Germany signals hands-off approach to RWE Iraq deal

Trade the News

Saturday September 04, 2010 09:34:13 AM GMT

* Deal aims to develop infrastructure for export to Europe

* Germany won't say if deal legal after Baghdad contests

* RWE says seeking dialogue, aware of sensitivities

By Brian Rohan

BERLIN, Sept 3 (Reuters) - Germany signalled on Friday that it would take a hands-off approach to a cooperation deal between utility RWE and Kurdish authorities in Iraq that the central government in Baghdad has rejected as illegal.

The deal signed last week foresees a future role for RWE in developing transport infrastructure for gas from the semi-autonomous Kurdish region, including supplies for the Nabucco pipeline project.

The Iraqi oil ministry has said the agreement between RWE and the Kurdish Regional Government is illegal because the country's oil and gas are federal resources to be administered centrally.

It opposes all unilateral energy deals negotiated by the Kurdish authorities in a long-running row over gas and oil resources and revenue-sharing.

Asked about the dispute, a spokesman for the German economy ministry said: "RWE is a consortium member of the Nabucco project, which is of central importance for the diversification of European gas supply. RWE is responsible for its own business decisions."

The Nabucco project aims to transport up to 31 billion cubic metres of gas a year from the Caspian region to reduce Europe's dependence on Russia, which supplies Western Europe with about a quarter of its natural gas.

Germany and RWE hope the project can go forward but are taking a cautious line.

The German foreign ministry described the project as a cooperative effort but declined to comment on its legal status.

"It is not up to the German government to judge the legality of the aforementioned contract," Stefan Bredohl told a regular government news conference in Berlin.

RWE says it is aware of sensitivities in the region, and is seeking dialogue with all sides in order to implement the deal.

"We are very much aware that we have to speak with all relevant authorities in Iraq, and are taking steps now to prepare for the dialogue with the government in Baghdad," the company said in a statement. (Additional reporting by Vera Eckert)

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