Iraqi oil minister "can cancel contracts signed with Kurds"

Nov 24, 2007, 15:02 GMT

Baghdad - Iraqi Oil Minister Hussein al-Shahristani has the authority to cancel contracts that oil companies signed with the government of the Kurdish autonomous region as long as the controversial oil bill is not passed, an 'informed' ministerial source was quoted Saturday as saying.

'The Ministry of Oil is responsible for managing the oil department until the issuance of the new oil law and therefore has the right to cancel any contract that it deems illegal,' the source, who spoke on condition of anonymity, told Voices of Iraq news agency.

The Kurdish region has been signing contracts ahead of a parliamentary debate over the controversial draft oil and gas law.

Kurds vie for independence as Sunni Arabs, who became accustomed to controlling Iraq's natural resources under Saddam Hussein's regime, are strongly opposed to a decentralized oil sector.

Different sects remain divided over some clauses of the law. However, amid conflicts, the parliament of the Kurdish autonomous region, which is home to Iraq's largest oilfields, had already passed its own oil law in August.

The region has been contesting the authority of the central government in Baghdad that wants to seal oil deals on behalf of the provinces. Kurds argue that Iraq is a federal state, hence its provinces should have the right to seal their own deals.

'Iraq's oil wealth is for all Iraqis, as stipulated in the Iraqi constitution,' Saturday's source said, adding that 'there is nothing personal' between al-Shahristani and the regional government.

In an interview with Monte Carlo Radio on Friday, Iraq's oil minister had reportedly 'cancelled' the regional government's contracts with oil companies. He also accused the Kurds of stalling the passage of the oil and gas law.

The minister had separately told local press that oil companies that have contracts without the prior approval of Iraq's central government would be prohibited from practising their activities in Iraq, according to the local agency.

Early October, Iraq's Kurdish autonomous region has signed two new contracts for oil exploration and investment with foreign firms bringing the number of signed contracts so far to 15, according to government reports.

The self-governing region's Oil Minister Ashti Hurami had said that the new projects would bring in foreign investments to Iraq as a whole. But still this did not prevent al-Shahristani from describing one of the latest contracts as 'illegal.'

Iraq has an estimated 115 billion barrels of proven oil reserves - the third largest in the world after Saudi Arabia and Iran.