Iraq and Gulf Analysis

More on the Galbraith Story: Translated Text of the DN Article about the Tawke Oilfield

Posted by Reidar Visser on Monday, 12 October 2009 20:53

Photo of Peter Galbraith in Bergen from Dagens Næringsliv, 10 October 2009

Photo of Peter Galbraith in Bergen from Dagens Næringsliv, 10 October 2009

There have been quite a few requests for translations of the original Dagens Næringsliv (DN) article on Peter Galbraith, Porcupine and the Tawke oil field which was published in the hard-copy edition of Saturday’s newspaper. Below is a quick and approximate translation of the meatiest parts of the story. General background facts about Galbraith’s past career (including the ongoing quarrel concerning the Afghanistan election results) and about DNO’s activities in Kurdistan have been left out, as have a couple of quotations by yours truly that have already been paraphrased in English in the previous story on this subject at historiae.org.

One piece of additional background information may be of interest. The arbitration proceedings mentioned in the article refer to a claim by Porcupine (Galbraith’s company) and a Yemenite multimillionaire, both of whom were squeezed out when the PSA for the Tawke oilfield was converted to a new contract by the Kurdish authorities in early 2008. That was when Galbraith lost his stake in the oilfield and instead became party to an arbitration dispute with DNO. The new relationship is recounted in the annual report of DNO for 2008 as follows: “Following the review of DNO’s PSCs in Kurdistan in March 2008, DNO is involved in arbitration proceedings related to third party assignments. A formal award, if any, may only be completed in 1–2 years. However, DNO does not consider the claims to be justified and thereby not likely to become payable. No provision has thereby been made in the financial accounts for 2008.” In the second quarter report for 2009, there is a similar reference:  “Also as recorded in the 2008 Annual Report, the Company is involved in arbitration proceedings related to certain third party interests in Kurdistan. The third party interests were not approved by the authorities as part of the PSC review which was completed in March 2008. The first part of the arbitration has ruled that the third party interests had the right to seek compensation for damages from DNO Iraq AS. The arbitration proceedings are therefore continuing and a final award with respect to possible compensation for damages is expected in the second quarter of 2010.”

This makes it clear that the relationship between Galbraith and the Kurdish authorities probably had soured considerably by early 2008, since it seems it was the KRG and not DNO that decided to leave his company out of the revised contract. The fact that the legal dispute has been ongoing since 2008 should hopefully also serve to quash the conspiracy theory already seen in the US blogosphere to the effect that this whole affair is a concoction by Norway to support its UN diplomat Kai Eide in his ongoing spat with Galbraith over the Afghan elections! (That conflict only became publicly known last month.)

One final remark: The article sometimes refers to “licenses” and “ownership”. It may possibly be more precise to speak about a stake in the Tawke PSA from 2004 to 2008 as basis for Galbraith’s claim. Whereas the oil itself presumably remains in Iraqi ownership (even the legal framework in force at the time, the TAL, concedes that much), the stakeholder in this case probably owns a share (in this case 5 per cent) of the economic surplus after the deduction of operating costs.

Senior Diplomat Demands [NOK] 1,500,000,000

[Translated excerpts from the Norwegian version. Originally researched and written by Kristin Gyldenskog, Trond Sundnes and Harald Vanvik and published in Dagens Næringsliv, Oslo, 10 October 2009, pp. 6–8.]

In secret, senior diplomat Peter Galbraith has economic interests in a Kurdish oilfield. Galbraith, who was recently sacked by the UN in Afghanistan, through his Porcupine company demands more than NOK 1,500,000,000 [approximately USD 250,000,000] from DNO for losing his oil licenses in Iraq […]

“I cannot comment on this because I want to avoid legal complications”, Galbraith said. He ran away when DN journalists tried to get in touch with him in Bergen on Thursday […]

On 29 June 2004, DNO signed an exploration deal for a territory within the Kurdish areas of northern Iraq. DNO was the first Western company to enter into an agreement with the Kurdish regional authorities. Whereas other international oil companies chose to liaise with the central government in Baghdad, DNO secured rights to the proceeds of 40 per cent of future oil discoveries in the Tawke field. DNO failed to reply to queries from DN yesterday. When the deal was signed, Kurdish authorities retained rights to a substantial part of the oilfield. However, five per cent went to Galbraith.

The day after DNO had signed the deal with the Kurds in 2004, Peter Galbraith founded the Porcupine company in Delaware. Delaware-based businesses are protected by a high level of confidentiality. DN has identified documents relating to the foundation of Porcupine signed by Peter W. Galbraith and dated 30 June 2004.  Porcupine is one of the parties involved in the lawsuit currently pending in London [relating to the marginalisation of the Porcupine company in 2008 by the Kurdish authorities as described in the introduction above]. DN is also in possession of documents from December 2006 showing that Galbraith’s company still held a five-percent ownership share at that point.

