KRG Ministry of Natural Resources

London, UK (KRG.org) – At a major Kurdistan oil and gas conference in London yesterday, senior government representatives and companies pledged their continued support and partnership with the Kurdistan Region and Iraq as they face economic and security challenges.

Prime Minister Barzani sent a message to the conference, which was read by the former UK ambassador Sir Jeremy Greenstock. The Prime Minister conveyed that the Kurdistan Region faces three enormous challenges: The threat of ISIS which is being repelled by the Peshmerga; the influx of 1.25 million IDPs, in addition to close to a million Syrian refugees; and the budget embargo that was made by the previous government in Baghdad in January 2014. 

Following the recent agreement with Iraq on 250,000 barrels per day of oil export by the KRG via SOMO in exchange for a budget payment, Mr Barzani hoped that Prime Minister Haider Al-Abadi has set a new era of relations with Kurdistan. The Kurdistan Region’s relationship with Turkey is very solid and strategic, the prime minister said, adding that the KRG will improve relations with its Eastern neighbour Iran. He thanked the oil companies for trusting in the Kurdistan Region and for paving the way for its brighter future. 

Dr Ashti Hawrami, the Minister for Natural Resources, said that from 2015 the KRG will be a net contributor to the Iraqi budget. He said, “We will work hand in hand with the Iraqi government in 2015 to make the budget successful.”

Minister Hawrami said that stage one of the agreement with Baghdad is not only the oil export but also for the KRG to upgrade the infrastructure for stranded oil in Kirkuk. He said, “I believe we have a real chance of the new chapter with Iraq succeeding.”

The second stage of negotiations have yet to take place, which are on the right to export oil, the right to the full 17% share of the budget, revenue sharing, settling the dues owed to the KRG, and removing the threat of budget cuts. The natural resources minister said that for the KRG, however, the right to export oil is a red line because it is a Constitutional right. 

The collapse of the oil price is a fourth new challenge, Minister Hawrami said, but he expects it to stabilise in the mid to long term.  

Minister Hawrami said that nothing is earmarked in the Iraqi budget for payments to Kurdistan oil producers, so until an agreement is reached with Baghdad, the KRG will have some limited capacity to pay producers’ ongoing costs and later the old costs.

Regarding gas in Kurdistan, he said “We will take the gas back from the production companies and process it ourselves, as we agreed with Genel Energy and their partners. After meeting our domestic needs, by late 2107 the surplus will be provided to Turkey and on to Europe from there. “

The Rt Hon Matthew Hancock, the UK’s Minister of State for Energy, said, “We remain committed to strong relations with the KRG in the economic, education and cultural fields. Since June 2014 several UK ministers have visited Erbil to offer our support.”

He added, “We applaud...in particular the agreement between Iraq and the KRG which required flexibility. This deal will pave the way for a conducive political environment but will also bring enhanced economic benefits.”

Dr Rowsch Nouri Shaways, Deputy Prime Minister of Iraq, described the oil financial agreement as a win-win situation. He said, “Driven by the goal of finalising the 2015 budget, despite time constraints it guarantees future revenue-sharing. It increases by 550,000 barrels per day Iraq’s production through oil from the KRG and from Kirkuk, it recognises the KRG oil policy and uses the pipeline passing through KRG territory. The agreement puts Iraq on a path to a more stable and prosperous future.”

The UK’s Ambassador to Iraq, Frank Baker, said that he has seen business confidence and optimism returning to the region after a difficult period. The UK needs to support the leadership of Iraq and the KRG to cope with political and security challenges, and strengthen and divert the economy away from reliance on oil and gas.

The senior oil company representatives speaking at the conference expressed their commitment to the Kurdistan Region. Chevron’s Vice President, Ian McDonald, said that the oil price hasn’t changed his company’s view, as Chevron invests for the long term and price volatility is a fact of life.

Mehmet Sepil, Genel Energy’s President, said that he believes Kurdistan will be able to sustain growth in production, even though it may slow down for some time. Bijan Mossavar-Rahmani, the Executive Chairman of DNO, said that one of the attractions of Kurdistan is that it has a parliament, a democratic system, and a civil society. 

Also speaking at the conference are KRG Finance Minister Rebaz Hamlan, Minister Falah Mustafa Bakir, the KRG’s Head of the Department of Foreign Relations, former US Ambassador Zalmay Khalilzad, and German MP Philipp Missfelder.

Also attending were KRG Ministers Amanj Ahmad Rahim and Mawloud Muhayaldin, MPs from the Kurdistan Parliament’s oil and gas committee including its head, Mr Sherko Jawdat Mustafa, and Member of the Iraqi Parliament Arez Abdulla, who heads the oil and gas committee in the federal parliament in Baghdad.

The two-day Kurdistan-Iraq Oil and Gas conference and exhibition is in its fourth year and is organised by the CWC Group.  It was attended by over 550 delegates.