IraqÕs Kurdish administration has approved four oil and gas production sharing agreements with international oil companies, with plans to lift output to a million bpd from just a few thousand bpd in about five years.

Iraq’s Kurdish regional administration has signed new oil deals in defiance of Baghdad’s wishes but the landlocked region still needs central government approval before it can export any oil.
As reported by Todayszaman.com, the Kurdish administration approved four oil and gas production sharing agreements with international oil companies this week, as it moved ahead with plans to lift output to a million barrels per day (bpd) from just a few thousand bpd in about five years.
Iraq’s Oil Minister Hussain al-Shahristani said last week that all deals signed by the Kurdish administration since February were illegal and that crude from the deals could not be exported legally.
Iraq’s draft oil law gives Baghdad’s State Oil Marketing Organization (SOMO) the exclusive right to export, he said. The Kurdish administration said its deals were legal and SOMO had no such right in the draft law.
The spat over export rights was of little consequence, as no sovereign government from surrounding countries was likely to strike an import deal with the Kurdish administration without Baghdad’s approval, analysts said.
“Getting oil and gas out of any landlocked region is always problematic,“ said Julian Lee, senior energy analyst at London’s Centre for Global Energy Studies. “And it is distinctly problematic for the Kurdish region, especially if it is seen as carrying out that policy regardless of Baghdad.“
Turkey would be the favored export route, as a pipeline already exists from Iraq’s northern oilfields to the Mediterranean port of Ceyhan. But Baghdad holds the export agreement with Ankara, while Turkey is suspicious of the progress of Iraq’s Kurdish region.
Ankara wants to avoid dealing with the Kurdish region directly for fear of encouraging independence, which in turn could have a destabilizing effect on Turkey, analysts said.
“The major issue is that Kurdistan is still dependent on reaching agreement with the federal government to export its oil,“ said Alex Munton, analyst at global consultancy Wood Mackenzie. “This is also influenced by foreign policy. The Turkish government is strongly opposed to Kurdistan taking on greater powers of independence. When it comes to bilateral relations, it deals with Baghdad and not Arbil.“
Iran and Syria may be less resistant than Turkey to doing a deal with the Kurdish administration, which is based in the city of Arbil, but they too have Kurdish minorities and would be unlikely to sidestep Baghdad, Lee said.
The Kurdish administration agreed four new oil deals this week, taking the total number of production sharing agreements its holds to 10. It plans to contract out all of its oil and gas exploration blocks by the end of the year. Its target of 1 million bpd would be well above Kurdish consumption and the region plans to export most of its future oil output.
Swiss-based Addax Petroleum is preparing to submit a $1 billion oilfield development plan to the Kurdish administration that could bring 200,000 bpd from the Taq Taq field. But the blueprint requires access to an export route.
The passing of the oil law was expected to eventually lead to an agreement on the export route for Kurdish oil, or at least establish the framework for a deal, analysts and industry sources said. Iraq’s cabinet agreed a draft law for dividing the world’s third-largest oil reserves in February. But rows with the Kurdish administration and objections from some Shiite and Sunni Arab politicians have delayed it.
The Kurdish administration was considering a privately financed, 1 million bpd pipeline from the Kirkuk oilfield north to link up with the Ceyhan line, industry sources said. This project too, would depend on the oil law and the approval of Baghdad, which has itself considered this route in the past.
The line north would allow exports from Kirkuk to bypass the section of the Ceyhan pipeline that dips south towards Baiji and is the frequent target of sabotage attacks that have rendered it mostly unusable since the US-led invasion in March 2003.

Chile is experiencing its sharpest inflationary surge in years, with price increases in recent months coming in well above expectations.
Although the spike may be transient, monetary officials can be expected to respond by raising interest rates again at their next meeting on October 11th. Even so, full-year inflation is likely to exceed the government’s target range this year by a significant margin, reported Economist.com.
Consumer prices increased by 1.1 percent month over month in September, and the year-over-year rate reached 5.8 percent--the highest annual rate in eight years. It was also higher than August’s 4.7 percent rate and above the official ceiling of 4 percent annually for the second consecutive month.
Food costs, which spiked by 2.5 percent month over month, contributed most to the increase in headline inflation. Housing costs rose by the second-highest amount in September (1.3 percent). Other components of the consumer price index rose by far less, and healthcare costs actually fell mildly (-0.2). Food costs have been the biggest driver of inflation on a year-on-year basis, rising by 14.5 percent for the 12 months through September.
The large hike in food-related inflation was due in part to international price rises, particularly for grains, and also to Chile’s very harsh winter, which damaged crops. The Economist Intelligence Unit expects monthly inflation rates to decline in the final months as the effect of one-off jumps in food costs diminishes; the effect should fall out entirely next year.
Still, there are also concerns about demand-side pressures, arising from increasing real wages and falling unemployment, as well as pressures coming from increased government spending. These will also persist into 2008.
Year-end inflation of 5.8 percent in 2007 is expected, significantly above the government target. A further tightening of interest rates this month will help to reduce inflation.
From the second half of 2008, and during 2009, there might be a gradual relaxation of monetary policy again, depending on the evolution of local inflation and the global economy. However, there is also a risk of inflation staying well above target next year, which could result from rising labor costs.
Still, an inflation spike is not a risk for Chile over the longer term. Disciplined fiscal and monetary policies are expected to stay in place, enabling authorities to bring inflation back to within the target range and to tame inflationary expectations in general.

