The prime minister of Iraq's self-ruled Kurdish region said Saturday [28 June 2008] that oil deals unilaterally signed by the Kurds with foreign companies will stand despite opposition from the Iraqi central government.

The Shiite-led government in Baghdad considers any deals signed by the Kurds illegal since the country has not yet finalized a new national oil law. 

But Prime Minister Nechervan Barzani said the more than 20 production-sharing contracts the Kurds have signed with international oil companies since they drafted their own oil and gas law in August 2007 are "irreversible."

"Anyone who wants to put off these deals is a dreamer," said Barzani during a press conference held Saturday in the Kurdish regional capital of Irbil. 

Kurdish and Iraqi government officials ended talks this past week in Baghdad to try to settle their differences over a proposed new oil law but made little progress.

Barzani said the two groups have agreed to set up a committee headed by Iraqi Prime Minister Nouri al-Maliki that will try to reach a final solution on the oil deals signed by the Kurds. 

"We resort to this alternative after reaching the conclusion that this dispute is political, not technical," said Barzani.

Iraqi political factions have been at loggerheads since February 2007 over the law that would set rules for foreign investment in Iraq's oil industry and determine how oil revenues will be shared among Shiites, Sunnis and Kurds. 

Major obstacles include a dispute over the rights of regional administrations to negotiate contracts with foreign oil firms and who has the final say in managing oil and gas fields.

The Iraqi Oil Ministry has threatened to blacklist companies that sign deals with the Kurds, but that has not prevented firms from working with the Kurdish government. The Kurds announced a new package of oil deals with South Korea's state oil company on Wednesday. 

The Iraqi government had previously excluded the state-owned Korea National Oil Co. from taking part in bids to develop Iraq's oil and gas fields after it signed a memorandum of understanding with the Kurds.

Kurdish officials claim these contracts are in line with the Iraqi constitution and therefore totally legal. 

"Since these contracts do not violate the constitution, no power in Baghdad can cancel them," said Barzani.

The Kurdish prime minister's comments are expected to deepen further the rift with the central government over the issue. 

Iraq has an estimated 115 billion barrels of oil and some 112 trillion cubic feet of natural gas reserves, according to the government.

The Kurds, who control three northern provinces, sell the roughly 10,000 barrels of oil per day they produce to the domestic market since their region has no coastline to transport the resources.