Iraq Agrees to Oil Exploration Agreement with Kuwait Energy

Iraq has agreed to an oil exploration agreement with a group led by Kuwait Energy, according to a senior official.

Iraq has chosen a partnership with a Kuwaiti company instead of TPAO, the state-owned firm of Turkey. The cabinet also made a decision to expel TPAO.

Last year, Iraq invited Kuwait Energy to get the shares of TPAO in oil exploration block 9 when Iraq’s diplomatic connections with Turkey soured. Back then, the Kuwaiti firm owned a stake of 30 percent.

Director Mahdy al-Ameedi of the “Contracts Directorate” of Iraq’s oil ministry said that Kuwait Energy has obtained TPAO’s stake and is currently holding the contract’s 70 percent stake while Dragon Oil PLC will acquire 30 percent.

Ameedi said that the country’s oil ministry is planning to finalize the deal on the 27th of January.

Baghdad had been enraged by Ankara’s actions when they built closer connections with northern Iraq’s Kurdistan Regional Government, which is in a land-and-oil-rights conflict with the federal government.

Moreover, Iraq and Turkey have charged one other for stirring sectarian conflicts and have called one another’s ambassadors over provocative military exercises.

The contract gives the consortium rights for block 9′s oil exploration and development. The block’s location is in southern Iraq’s Basra province.

Iraq, a member of the OPEC, is anticipated to be the largest source of the world’s new supplies of oil in the next several years. The country is planning to open additional bidding rounds for outside oil investments by multinationals and state-owned oil companies alike.

Several international firms won bids during the fourth energy auction of Iraq which had few participants due to the strict contract terms imposed by Baghdad.

Iraq has given service agreements to foreign firms that are less appealing wherein they get a fee instead of production-sharing agreements – like Kurdistan – that will let them profit together from the results.