Dubai: A service contract between the semi-autonomous Iraqi Kurdistan Regional Government and Dana Gas may evolve into a long-term production sharing agreement (PSA) once Iraq's oil law is passed, the KRG's top energy official said yesterday.
The PSA would be considered after Iraq's pending oil law is approved by parliament and if Dana Gas finds significant gas reserves at fields in the region, Ashti Hawrami, minister of natural resources in the KRG said.
The KRG said on Wed-nesday it would reject annexes to the oil law that propose giving central control to fields containing over 80 per cent of the country's reserves to a newly formed state-run national oil company.
"The annexes have yet to be discussed and currently award 82 per cent of Iraq's oil and gas law to a centralised Iraqi National Oil Company (Inoc), which has yet to be established and with no apparent accountability for maximising returns for the Iraqi people," Hawrami said.
The KRG previously signed several PSAs with firms like Norway's DNO. The deals provoked disputes with some members of Iraq's central government as they were signed long before Iraq's cabinet approved a draft oil law in February. PSAs have drawn criticism from some nationalists as they allow foreign oil firms to book reserves.
"The service contract is for a few years," Hawrami said.
"After that and subject to new legislation coming into force, we will look at other possibilities e.g. if in the long run we might make it a production sharing agreement, if there are additional resources there. What we like about Dana Gas is that it is investing money upfront and not just there to make a quick profit.
