Reliance faces Iraqi ban after Kurdish oil deal

16 November 2007

Mumbai: Reliance Industries (RIL), which struck a deal with the Kurdish regional government for oil prospecting in two blocks without Baghdad''s approval, has been warned by the Iraqi government that it will be excluded from future oil contracts. 

"Our position is very clear. Any company that signs contracts with the Kurdish regional government without approval of the central government will compromise chances of getting future opportunities in Iraq," Iraqi oil minister Hussain Al-Shahristani said.

Baghdad had "conveyed this to all the companies that have recently signed production sharing contracts... That has also been conveyed to Reliance Industries," Hussain said on the sidelines of the OPEC ministerial meeting in Riyadh.

Reliance had last week signed the contract for the blocks Rovi and Sarta in northern Iraq with the autonomous Kurdish Regional Government (KRG). The blocks, measuring 517 and 607 sq km respectively, have almost 80 per cent oil bearing structure.

Reliance is confident of making a discovery soon. RIL paid a signing amount of $15.5-17.5 million for the blocks.

"Iraq will not allow its oil to be exported without federal government approval. We have informed and warned the companies of the consequences. They will not be able to take oil out of the country," the minister added.