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Thu 17 Apr 2008 10:05 AM

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EU says close to Iraq energy pact

Preliminary agreement in sight as Europe looks to reduce heavy reliance on Russian supplies.

The EU said on Wednesday it was close to clinching a preliminary energy pact with Iraq as part of the bloc's efforts to reduce its heavy dependence on Russian oil and gas.

European Commission President Jose Manuel Barroso said after talks with Iraqi Prime Minister Nuri Al-Maliki he hoped a memorandum of understanding could be signed within weeks, and that the country's oil minister had been invited back to Brussels in May with the aim of concluding negotiations.

"There is very good news of progress in talks, so we can very soon establish a memorandum of understanding on energy cooperation," Barroso told a joint news briefing with Al-Maliki.

Separately, a Commission statement issued after talks between European Energy Commissioner Andris Piebalgs and Oil Minister Hussain al-Shahristani in Brussels said Iraq had pledged an initial 5 billion cubic metres (bcm) of gas to the EU per year, with the likelihood of more in the future.

Earlier, the Iraqi prime minister said the two-day visit by an Iraqi delegation to the headquarters of the EU and Nato was aimed at deepening ties, and held out the prospect of enhanced energy cooperation and business openings for European companies.

"We do hope this meeting will result in new steps of cooperation between Iraq and EU countries, especially regarding contributing to developing our oil and gas sectors," he said.

EU officials said ahead of al-Maliki's visit they hoped to reach an outline agreement with Iraq to import Iraqi gas via the planned Nabucco pipeline across Turkey to central Europe.

The EU wants to diversify gas supplies away from Russia, which provides a quarter of its needs. Connecting fields in western Iraq to a planned Arab Gas Pipeline would enable Baghdad to supply gas to Nabucco, which is due to come on line in 2013.

"Iraq made a political gesture of goodwill from Iraq to the EU and promised at least 5 bcm of gas in a first stage from the Akkas field, and indicated that probably there would be more in the future for the European Union," the Commission said.

"Iraq confirmed that part of their gas will flow to Europe through various routes and potentially from various fields."

A Commission official said that of the 35 companies granted access to the Akkas field near the Syrian border, 11 were from the EU. Gas was due to flow from the field in two to three years, the official added.

The European Commission said on Monday it had secured a guarantee last week of 10 billion cubic metres a year of natural gas from Turkmenistan from 2009 as part of the drive to ensure sufficient supplies to make Nabucco commercially viable.

The pipeline is seen as a rival to the Kremlin-backed South Stream project due eventually to take some 30 billion cubic metres of Russian gas a year to southern Europe.

Ties between the 27-member EU and Iraq have been gradually deepened since the US-led 2003 war vehemently opposed by countries such as France and Germany.

The bloc is a substantial donor to the country and in 2005 launched a rule-of-law mission that has so far trained 1,450 judges, investigators and top police and penitentiary officials.

Earlier, Al-Maliki gave a European Parliament committee an upbeat assessment of Iraq's efforts to get its war-ravaged society and economy back on track.

He said Iraq was "close to agreeing a final version" of a long-awaited oil and gas law, delay over which has held back investment in the sector. (Reuters)

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