Kurds contribute oil exports for the benefit of Iraq

June 1, 5:17 PMDallas Oil and Gas ExaminerAlisa Martin

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Kurdish president Massud Barzani, right, and Iraqi President Jalal
Talabani open a ceremonial valve during an event to celebrate the start of
oil exports from the autonomous region of Kurdistan, in the northern
Kurdish city of Erbil today. Iraq's self-ruled Kurdish region began
exporting oil for the first time on Monday, shipping crude through a
pipeline to Turkey. (AP Photo/Safin Hamed)

Today the symbolic valve was pulled 'round to the "on" position, to release 90,000 to 100,000 barrels per day  of crude oil for export from the Kurdistan region of northern Iraq. In a double-first, this is the first time foreign oil companies have been allowed to produce oil for export from Iraq in more than 30 years.

The northern Kurdish region is thought to have about half of Iraq's 115 billion barrels of proven oil. Its development, oil industry and otherwise, has been hindered by violence, repression and chemical weapon-genocide by the previous Ba'ath regime.

After the 2003 U.S. invasion, the new Iraqi government  has struggled to agree on a federal hydrocarbon law -- save a proportional budgetary revenue-sharing arrangement, which finally allowed this day to proceed -- and fear that the Kurds would use their oil wealth for nationalistic purposes.

Foreign firms involved in northern Iraq include Norwegian oil company DNO, Swiss-Canadian Addax, and Turkey's Genel Enerji. These were the first Western companies to develop fields and export oil from Iraq since 1972, when the country's industry was nationalized.

While political will has established that the Kurdish region will receive 17 percent of proceeds from a central government account, and how the oil will be transported to and through an Iraqi pipeline to Turkey, the issue of how the international companies will be compensated is pending.

"If this issue is not resolved soon, then it would have an impact on our investment [in the region], said Helge Eide, DNO chief executive, according to AP reporting today from the official government ceremony in Erbil, Kurdistan region, Iraq.