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Iraqi Kurds Expected To Reappoint Energy Minister

ARBIL/BAGHDAD (Reuters) -- Iraqi Kurdistan is likely to reappoint its energy minister in the newly formed government, officials said, keeping in place an official who has headed an energy strategy pitting Kurds against the Iraqi Oil Ministry.

"It is believed the Kurdish natural resources minister will stay in his position in the new government due to his expertise and efficiency that he showed over the past four years," a well-placed Kurdish politician said on condition of anonymity.

Two sources in the current Kurdish regional government also said Ashti Hawrami, whom supporters credit with forging a series of oil and gas deals with foreign firms that have put Kurdistan on the world energy map, was expected to stay after the incoming parliament meets to select a new prime minister on September 8.

After Kurdish parliamentary elections in July that kept to the largely autonomous region's two major parties in power, Kurdish lawmakers are expected to name former Iraqi Deputy Prime Minister Barham Salih the region's new prime minister.

Salih's government is expected to include Hawrami, the face of the Kurdistan Regional Government's (KRG) drive to develop energy reserves, including deals with Norway's DNO International and Toronto-listed Addax Petroleum.

Hawrami, in the job since 2006, oversaw the launch of Kurdish oil exports through Iraq's northern pipeline in June, a fleeting bright spot in otherwise strained ties between minority Kurds and the central government in Baghdad. Yet to detractors, Hawrami's strident critiques of Iraqi Oil Minister Hussain al-Shahristani's management of the country's vast oil resources have inflamed Kurd-Arab tensions that have held up passage of long-delayed energy legislation and undermined stability in a country struggling to emerge from war.

Kurds, who were slaughtered by Saddam Hussein in the 1980s and fought a bloody civil war amongst themselves in the 1990s, maintained de facto independence from Baghdad after the first Gulf war, protected by a UN no-fly zone.

Since the U.S.-led ouster of Saddam in 2003 enhanced their power, Kurds have sought to expand the borders of their northern enclave, enraging Arabs and Turkmen by laying claim to the ethnically mixed city of Kirkuk, Iraq's northern oil hub.

Oil and land disputes between Kurds and Arabs are now seen as the chief threat to Iraq's fragile security as Sunni-Shi'ite violence subsides and American troops prepare to withdraw.


With oil prices around a modest $68 a barrel, Iraq needs to boost output of around 2.5 million barrels per day more than ever to rebuild, create jobs and provide basic services.

Iraq has the world's third largest proven oil reserves, but investors are wary of violence and political strife.

Hawrami called Shahristani's first energy auction in June, a centerpiece of his oil strategy, a "fantastic failure" because it produced a deal for just one of eight fields on offer -- even though that deal would lift output by close to 2 million bpd.

Hawrami, who studied oil engineering in Scotland, estimates Kurdish oil reserves are at least 40 billion barrels.

He has blamed lower-than-expected recent exports from the KRG's Tawke and Taq Taq fields on interference from the national North Oil Company, which reports to the Oil Ministry.

Shahristani meanwhile brands KRG deals with foreign firms illegal, threatening to blacklist those companies and affiliates from far larger deals the Oil Ministry is putting up for offer.

It is still unclear how the KRG will pay firms for oil exports in the production-sharing deals Hawrami brokered.

Revenues from those sales, exported in a national pipeline, go through the central government and so far Arab officials have not indicated they will give the KRG anything beyond its 17-percent share of the Iraqi budget to pay the firms.