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Who controls Iraq's oil?

By Faisal Islam

Updated on 21 March 2008

Channel 4 News has had exclusive access to the first Iraqi oilfield in decades to be opened by a foreign company.

Half of the oilfields are in the Shia south and most of the rest are in the north around Kirkuk.

The recently-opened oilfield is in the area controlled by the Kurdish regional government near Irbil. Iraq's cheap-to-extract and easy-to-refine crude could make the nation rival Saudi Arabia as the world's top oil earner.

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Kurdistan's leaders want their oil to be exported now and the very question of who has the right to sell Iraq's oil is in dispute.

Some maverick, mainly-foreign, oil companies have stolen a march on their bigger rivals.

The Kurdish Regional government has given the Norwegian oil company DNO the first deal in the whole of post-Saddam Iraq to pump new crude oil. DNO have rented a drilling rig from China, complete with a troop of Chinese drillers. They struck oil at the first attempt, finding a 250 million barrels.

Magne Normann, the managing director of DNO Middle East, said: "We were the first international oil company that had the guts to go to Northern Iraq. We didn't just talk about it, we did it."

But DNO's spectacular discovery isn't being applauded by all.

Oil is so bountiful across Iraq that some question the need for new exploration. Indeed the central government in Baghdad has blacklisted some of the oil companies that have signed deals with the Kurdish regional government.

Tariq Shafiq, co-author of the draft Iraqi oil law, said: "The problem is they are thinking like Kurds and not like Iraqis. The Kurdistan government has illegally been enacting contracts, the oil and gas asset is the property of the whole nation."

Kurdish leaders are adamant they have full constitutional authority to sign deals and say the moves were necessary because of Baghdad's failure to reach agreement on an oil law.

Iraq's second-biggest export pipeline passes 25 miles away from DNO's latest field and the Norwegian company has completed its own pipeline to transfer the oil, but the final few metres pipe remain unconnected.

The United States admits that its pressing Baghdad to pass its oil law to pump more oil and presumably help bring down world prices. Yet the impasse between the central and regional governments remains.

Whoever it is that ends up controlling Iraq's black gold, it can't yet be certain that Iraq's oil curse will one day turn into a blessing.

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