Kurds Will Suspend All Oil Exports

As reported before, after the Kurd’s row with the Norwegian oil company DNO blew up in their faces over a secret stock purchase from 2008, the Kurdistan Regional Government (KRG) has now announced they will suspend all oil exports. In mid-September 2009, the KRG stopped DNO’s operations for six weeks until it cleared the regional government’s name in an investigation by the Oslo Stock Exchange. The Exchange was investigating a $29.7 million transaction between DNO and Turkey’s Genel Enerji in October 2008 in which the KRG’s Natural Resource Minister acted as a middleman. The Kurdish minister did nothing wrong, and DNO’s suspension was lifted. However, in a letter to the Natural Resource Minister, DNO apologized, but then said that it would stop working on exports from the Tawke field, one of two selling petroleum internationally from Kurdistan, until they were paid. The Tawke and Taq Taq fields began exporting crude in June 2009, but no compensation plan was worked out with Baghdad. DNO and the other companies operating the fields had been working for four months without getting any money. The Resource Minister announced on October 9, that the KRG would now end all exports until a deal was worked out with the central government.

The opening of exports from the KRG was seen as a symbolic victory for the Kurds in their long-running dispute with Baghdad over who has control of oil contracts, and exploitation of petroleum fields. It was a short lived victory, as the regional government never had the ability to compensate the companies doing the work. The KRG’s over reaction to the DNO stock investigation did not help the situation, and now the foreign sales have ended, and are not likely to resume as the KRG and the government of Prime Minister Nouri al-Maliki can agree upon little.

SOURCES

DNO International ASA, Letter To Minister of Natural Resources, Kurdistan Regional Government, 10/5/09

Reuters, “Iraq Kurdistan denies wrongdoing in DNO affair,” 10/9/09