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Kurds in refinery talks with Canadian oil firms

BAGHDAD: Iraq's self-governing northern Kurdish region is negotiating with two Canadian firms on a joint venture to construct an oil refinery and continue work on a second one to boost its fledgling oil industry, its spokesman said yesterday.

But Kurdish officials are facing opposition from the central government in Baghdad, and a group of about 145 Sunni and Shi'ite legislators in parliament expressed their deep concerns against "any individual act" in Iraq's natural resources.

The Kurdish spokesman, Jamal Abdullah, said the contracts are legal and that no one has the authority to annul them.

"We are going forward to develop this sector to serve our people, and anyone who has any complaint should file it to the federal court," he said.

Iraq, the holder of the world's third-largest crude oil reserves with an estimated 115 billion barrels, aims to boost production to three million barrels per day by the end of the year. Parliament is currently considering an oil law to divvy up the country's oil and gas among Shi'ites, Sunnis and Kurds - one of the benchmarks sought by the US to achieve national reconciliation.

Abdullah said the two 20,000-barrel-per-day refineries will be located in Sulaimaniyah, one of three provinces that make up the Kurdistan regional government and about 260km northeast of Baghdad.

The first refinery, in the Bazian area, is scheduled to be completed by 2010 in a joint venture with Canada's Heritage Oil. The second refinery, to be located at the Taq Taq oilfield, would be constructed by Genel and Canada's Addax Petroleum and completed by early next year.

Abdullah was not able to confirm the cost of the contracts.

But another Kurdish official said the two projects would together cost about $300m.

To help finance the construction, he said the Kurdistan government would also offer four production-sharing contracts of $800m to other international oil companies.

Abdullah said Iraq's Industry Ministry was assigned in 2005 to construct the Bazian refinery but that work halted because of disputes between Kurdish authorities and the central government in Baghdad. He said the refinery was about 20-30 per cent complete.

The Kurds wanted the project to be financed by the Industry Ministry, but the central government wanted the funds to come out of Kurdistan's allocation in the federal budget.

"We've become hopeless with the central government," Abdullah said.

"In addition to that, its teams don't have the modern technologies and capabilities to handle such a project."

With the national oil and gas law stuck in dispute between the Kurds and Arab leaders over who has the final say in managing oil and gas fields, the Kurds have signed 15 production-sharing contracts with 20 international oil companies.



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