Iraq claims Kurdistan/RWE deal illegal

Iraq has called the agreement between its autonomous Kurdistan region and the German energy firm RWE, “illegal”.

RWE Supply & Trading announced on Friday it has signed a cooperation deal with the Kurds “to develop and design its domestic and export gas transportation infrastructure — creating a route to market for Kurdistan’s major gas reserves.”

However the Iraqi central government in Baghdad is not happy.

“All (sales) contracts and agreements signed outside the legal framework, in other words with SOMO (State Oil Marketing Organisation), are illegal,” Iraq’s oil ministry said in a statement. SOMO  deals with sales of Iraqi oil and gas products.

“No one outside the ministry has the right to sign contracts for the exportation of oil and gas,” the oil ministry added.

Talks on the allocation of Iraq’s natural resources have been at an impasse, with Baghdad refusing to recognise contracts which the Kurdish regional government has signed with foreign oil companies.

RWE is a key shareholder in the Nabucco project, which aims to bring up to 31 billion cubic metres (1,100 billion cubic feet) of gas annually to Europe through Turkey. The agreement between RWE and Kurdistan foresees the negotiation of gas supply agreements to enable gas from the region to be transported to Turkey and Europe via the Nabucco pipeline.

The Kurdistan regional government halted oil exports in October last year due to a payment dispute with Baghdad.

In May, the oil ministry said it had reached a deal with Kurdistan, whereby all revenues would be handed over to SOMO, with Baghdad responsible for paying the extraction expenses in Kurdistan. But the agreement has not been implemented.