RRT ERBIL: THE OIL IMPASSE: VIEWS OF THE KRG

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 001364

SIPDIS

DOE FOR GEORGE PERSON

E.O. 12958: DECL: 05/25/2019
TAGS: EPET ENRG PGOV IZ
SUBJECT: RRT ERBIL: THE OIL IMPASSE: VIEWS OF THE KRG
MINISTER OF NATURAL RESOURCES

REF: A. BAGHDAD 1250

B. BAHGDAD 1230

Classified By: RRT Erbil Team Leader Lucy Tamlyn, reasons 1.4(b,d)

This is an Erbil Regional Reconstruction Team (RRT) cable.


1. (SBU) Summary: In a discussion before the recent oil
export breakthrough (reftels),Kurdistan Regional Government
(KRG) Minister of Natural Resources Hawrami urged the United
States to focus on assisting passage of an oil revenue
sharing law as the most important priority in establishing a
structure for the GOI and KRG to manage Iraq's hydrocarbons
resources. The KRG Minister criticized GOI Oil Minister
Shahristani for his reliance on technical service, instead of
production sharing, agreements to attract foreign investment
and blamed him for the breakdown in an agreement to allow
export of oil from KRG fields. End summary.


2. (U) RRT Team Leader met with KRG minister of Natural
Resources Ashti Hawrami April 27 to discuss the KRG's
hydrocarbons sector. Minister Hawrami's chief adviser,
Khaled Salih attended. (Note: The meeting took place before
the recent oil export breakthrough was agreed between the KRG
and the GoI. Minister Hawrami gave no hint of this impending
approach in the meeting, but focused on the longer term
strategy for resolving the current impasse over hydrocarbon
management and revenue sharing. End note.)

Revenue Sharing Should Be First Priority
--------------


3. (SBU) Minister Hawrami opened the discussion by recalling
that the third U.S. benchmark for Iraq was to ensure
equitable distribution of hydrocarbon resources to Iraqis -
not agreement on oil sector management. According to him, it
was regrettable that the U.S. focus had subsequently shifted
to oil sector management with the more important benchmark of
oil revenue sharing being put on the back burner. Minister
Hawrami argued that agreement on revenue sharing should be
given precedence, as it took the most difficult issue - who
gets the money - off of the table. He also ventured (note:
as have other KRG officials) that agreement on oil revenue
sharing would defuse some of the Kirkuk tensions, by making
it clear that the KRG did not seek Kirkuk for its oil.
Minister Hawrami reiterated that the Kurds have committed to
the principle that oil revenues coming from the Kurdistan
Region would be subject to the same 17/83 split that applies
to other revenues. (Note: Prime Minister Barzani has also
stated this repeatedly. End note.)

USG Role
--------------


4. (C) Minister Hawrami felt that the United States could
play a stronger and more effective role by assisting the oil
revenue sharing question to be resolved, as this law did not
directly affect U.S. interests (in the same way that
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