Iraq Signs New Oil Exploration Deal

Energy officials of Iraq recently signed an agreement with a Kuwait-led organization, completing a deal that was changed to remove a Turkish company in the midst of worsening relations with Ankara.

An agreement was signed with UAE’s Dragon Oil and Kuwait Energy allowing the exploration of a block spanning 900 square kilometers believed to contain crude. The block is located in Southern Iraq, close to the country’s demarcation line with Iran.

According to reports, the contracts and licensing head of Iraq’s oil ministry, a representative of Kuwait’s state-owned South Oil Company and Dragon Oil’s Mark Sawyer signed the contract.

Kuwait Energy possesses a stake of 7 percent in the oil exploration project, while Dragon Oil holds the rest. The firms agreed to a service fee payment amounting to $6.24 a barrel of oil equivalent extracted later on.

The contract is one of many deals between Iraq and international energy companies to strengthen oil production and look for fresh energy reserves as Iraq tries to establish its position as a primary world supplier of crude.

The original group that won the deal had consisted of Turkish firm TPAO. However, officials made an announcement last November that TPAO would be removed because of non-technical problems, one of many indications of worsening relations between Iraq and Turkey.

The two nations have been in tension over the conflict between Syria, and Iraq has publicly implored Turkey to surrender fugitive Vice President Tareq al-Hashemi. The vice president has been given a death sentence in Iraq for allegedly operating a death squad.

Iraq’s proven deposits of oil and gas amount to 143.1 billion barrels and 3.2 trillion cubic meters, both are among the biggest reserves worldwide.