SHARE
COPY LINK

ENERGY

RWE gas deal with Kurdish government rejected by Baghdad

Iraq on Sunday slammed as "illegal" an agreement between its autonomous Kurdistan region and the German energy firm RWE that is expected to help supply the planned Nabucco gas pipeline to Europe.

RWE gas deal with Kurdish government rejected by Baghdad
Photo: DPA

“All (sales) contracts and agreements signed outside the legal framework, in other words with SOMO, are illegal,” Baghdad’s oil ministry said in a statement. SOMO – the State Oil Marketing Organisation – deals with sales of Iraqi oil and gas products.

Talks on the allocation of Iraq’s natural resources are deadlocked, and Baghdad refuses to recognise contracts that the Kurdish regional government, based in the northern city of Arbil, has signed with foreign oil companies.

“No one outside the ministry has the right to sign contracts for the exportation of oil and gas,” the oil ministry added.

RWE announced on Friday it has signed a cooperation deal with the Kurds “to develop and design its domestic and export gas transportation infrastructure – creating a route to market for Kurdistan’s major gas reserves.”

“The cooperation also foresees the negotiation of gas supply agreements to enable gas from the region to be transported to Turkey and Europe via the Nabucco pipeline,” the German company said.

RWE is a key shareholder in the Nabucco project, which aims to bring up to 31 billion cubic metres (1,100 billion cubic feet) of gas annually to Europe through Turkey.

The European Union regards the project as vital to its future energy security following a number of eastern European disputes, which have disrupted supplies of Russian gas.

Kurdistan has been touted as a potential major supplier, but experts warn that instability in Iraq could make it difficult for supplies from the region to reach Europe. The regional government halted oil exports in October last year due to a payment dispute with Baghdad.

The oil ministry on May 6 said it had reached a deal with Arbil whereby all revenues would be handed over to SOMO, with Baghdad responsible for paying the extraction expenses in Kurdistan. But the agreement has not been implemented.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

ENERGY

Could the Norwegian government introduce a cap on energy prices? 

Due to soaring prices, the Norwegian government is mulling over several solutions, including a potential price cap for electricity and limiting energy exports abroad. 

Could the Norwegian government introduce a cap on energy prices? 

High energy exports in the last 12 months, low filling levels in Norwegian reservoirs and an uncertain energy situation around Europe have led to soaring electricity prices in southern Norway. 

Last year the government introduced a scheme whereby it covers 80 percent of consumers’ energy bills where the price rose above 70 øre/kWh. The portion of the bill under 70 øre is paid in full by households. The portion the government covers will increase to 90 percent in October. 

Critics have argued that the current scheme still leaves households struggling with their bills. As a result, Norway’s government has said it is mulling its options to curb energy bills.

Norway primarily depends on hydroelectric dams to help it meet its energy needs. Still, reservoirs in southern Norway have been at the lowest level for ten years, public broadcaster NRK reports. 

Low reservoir filling over the past year has conceded with record exports with higher prices on the continent, making sending power abroad an enticing proposition.

Recently, exports have fallen significantly, and the government is considering introducing a limit to reduce the possibility of energy rationing being introduced this winter. 

“Restrictions on the export of electricity to Europe may be one of the measures that is needed,” Elisabeth Sæther, state secretary at the Ministry of Oil and Energy, told NRK. 

Earlier this week, Prime Minister Jonas Gahr Støre ruled out completely shutting off exports to the continent. 

“It is a dangerous thought and will not serve us well. It could give us more expensive power and lack of power in given situations. We will hardly be able to import power when we need it without contributing to other countries when they need it. There is a reciprocity in this,” he told the newspaper Aftenposten earlier in the week. 

Sæther also told NRK that the government was weighing up putting a maximum price on energy but warned that it could have unforeseen consequences. 

“We are afraid that a maximum price means that more water is drawn into the reservoirs, which we need for the winter. It is a serious situation. We must prevent ourselves from getting into a situation where we lack enough power this winter,” she told the broadcaster. 

At the end of May, the state-owned Statnett announced that the supply situation in Norway might be under strain – in some scenarios – all the way up to and through the winter, especially if Southern Norway experiences drier than usual weather in the second part of the year. 

SHOW COMMENTS