< Back to Iraqi Dinar in the News September 13th, 2007

Iraqi Kurds demand oil minister's resignation

Iraq's northern Kurdish administration has demanded Baghdad's oil minister be sacked, following his remarks that oil contracts signed by the regional government are "illegal."

The call by the Kurdistan Regional Government (KRG) late Thursday deals another blow to attempts by Prime Minister Nuri al-Maliki to forge a national consenus on the controversial issue of dividing up the spoils of Iraq's vast oil reserves.

Oil Minister Hussein al-Shahristani should quit rather than "interfere in the internal affairs" of the Kurdish region, KRG spokesman Khalid Saleh told reporters in Arbil.

Shahristani at a recent meeting of OPEC in Vienna said that all oil contracts signed in Iraq's Kurdish region are "illegal" as a controversial oil law is yet to be passed in the parliament.

The regional government has signed contracts with several global oil companies to explore crude oil in its region, which houses the bulk of the country's oil reserves.

Kurdish officials say they will honour the contracts, and also claim to have reached an agreement with Baghdad whereby it will receive 17 percent of the country's oil revenues.

In a separate statement, the KRG said the minister was "strongly advised to stay out of issues over which he has no authority."

"But once again he has repeated his false mantra of 'it is illegal'. Unfortunately this has been his way of dealing with the legitimate concerns of the hard working oil union members in the south, with the achievements of the KRG or with any other organisation that he does not like."

The statement said the minister must focus on preventing "illegal oil smuggling under his watch, which is crippling the Iraqi economy."

Saleh said if Shahristani failed in this he should resign and allow some other "person more qualified than him" to do his job.

The regional government also accused the minister of favouring contracts signed with companies who operated during the former regime of Saddam Hussein.

"The answer is to get on with the agreed draft oil law and present it without changes to the parliament. That way we will all get on with the task of developing the oil industry for the benefit of the people," the KRG said.

Iraq's oil infrastructure has been hit by decades of under-investment as a result of successive Gulf wars, 13 years of UN sanctions and the rampant insecurity that followed the US-led invasion in 2003.

Washington regards passage of the controversial oil legislation as key to efforts at national reconciliation in the country which is wracked by an insurgency and sectarian violence.

US President George W. Bush in his televised address to the nation late Thursday bluntly acknowledged he was not satisfied with the pace of Iraqi political reforms that Washington views as critical to forging national unity.

"The government has not met its own legislative benchmarks," said Bush, who directed a message to Iraq's people that "you must demand that your leaders make the tough choices needed to achieve reconciliation."

The draft oil and gas law provides for earnings to be shared equally between Iraq's 18 provinces in a bid to allay Sunni fears they will be monopolised by Kurdish and Shiite provinces which contain the oilfields.

But it also opens up Iraq's long state-controlled hydrocarbons sector to foreign involvement.

The draft law was passed by Maliki's cabinet in July but faces tough passage in the 275-seat legislature, where the Kurdish bloc has 53 seats.