SK Energy on Tuesday said the Iraqi government in late December last year threatened to suspend crude oil exports unless a Korean consortium including SK stops oil exploration in Kurdistan. It suspended the exports on Jan. 1.

Iraqi authorities maintain that it was illegal for the Korean companies to sign oil-related contracts with the semi-autonomous Kurdistan Regional Government in northern Iraq without approval from central government. The Iraqi central government found fault with a contract for the drilling rights in the Bazian oil field in the northern Iraqi region of Dahuk, which was signed between the consortium, which also includes Korea National Oil Corp (KNOC), and the Kurdistan Regional Government in mid-November last year.

The regional government has concluded a total of 15 oil development contracts with foreign oil corporations, all of which the central government regards as illegal and null and void. On Jan. 17, Baghdad announced its decision to suspend cooperation with any foreign enterprise that had signed an oil development contract with the Kurdistan Regional Government without permission. Austrian oil group OMV has been denied oil exports from Iraq for the same reason.

SK Energy said, "We're holding talks with the Iraqi government on the possibility of resuming oil shipments." But the prospects are not bright. Since the Iraq War, Baghdad has stressed that the central government should be the party directly concerned in all contracts on oil development in Iraq. It has strongly warned the Kurdistan Regional Government against its unapproved activities. SK Energy imports 270 million barrels of oil per year, with about 20 million barrels, or 7.4 percent of the total, imported from Iraq. SK Energy said it is purchasing the amount of oil it used to import from Iraq on the spot market, so it is having no problem securing enough stockpiles for the time being.

(englishnews@chosun.com )