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Kurdistan government and Korea National Oil
Corporation sign new petroleum contracts
25.6.2008
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June
25, 2008
Erbil-Hewler, Kurdistan region "Iraq", —
Dr Ashti Hawrami, the Kurdistan Regional Government
(KRG) Minister for Natural Resources, Wednesday
announced that the KRG has awarded two production
sharing contracts (PSCs) and approved the assignment
of Third Party Interests in a number of existing
contracts to Korea National Oil Corporation (KNOC),
the oil and gas company owned by the Government of
the Republic of Korea.
The announcement comes a day after the KRG announced
two other petroleum contracts,
with Talisman Energy
Inc.
Dr Hawrami said, “We are very pleased to strengthen
our relationship with KNOC and with the Korean
people who as part of the coalition forces have
contributed to the stability of our region since
2004. The growing presence of KNOC followed by
significant Korean private sector infrastructure
investment will secure our mutual prosperity.”
The contracts were signed by KRG Prime Minister
Nechirvan Barzani and Dr Hawrami,www.ekurd.net
together with KNOC
representatives, headed by Dr Seong-Hoon Kim,
Executive Vice President of New Ventures &
Exploration, in Erbil on Saturday 21 June.
The contractual terms had been approved after the
Memorandum of Agreement reached between the parties
during an official visit by the KRG delegation,
headed by Prime Minister Barzani, to Seoul in
February of this year. |
KRG Minister of Natural Resources Dr. Ashti Hawrami |
“We are delighted to expand on our existing
operations in the Kurdistan Region of Iraq and to
underpin our access to significant sources of
potential oil reserves to secure the energy needs of
our country,” said Dr. Kim. “The region is in need
of economic development and the implementation of
basic infrastructure projects, which the Korean
involvement will aim to support.”
Brief description of the
project
Sangaw South and Qush Tappa
KNOC will take a 60% interest in the Sangaw South
Block, with the remaining 40% participation interest
held by the KRG. KNOC will also take an 80%
participation interest in the Qush Tappa Block
(published in some KRG block maps as “Block K26”),
with the remaining 20% participation interest held
by the KRG.
Third Party Interest
assignments
KNOC will receive Third Party Interest allocations
of 15% in an existing PSC comprising four blocks
containing two discoveries (Hawler Block), 20%
interest in another PSC (Sangaw North Block) and a
further 20% in the Bazian Block, which was
previously awarded to a consortium of Korean oil
companies led by KNOC.
Capacity-building and
infrastructure support
KNOC has agreed to allocate some of its income from
the share of its profits from the oil finds to
support a large programme of infrastructure and
capacity-building in the Kurdistan Region. This
programme was agreed between the KRG and a
consortium of Korean infrastructure companies in
Seoul, also in February this year. The programme is
designed to solve some of Kurdistan’s pressing
problems related to power generation and
distribution, water purification, and the building
of a major highway linking the three main provinces
of Kurdistan. The initial investment related to this
programme will be in the region of 2 billion US
dollars.
Revenue from the contracts
The contracts agreed with KNOC are based on the
KRG’s published model production sharing contract
and commercial terms and conditions. As with all
Kurdistan Region petroleum operations, the contracts
are governed by the Kurdistan Region Oil and Gas
Law, which entered into force in August 2007.
KNOC will be entitled to petroleum cost recovery
from the contracts and to receive a share of the
profit oil, based on a formula defined in the KRG
Oil and Gas Law and the KRG’s published commercial
terms.
With respect to the Government share of profit oil,
the KRG has volunteered a commitment to forward
petroleum revenues from the Kurdistan Region for
Iraq-wide revenue sharing when a federal revenue
sharing law is in place. The KRG is bound by law to
the principles of the Extractive Industries
Transparency Initiative.
Industry and media enquiries to the KRG:
Khaled.Salih(at)krg.org
Enquiries to the KNOC: Mr. C.S. Yoon:
csyoon(at)knoc.co.kr
Copyright, respective author or news agency, krg org
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