Nov 19, 2007

ARBIL, Iraq (AFP) - Despite a veto from Baghdad, Iraqi Kurds have signed contracts with foreign firms to exploit their huge oil reserves which they vow will benefit the whole country.

Strengthened by the autonomy enshrined in the Iraqi constitution, the Iraqi Kurdish authority launched a regional oil policy in August, signing deals with overseas companies, to first achieve self-sufficiency and later exportation.

The authority has signed 20 contracts during the last three months and shows no sign of changing course, despite threats from the federal government to blacklist companies trading with the Kurdish region.

"Iraq has more than 12 percent of the world's crude oil reserves, of which at least five percent is in our region," said Kiwan Siwaily, advisor to Kurdish oil minister Ashti Hawrami.

"The old Iraqi regimes since the 1920s didn't allow us to develop these resources. No student was allowed to study in the oil and gas sector," added Siwaily, just recently back from Germany with a degree in this field.

In the 1970s, gigantic oil fields were discovered in Iraqi Kurdish region but failed to be fully explored. They were never exploited during the reign of Saddam, hostile to the Kurds who resisted his authority.

Since the end of his regime in April 2003, the reserves attracted the attention of international oil sector representatives who travelled to the main city Arbil.

"To export, we have to talk to the central government. But for our domestic use, we don't have to ask anyone. It belongs to us. It's our country," said Siwaily.

"We're now producing 20,000 barrels a day. We need 100,000 for our domestic use alone. It's our oil, it's our right."

The federal parliament has been attempting to hammer out a deal regarding national oil policy and to negotiate the delicate issue of sharing resources between the regions.

The Shiite majority in the south and Kurdish majority in the north have plentiful oil reserves.

But the Sunnis in central Iraq have little oil and insist policy is centralised through Baghdad, an approach not shared by the Kurdish regional authorities but backed by Washington.

US authorities want the oil revenues to be shared equally among the 18 provinces of Iraq, especially the Sunnis in a bid to wipe out the Sunni-led insurgency against its troops.

Commenting on the oil contracts signed in Arbil on November 7, Hawrami said: "In Kurdistan, we are setting the example: this is only the first post-Saddam framework for oil investment in Iraq that follows the democratic, federal, and free-market principles mandated by the Iraqi constitution."

The Kurdish authorities are attempting to reassure Baghdad and the other communities that they are happy with rules that restrict them to retaining only the 17 percent of export earnings.

At the federal level, this figure of 17 percent is also the portion of the national budget granted to the Kurdish region.

"We know that if we want to export anything, we'll have to share: 17 percent for us only," said Siwaily. "We have no problem with that."

"They are still discussing this oil law at the federal level. It could take them another two or three years. We're not going to wait. We have lost enough time already.

"Here, we have enough oil and gas for all the Middle East. It's our oil, our country. You'll see, we don't need more than two or three years to develop everything and cover our domestic needs."

Among the contracts recently signed, is one for a gas collection and a refinery to supply the electricity stations, which experts says make the problem of regional power cuts a distant memory.