POLITICAL tension over oil rights in Kurdish Iraq mounted yesterday as the Kurdish regional government said that it was negotiating further contracts with oil companies and dismissed claims that the federal Government must approve the Kurdish oil deals.

In a strongly worded rebuke to Baghdad, Ashti Hawrami, the Kurdish oil minister, accused his critics of being supporters of the deposed dicatator Saddam Hussein.

His comments came after the announcement on Monday that DNO, the Swedish explorer, had found 100 million barrels of oil in its licence area near the Turkish border.

Oil licensing activity by the Kurdistan regional government has provoked sharp criticism within Iraq’s federal Government, including Hussein al-Shahristani, the Oil Minister, who said last month that all oil exploration must be handled by the Oil Ministry in Baghdad.

Speaking in Arbil, the Kurdish capital, Dr Hawrami dismissed calls to amend the oil and gas provisions in the Iraqi Constitution.

“These calls are irrelevant. They are initiated largely by those who hold anti-federalist views [and] are supported by some sympathisers of the former regime.”

The Kurdish oil minister said that the Constitution was clear and gave the federal Government only an administrative role in exporting and marketing oil from existing fields. Moreover, he said that regional governments had exclusive power over undeveloped oilfields and new exploration activity. He said: “These articles are clear to all concerned . . . The only difference being is that we like them and they don’t.”

DNO was granted a licence over 250 square miles of Kurdish territory in 2004 and recently tested its first exploration well, which flowed at 5,000 barrels per day.

DNO’s success in finding oil in previously unexplored and relatively peaceful areas of Iraq has excited large interest at a time when Iraq’s oil industry is struggling to produce even half of its prewar output.

The Constitution is silent on how to distribute oil revenues. Anticipating forthcoming negotiations, Dr Hawrami pointed to Article 112, which stipulates that a share of the proceeds should be allocated to regions unjustly deprived by Saddam’s regime. The row over control of oil resources could set a dangerous precedent if it encouraged Iraq’s southern provinces to seek to independently develop the huge resources near Basra.

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