London, 18 September (Argus) — The crude export deal between the Kurdish Regional Government (KRG) and Baghdad agreed last week is “a big breakthrough” paving the way for agreement over new oil and gas legislation for Iraq, said oil minister Ashti Hawrami, today.

A committee comprising Hawrami, the Iraqi oil minister and the speaker of the Baghdad parliament has been set up expressly to agree the oil and gas draft law for submission to parliament. He expects the oil and gas legislation to be enacted early next year or possibly by the end of this year.

Baghdad's objection to the KRG unilaterally issuing exploration and production licences within the semi-autonomous Kurdish region of northern Iraq has blocked progress on the law. But the KRG minister said that the deal agreed last week recognises what the regional government has done to date.

The central government will pay some $850mn to the KRG for past exports, enabling the KRG to pay oil companies. But the money will be paid in two tranches, including one tranche of $650mn this year. Also, the KRG will receive 17pc of products refined in Iraq and 17pc of the crude allocated to generate electricity. He said that the KRG does not have to generate electricity with that crude. It can refine it, if it prefers.

The Baghdad government approved the export deal today, Hawrami said, and the KRG will ratify it shortly.

Yesterday, Norwegian independent DNO said it had already increased its production for export but Hawrami said production from the Kurdish region remains at 100,000 b/d for now. Under the agreement, it is due to rise to 140,000 b/d this month and 200,000 b/d in October. Hawrami believes it can produce 250,000 b/d for export next year.

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