GOI ASKS KRG TO STOP SIGNING NEW PSCS

C O N F I D E N T I A L BAGHDAD 004052 SIPDIS SIPDIS STATE FOR E, NEA-I AND EEB DOE FOR GEORGE PERSON E.O. 12958: DECL: 12/12/2017 TAGS: ECON EPET ENRG IZ SUBJECT: GOI ASKS KRG TO STOP SIGNING NEW PSCS REF: BAGHDAD 4813 Classified By: Classified by CETI Ambassador Charles Ries, reasons 1.4 b,d. ¶1. (C) SUMMARY: Prime Minister Maliki and President Talabani jointly sent a letter dated December 2 to Kurdish Regional Government President Barzani, asking that the KRG comply with the Constitution and existing federal oil laws and cease executing oil production contracts with private international oil companies. They asked KRG to resume negotiations for the enactment of the February draft hydrocarbon framework law, as revised, rather than going its own way in developing oil resources in Kurdistan. Separately, DPM Barham Saleh told EMIN that President Barzani would not agree to review of the KRG contracts as long as Shahristani remains as Oil Minister. END SUMMARY. GOI Asks KRG: No New Contracts -------------- ¶2. (C) Prime Minister Maliki and President Talabani jointly sent a letter dated December 2 to Kurdish Regional Government President Masoud Barzani. Minister of Oil Shahristani provided a copy of the letter to U/S Jeffery on December 9 in connection with a meeting reported septel. The letter (as translated by Embassy staff, full text emailed to NEA-I) reminded the KRG that Iraq's oil policy, as set forth in the Constitution (see, Paragraph II, Article 122) requires the Regional Government to coordinate with the Federal Government prior to executing standard oil contracts with private oil companies. The letter notes that this prior consultation requirement was agreed upon in an exchange of letters dated February 25, 2007 between the PM and the KRG promising that no new contracts would be executed until after the new Hydrocarbons Law (HCL) was enacted and in accordance with HCL's requirements. ¶3. (SBU) The letter asks that the KRG stop executing new contracts and suspend those already signed pending the enactment of the HCL, so that Iraq can progress on enactment of the HCL and move away from an "atmosphere of media statements and unilateral decisions." KRG: MOO is the problem -------------- ¶4. (C) Separately, DPM Barham Saleh told EMIN on December 10 that President Masoud Barzani has warned that he would never agree to allowing federal review of KRG contracts (as contemplated in the draft HCL) as long as Shahristani is the Minister of Oil. BUTENIS