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Wed 7 Nov 2007 11:59 AM

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Kurdish Iraq pens seven energy deals

Regional gov't pushes ahead with development of oil and gas reserves despite opposition from Baghdad.

Iraq's Kurdish region has signed seven new oil and gas contracts with international firms, awarded four more to a new state-owned company and revised the terms of old deals, the Kurdish government said on its website.

Despite the threat of a Turkish offensive into the region to track down guerrillas using northern Iraq as a base, the Kurdish Regional Government (KRG) has pushed ahead with long-term plans to attract international energy companies to develop its oil and gas.

It aims to boost oil output to a million barrels per day (bpd) in about five years from just a few thousand bpd now.

"These contracts are a major step towards the Kurdistan region's goal of increasing oil production to one million bpd," top energy official Ashti Hawrami said in a statement on the website. "There will be more announcements soon."

The international companies that signed up for the new production sharing contracts for oil and gas include India's Reliance, Austria's OMV and Hungary's MOL, the KRG said.

Four more exploration blocks were awarded to a newly-formed government-owned Kurdistan Exploration and Production Company (Kepco).

Kepco will bring in large international oil companies as partners in the blocks to provide technical and financial backing for Kepco, the KRG said.

All the deals give 15% of profits on any commercial discoveries to the operators, with the rest going to Iraq, the KRG said.

Hawrami said five more deals were pending final negotiations, and that international companies had shown strong interest in another 24 oil and gas exploration blocks still available.

The Kurds have clashed with Baghdad over its oil deals and the content of a draft federal oil law. Frustrated with delays in Baghdad, the region passed its own oil and gas law in August.

The central government says deals passed this year are illegal,while the Kurdish region says the deals are in line with its new law and the draft federal law.

The region's oil and gas council also reviewed five older production sharing contracts to bring them in line with the Kurdish law. The KRG had told the companies involved of the results of the review, but did not say if the terms of the contracts had been revised.

Those deals include the contract signed with Norway's DNO, which was the first international oil company to drill in Iraq after the US-led invasion of March 2003.

The KRG awarded a service contract to the government-owned Kurdistan National Oil Company (KNOC), which will develop the Khurmala field and build a 50,000 bpd refinery to supply natural gas and fuel oil for power generation.

The KRG said it expected peak output from the Khurmala field of 250,000 bpd. (Reuters)

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