MADRID (AFP) — The minister of natural resources of Iraqi Kurdistan criticised the plans of the Iraqi government to award service contracts to foreign oil companies, in an interview published on Tuesday.
The central Iraqi government had been expected to sign interim service contracts on Monday but failed to strike an agreement. It said it planned to sign other long-term consultancy deals for six oil blocks next year.
The deals on offer were "likely to fail. We don't encourage these contracts," Natural Resources Minister of the Kurdistan Regional Government Ashti Hawrami told the daily newsletter of the World Petroleum Congress here.
In the past year, the autonomous Kurdish government has angered Baghdad by finalising its own energy law and signing production-sharing contracts with global oil majors despite the absence of national oil legislation.
The contracts on offer from the central government are for only technical advice and consulting services and Oil Minister Hussein al-Shahristani said foreign groups would not get a share of the oil.
"Since when did the majors become consultants?" asked Hawrami, who told the WPC News newsletter that the contracts on offer were "lousy".
Furthermore, they would not be approved by parliament and would fail to result in the increase in oil production hoped for by Iraqis.
"Anyone sensible will not sign. If you don't have a legal framework it will end in tears," he said.
Political infighting over how oil revenues should be shared in Iraq has slowed the process of rebuilding Iraq's oil industry, which has been shattered by UN sanctions and war.
Crucially, the passing of a hydrocarbon law that aims to govern profit-sharing as well as foreign agreements has yet to be passed by the nation's parliament.
The head of British-Dutch oil company Shell said Monday that he hoped to sign a deal with Baghdad in the next few weeks.
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