“This dog is very aggressive”, Galbraith said when DN journalists confronted him in Bergen early Thursday morning […] DN have made repeated attempts to obtain comments from Galbraith on his involvement in Porcupine. When he saw DN’s photographer and journalists he first ran away. Later he replied to a few questions after having been confronted with company documents showing he is the manager of Porcupine.  “It is well known that I have worked for companies that invest in Iraq. I have pledged to maintain confidentiality concerning these relationships and cannot provide any more information”, Galbraith told us.

“What did you do in Iraq between 2004 and 2006?”

“You should have read my book, The End of Iraq. Everything is explained there”, Galbraith said, walking briskly. When he noticed DN’s photographer he started to run.

Later in the day, Galbraith contacted us. “I don’t want to be difficult. But I was surprised that you brought a photographer along. Actually, I thought things worked out well; I needed some exercise anyway. I have been thinking about your questions. I should have been able to provide answers to you.”

Galbraith said he had advised the Kurds for many years, but never in a capacity as a formal adviser. “I have worked with companies investing in Iraq and of course the Kurdish authorities know about my relationships to my clients. That is all I want to say”, Galbraith commented.

“What is your relationship to Porcupine?”

“I am in a situation where my business undertakings are subject to confidentiality agreements. I tried to get in touch with my lawyers to find out what information I might be able to provide to you without breaching my pledges of confidentiality, but I couldn’t reach them”, Galbraith said […]

DN agreed with Galbraith to call him again later yesterday. However, when we did so, Galbraith said he did not want to make any further comment and hung up while we tried to ask him questions. “Go ahead and write whatever you want to write. This is your story. Good bye”, Galbraith said.

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12 Responses to “More on the Galbraith Story: Translated Text of the DN Article about the Tawke Oilfield”

  1. Salah said

    Published: 07:48 01.10.2009 GMT+2 /HUGIN /Source: DNO International ASA /OSE: DNO /ISIN: NO0003921009

    DNO International ASA – Arbitration Proceedings

    As explained during the presentation given at the Market and Media Update on 28 September 2009, DNO signed two Production Sharing Agreements (PSA) in Kurdistan in 2004. DNO was the only participant to the PSA at the time with a 40 % economic/beneficial interest. On several occasions DNO communicated to the market that the final terms of the contracts would be subject to final review and the additional participants on the PSA’s would be reported in due course.

    Following implementation of, and in accordance with, the new oil and gas law in the Kurdistan Region in 2007, all contracts were subject to review to comply with the new legislation. In all countries, including Norway, there are certain requirements to be fulfilled for companies which apply for contracts for exploration and production of oil and gas. For DNO’s contracts in Kurdistan such review was completed in March 2008.

    As reported at the Market and Media Update on 28 September 2009, DNO is involved in arbitration proceedings related to certain third party interests in Kurdistan. Such third parties were not approved to be part of or have any rights in the PSC’s following the reviews which were completed in March 2008.

    DNO has rejected the basis for any claims from such third parties, which relates to up to 10 % beyond DNO’s interest in the PSC. The first part of the arbitration has ruled the right to seek compensation for damages from DNO Iraq AS, which is a subsidiary of DNO International ASA. The arbitration proceedings are therefore continuing and a final award with respect to possible compensation for damages is expected in the second quarter of 2010.

    Accordingly there are no other parties who have any rights to an interest in the PSC’s, beyond what were reported on 6 April 2009.

    Ongoing arbitration proceedings are confidential as is any award, subject of course to any legal obligation on DNO to disclose or report any future possible award. DNO is therefore unable to make any further comments related to the arbitration.

    There has been no formal statement of claim specifying the damages requested in the arbitration to date. During our ongoing discussions with KRG we have understood that the arbitration is not part of the present suspension period in Kurdistan, which DNO is working to resolve as soon as possible.

    DNO has reported the arbitration in the note to the 2008 Annual report and in the notes to the Second Quarter 2009 Interim Report. No further information can be given at this stage.
    ________________________________________________________________________
    Following the review which was completed in March 2008 the definition of the contracts changed from Production Sharing Agreements (PSA) to Production Sharing Contracts (PSC) and below is an extract of the content of a DNO Stock Exchange Notice disclosed to the market on 14 March 2008:

    Quote:

    DNO today confirms that it has signed revised agreements with the Kurdistan Regional Government (“KRG”) amending the production sharing contract it holds for the Dohok and Erbil license areas. The Dohok area has been divided into two license areas, one for the Tawke oil field and one for the remaining Dohok area.

