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MENAFN - Arab Times - 11/11/2012

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(MENAFN - Arab Times) Iraq has warned Russia's Gazprom Neft to quit oil deals with the country's autonomous Kurdistan or pull out of its contract for the Badra oilfield, a spokesman for Deputy Prime Minister for Energy Hussain Shahristani said on Friday.

Gazprom Neft, the oil arm of Russian gas export monopoly Gazprom, in August acquired interests in two blocks with the Kurdistan Regional Government (KRG) following moves by rivals like Exxon and Total which angered the central Iraqi government in Baghdad.

"Iraq sent a letter to Gazprom at the end of October asking the company for an official reply, that it should cancel deals signed with KRG or pull out completely from Badra oilfield," Faisal Abdullah said.

Last year Gazprom said it expected to start production at Badra with 15,000 barrels per day in August 2013. The field with 100 million barrels of reserves near Iran's border is operated with Turkey's TPAO, Korea's Kogas and Malaysia's Petronas.

Gazprom Neft Chief Operating Officer Alexander Dyukov declined to comment.

Exxon was the first major to sign oil deals with Kurdistan and is now at the centre of a dispute over oil and territory between the Arab-led central government and ethnic Kurds, who have run their own administration in northern Iraq since 1991.

The ultimatum is the latest in an long-running row between Kurdistan and the central government, which regards any contracts signed with the Kurdish region as illegal and has told companies they must choose between work in the northern three-province region and the rest of Iraq.

A Gazprom-led consortium won the contract to work on the Badra oil field, which lies southeast of Baghdad on the Iranian border, in a public auction in December 2009.

In August of this year, though, Gazprom also signed two production and exploration contracts in Kurdistan.

In addition to Kurdistan's refusal to submit deals it signs to the federal government for approval, the two sides also differ on the types of contracts to offer - the Kurdish region prefers production-sharing agreements while Baghdad has opted for per-barrel service fees.


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