Business groups are hoping that a US court will block an immigration rule that could affect millions of employers and workers, arguing that the government didn’t consider the new regulation’s impact on small business.
According to Bloomberg.com, in an unusual alliance, business associations joined labor unions in suing the Department of Homeland Security over a plan that could lead companies to fire workers whose Social Security numbers don’t match up with their names in a federal data base.
“Agencies must do their homework, and DHS did not,“ by paying “lip service“ to the required review, said Karen Harned, executive director of the National Federation of Independent Business Legal Foundation, an arm of the 600,000-member Washington-based small-business trade group.
The case is being closely watched because of its potential impact on the economy and on a stalled federal policy aimed at preventing illegal immigration, as well as because of the strange coalition opposing it.
The AFL-CIO and civil liberties groups filed the suit in San Francisco on Aug. 29, alleging that the regulation would commandeer the Social Security tax system for immigration- enforcement purposes. The department was ready to mail thousands of alerts to employers about “no match“ documentation problems with workers.
Business groups quickly joined the case. They contend the rule, which is focused on identifying some 12 million undocumented immigrants, would result in forced firings as well as more than $100 million in new costs and liability for owners.
The San Francisco Chamber of Commerce and small-business trade groups representing roofers, landscapers, restaurants, franchisees and fresh produce growers claimed the agency ignored the rule’s financial impact on them.
Since 1980, federal agencies have been required to analyze how new rules would affect small business and consider alternatives.
The Bush administration countered that the rule doesn’t impose new obligations since employers already have to verify workers’ eligibility to keep them on the job. The government has used employers’ responses before in enforcement proceedings, the department said in its court filings.
More than 80 lawsuits have claimed inadequate or missing small-business reviews since 1996. About half the time, agencies were ordered to conduct reviews while the rule was allowed to go into effect, according to David Frulla, an attorney with Kelley Drye Collier Shannon in Washington.
Frulla, who has argued a dozen review actions against agencies, said judges in at least four cases completely blocked rules because of the small-business review--the outcome employer groups are seeking.
Homeland Security said in a court filing that a small-business analysis was unnecessary because the rule had no effect on such enterprises and clarified for all employers the meaning of so-called “no match“ letters.
The administration cited letters from Tyson Foods Inc., the Springdale, Arkansas-based meat processor, Alston & Bird LLP, an Atlanta-based law firm, and W.E. Welch & Associates Inc., a mechanical contractor in Ijamsville, Maryland, asking about appropriate employers’ conduct after receipt of a no-match letter.
“The secretary properly concluded that there was no need to conduct a Regulatory Flexibility Analysis because the regulation does not change the existing obligations of employers--small or large,“ when an employee’s legal status is called into question, the government court documents said.
Business groups said it would cost them at least $100 million to resolve employment verification discrepancies that the US government is expected to flag in its first mailing of 140,000 letters to employers covering 8.7 million employees.

Many Chinese are unsure about the differences between organic and so-called green food, which has been promoted as an alternative to organic.

Cows at Green Yard, one of China’s first organic dairies, enjoy a pampered life in the country. They take daily strolls in the pasture. For a morning snack, the cows graze on grass untouched by pesticides.
When it’s time for a more filling meal, they dine on organic hay from Inner Mongolia, or perhaps sweetcorn, grown right on the farm. When they get sick, they take only traditional Chinese medicine.
According to BBC, the man behind Green Yard is Wang Zhanli, a farmer born in Yanqing, about two hours’ drive from Beijing. He persuaded 50 of his neighbors to invest in his business.
Wang had initially started a traditional dairy, but his small farm was no match for mass-market brands such as Mengniu Dairy, based in Inner Mongolia. About three years ago, he decided to make the switch to producing organic dairy products, because he could charge more.
“Nowadays, what we eat is important,“ he said. “It’s important to eat food that is good for you. A lot of farmers in China use too many pesticides. I got into this business because I thought the dairy market would take off. It’s hard to succeed in the mass market, but we’re selling a better product.“
Green Yard’s product costs two to three times more than regular milk. With only 600 cows, the dairy supplies a small market in Beijing, but the company is keen to grow. It may be at least another year before the dairy covers its initial investment.
Small volume and high growth sums up China’s nascent, and still tiny, organic market. Most of the country’s organic products are sold overseas to Japan, Taiwan and other Asian countries.
Official figures show organic exports totaled $350 million in 2005, up from $150m from 2004. China has about 5.7 million acres of certified organic farmland, behind only Australia and Argentina worldwide.
Green Yard’s Wang says much more needs to be done to raise awareness of organic food in China. Many people are unsure about the differences between organic and so-called “green food“, which has been promoted as an alternative to organic.
In a country where fakes abound, many consumers are wary of paying top dollar for food that may not actually be organic. Still, domestic sales grew about 50 percent last year, though the vast majority of Chinese simply can’t afford to buy organic.
Eva Sternfeld, of the China Environment and Sustainable Development Research Center, says frequent media reports about tainted food are driving the market.
“From my German experience, I would say China is maybe 20 years behind,“ she said. “But our experience shows us also that China is developing very fast, so it might only take five or 10 years before China catches up.“