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Iraq threatens to stop oil exports to South Korea over its direct dealings with Kurds

Iraq threatens to stop oil exports to South Korea over its direct dealings with Kurds

Iraq's oil ministry has threatened to stop all crude exports to South Korea if that nation proceeds with a deal it signed with the semiautonomous Kurdistan regional government.
In early November, a consortium led by the state-run Korea National Oil Corp., or KNOC, secured exploration rights from the Kurdish regional government for an oil field in the northern province. The Korean consortium includes SK Energy, South Korea's biggest oil refiner, and GS Holdings Corp.
"The ministry has made it clear that no contracts should be signed until a new national oil law is passed," Assem Jiham, a ministry spokesman, told The Associated Press late Thursday. "There was a clear warning to these companies that they will be blacklisted and excluded from any future cooperation with the ministry."
He added there would be "no leniency" shown to any company signs such contracts.
According to KNOC, through November South Korea had imported 42 million barrels of oil from Iraq, nearly triple all its imports from the country last year. Iraq is the sixth-largest provider of oil to the country.
The Kurds have signed more than a dozen contracts with foreign oil companies, insisting Iraq's constitution gives them that authority. But the Iraqi Oil Ministry insists the contracts are illegal and has threatened to blacklist foreign firms who sign them.
Iraqi authorities have drafted numerous versions of legislation to regulate the country's oil industry and share the revenues among Shiite, Sunni and Kurdish communities.
But the effort has bogged down parliament in large part because of opposition from the Kurds, who want a greater say in managing oil fields in their self-ruled area of the north.
U.S. officials view the oil law as a catalyst for investment and a means of tamping down sectarian violence. Most of Iraq's oil reserves are in the Kurdish north and the largely Shiite south. The provinces where most Sunnis live have few proven reserves, leading to suspicions they will be left out of oil profits.
Jiham did not say if a deadline had been set for KNOC to annul its exploration contract with the Kurds, but said that no exceptions will be made to the ban on contracts.
Earlier this week, Park Hyung-il, head of crude oil trading for SK Energy, said in a statement that he had been informed "that there may be some difficulties to renew the pending contract on crude oil with Iraq. However, it is too early to confirm details at this point."
Oh Ji-won, a spokeswoman with South Korea's Ministry of Commerce, said that the government was working through "diplomatic channels" on the issue.
Iraq is now exporting 1.9 billion barrels of oil a day, compared to 1.5 million a day earlier this year, according to U.S. statistics.
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Associated Press writer Kelly Olsen contributed to this report from Seoul, South Korea.


Updated : 2021-03-09 03:00 GMT+08:00