now exporting via Turkey significantly more than 100,000 barrels of oil per day. That volume is increasing day by day,” Prime Minister Salih said. 

He added, “The KRG has today presented its first oil export statement to the federal Finance Ministry for over five million barrels of oil delivered to SOMO since the commencement of export earlier this year. The KRG expects to receive from Baghdad its first payment for the Kurdistan Region contractors, as previously agreed with Prime Minister Maliki.” 

Export of federal oil and gas through the Kurdistan Region 

Last week, Iraqi and Turkish officials announced details of plans for oil from the southern Iraqi provinces to be transported to Turkey and Europe. 

Prime Minister Salih said he welcomed the recent discussions between Turkish authorities and the federal government on the transportation of oil and gas from the southern Iraqi governorates to Turkey, via Zakho in the Kurdistan Region. 

“I am encouraged by news that the federal government is engaged in active discussions with the government of Turkey in respect of export of crude oil and gas,” he said, adding, “The KRG, in its role as the oil and gas aggregator within Kurdistan Region, is ready to discuss all options with the federal government, including full cooperation on construction of new pipelines and facilities for export of oil and gas to Turkey and Europe.” 

KRG oil and gas domestic and export policy 

Prime Minister Salih emphasised that KRG policy is, under its powers set out in the 2005 federal Constitution, to manage production of oil and gas from new fields located wholly in the Kurdistan Region to generate export revenue for all of Iraq. 

“That derived export revenue will be shared throughout Iraq in accordance with federal revenue sharing principles set out in the Iraqi Constitution," said Prime Minister Salih. 

On oil and gas activities in areas adjacent to the Kurdistan Region, Prime Minister Salih said, “It is the KRG policy to ensure that oil and gas and electricity generation requirements are kept entirely separate from the resolution of boundary matters.” 

He continued, “The KRG has agreed to assist with the reinstatement of electricity import from Turkey to Mosul governorate, and it is our policy to cooperate with all neighbouring Iraqi provinces to minimize gas flaring and to utilise the available proven natural gas reserves in these areas to solve the chronic power generation problems of Kirkuk, Mosul and Salahaddin.” 

He added, “Our policy of domestic use of oil and gas in these areas is the same as the oil and gas utilisation policy originally set out by the federal authorities.”