The Hindu Business Line : Reliance deals with Kurdish Region have no standing: Iraq

On the block
Deal was for the Rovi and Sarta Blocks in northern Iraq.
Reliance says agreements signed are within the legal framework.
Company paid a signature bonus of $15.5-17.5 million.

Richa Mishra

Riyadh, Nov. 15 Reliance Industries Ltd may find the going tough in acquiring future oil blocks in Iraq. Mr Hussain Al-Shahristani, Iraqi Oil Minister, said on Thursday at the sidelines of the Third OPEC Summit that those companies that have signed contracts with the autonomous Kurdish Regional Government have been warned that they will not be allowed to export oil from these blocks. In addition, they may also compromise their chances on future exploration and production contracts.

“These contracts have no standing with the Iraqi Government. The companies that have signed the contracts with the Kurdish Region may compromise their chances of getting future contracts in Iraq,” he told Business Line.

‘Within Legal framework’

Reacting to Mr Al-Shahristani’s statement, Reliance Industries said that “The two exploration blocks in the Northern Iraq’s Kurdistan Region for which we have signed the agreements are within the legal framework. Reliance has always maintained highest cordial relationship with the Government of Iraq and all other stakeholders in countries where we operate. We will continue to do so in future,” a press statement from the company’s spokesperson said.

The Mukesh Ambani-led RIL had earlier this month signed a contract for the Rovi and Sarta Blocks in northern Iraq, paying a signature bonus of $15.5-17.5 million. The two blocks could hold one billion barrels of oil reserves. Under the terms of the contract, Reliance Exploration & Production DMCC, a wholly owned subsidiary of RIL, will serve as the operator.

The deals with RIL were part of seven contracts signed by the Kurdish Government recently in defiance of Iraq’s proposed new exploration law. As per information available, nearly 80 per cent of the blocks that RIL has bagged, measuring 450-500 sq km, are made up of oil-bearing structures. The company had expressed confidence of making a discovery soon.

The Iraq’s Oil Minister had previously also said that all oil contracts signed before the passing of the oil law would be considered “illegal”. The hydrocarbons law of Iraq is still awaiting Parliamentary nod.

The legislation is stuck due to differences between warring political factions over the sharing of lucrative revenues from Iraq’s crude, the third-largest proven reserves in the world.

Apart from RIL, the Kurdish Government has also signed two production sharing contracts with Austria’s OMV Petroleum Exploration Gmbh for Mala Omar and Shorish blocks. Separately, the Akre-Bijeel block has been awarded to Kalegran Ltd, a wholly-owned subsidiary of MOL Hungarian Oil and Gas Plc and Gulf Keystone Petroleum Ltd, a subsidiary of Britain’s Gulf Keystone.

The Shaikan block, also in Dohuk province, has been taken up by Gulf Keystone, Texas Keystone and Kalegran. Another block in Dohuk has been awarded to a Western company. Four strategic blocks in Sulaimaniyah and Arbil provinces have been awarded to Kurdistan Exploration and Production Company, a government-owned firm.

More Stories on : Petroleum | Overseas Investments | Politics | Reliance Industries Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page