26 March 2012

Erbil, Kurdistan Region – Iraq (KRG.org) – Neither Iraq’s federal oil ministry nor state-owned oil companies have the right to unilaterally award contracts to develop currently producing fields in Kirkuk province or in other adjacent areas, Kurdistan Regional Government’s Ministry of Natural Resources said today. 

Management of oil and gas in Iraq does not fall under the exclusive powers of the federal government, the ministry said, adding, “Article 112 of Iraq’s Constitution states that the federal government and the regional and producing governorates shall together manage the present producing oil fields.” 

The term ‘present producing fields’ in article 112 means the fields already under production at the time Iraq’s permanent Constitution was approved in 2005. 

The ministry said, “However, article 115 provides the exclusive right to the regions and governorates to manage all future fields — that is, the undeveloped discoveries and unexplored structures.” 

It said the KRG agrees that “in both cases – that is, present and future fields – the net revenue derived from the exploitation of any of the oil and gas resources belongs to all Iraqi people and as such is required to be distributed in a fair manner in proportion to the population”. 

The Ministry of Natural Resources’ comments followed reports that the state-owned North Oil Company had signed or was about to sign a preliminary agreement with BP to increase production at the Kirkuk field. 

The ministry said that while it welcomes the experience and technical expertise that international oil companies can bring to mature fields such as the ones around Kirkuk, “the Constitution requires joint management with and the cooperation and approval of the producing governorates and regional governments in any management or policy decisions regarding the Kirkuk field”. 

So far, the KRG has not been consulted on this matter. 

The Kirkuk field comprises three main structures: Khurmala, Baba and Avana. 

The Khurmala structure lies in Erbil province; it was a non-producing field at the time of the Constitution. The ministry said, “Its management falls under the exclusive authority of the KRG and is currently being exploited for oil refining needs of the Region.” 

The producing Baba structure lies in Kirkuk province. “Both the governorate of Kirkuk and the KRG must also be present with the federal government in any discussions and agree over the Baba structure’s development,” the ministry said. 

The producing Avana structure lies within the district of Makhmour, whose administrative status is expected to change soon so that it rejoins Erbil province. “The appointment of IOCs and any operations undertaken by them in the Avana structure would thus need the cooperation and approval of the KRG,” the MNR said. 

“The Kurdistan Regional Government requires the federal Oil Ministry and the North Oil Company to respect the country’s Constitution and sit down soon with all the relevant parties to determine how best to enhance and revitalise the present Kirkuk fields, so that the people of Iraq will benefit from the extra revenues in a timely manner, as the Constitution obliges,” it added. 

“In the meantime, the KRG expects that IOCs refrain from any activities that may be in breach of the Constitution.”


As per KRG's agreement with the Iraqi government and under the 2015 Budget Law


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