    The Company now holds three Production Sharing Contracts (PSC) in Kurdistan – Northern Iraq:

    Tawke PSC
    , with a working interest to DNO of 55 %
    Dohuk PSC
    , with a working interest to DNO of 40 %
    Erbil PSC
    , with a working interest to DNO of 40 %

    The balance of the working interests in all PSC’s is held by the KRG as a Government Interest and Third Party Interest to be appointed by the KRG

    End Quote:

    In April 2009 DNO reported certain assignments which had been completed in relation to its contracts in Kurdistan. Below is an extract from this notice:

    Quote:

    DNO has been advised by the Kurdistan Regional Government (KRG) that it has completed the assignment of a 25% Third Party Interest in the Tawke Production Sharing Contract (PSC) to Genel Enerji. This right of appointing an additional party to the PSC is included in most of KRG’s contracts, and in the case of Tawke, the right was scheduled to be exercised by the end of 2008.
    The assignment process started in the last quarter of 2008, and it was agreed to by the end of last year, and all remaining formalities were recently finalized. The assignment is effective from 1st January 2009 for the purposes of paying costs.

    DNO has been further advised by the KRG that it has also completed the assignments of the Third Party Interest in the Duhok PSC, also to Genel Enerji and the Erbil PSC to another private investor. Duhok and Erbil are still in the exploration/appraisal phase.

    End Quote

    DNO International ASA
    1 October 2009

  2. Steve Connors said

    Reidar,
    Have you seen any indication as to why the KRG should cut Porcupine out of the agreement?

  3. Salah said

    Kurdistan region and oil it is long standing issue in Iraq history. The west and Iran support for the rebels in north Iraq speaks a lot why this region picked their interest and attention as early as Iraq invaded by Britton with the first pipeline from Iraq’s Kirkuk oil fields to Palestine’s Mediterranean port of Haifa.

    The west never stopped interfering in the region so long as they new the richness of the area with oil and other mines, Bill Clinton side US got Uranium enough for decades fro north Iraq after 1991 when US control the area.

    So not surprising if the Kurds who were in control of the area had offered their kickbacks or promised sharing area resources to expand their power on the land.

    After 2003 invasion of Iraq the facts speak to the more complex truth around Kirkuk, the aggressive activities of Kurdish militias continue under the auspices of the United States and the puppet regime in Baghdad. But what is most disturbing is that the events concerning Kirkuk are just another testament to the ideology of institutionalised racism imposed on Iraqi society.

    As for the case of Peter Galbraith not the only or first one repeated here with Kurds and money/Oil there many case similar or may be bigger one of them Baroness Emma Nicholson with her stories about Halabja and advocate for the marsh Arabs in iraq with all the donations and found rising which ended with big blow of Scotland Yard is to study accusations that millions of pounds in donations went missing in a fundraising drive for the Kurds of Iraq headed by Jeffrey Archer. More here with Oil involved and money and Kurd politicians.

  4. Reidar Visser said

    Salah, just to let you know, I refrained from publishing some of the lengthy excerpts that you provided concerning trade in DNO shares and how the company is being investigated by Norwegian authorities, not because they are not interesting and worthy of discussion, but because I want to keep the focus here on Galbraith’s peculiar role as a constitutional adviser slash investor. I don’t want it to develop into the sort of “DNO, general” discussion that can already be found in lots of other places on the internet.

  5. Salah said

    Reidar,

    Apologies your point taken

  6. Reidar Visser said

    Steve, thanks for your comment about the reception of this story in the US so far (also in greater detail at http://justworldnews.org/archives/003844.html ).

    I think the following story illustrates part of the problem. Last Sunday, I noticed that I suddenly had like 2,000 website visitors in the course of one hour, which is a lot more than normal. I checked and found that most of it came from http://democraticunderground.org/ where someone had linked to my story.

    Among the comments that ensued were the following:

    1. who would unrec this?! This is the forgotten part of the Iraq story that every progressive pol should preface their comments about Iraq with.

    2. I JUST RECCD IT

    4. I see the problem: this guy is an appointee who more often works for Democrats, and…
    the story was posted on National Review. However, anything that drags the oil motive for the Iraq War (and natural gas pipeline motive in Afghanistan) is all for the good.

    9. wonder if that charge has something to do with this one? Sacked envoy Peter Galbraith accuses UN of ‘cover-up’ on Afghan vote fraud

    I guess the problem is the way the decentralisation theme in Iraq is so systematically associated with powerful voices in the Democratic camp. “Thou shall not make any comment that in any way can be construed as an attack on Joe Biden” etc.

    But I wouldn’t dismiss the entire US press just yet!

  7. Steve Connors said

    “But I wouldn’t dismiss the entire US press just yet!”

    Perhaps Mother Jones or the Nation may do something but for the rest, I won’t be holding my breath. Mainstream America (and I don’t just mean the media) have so absorbed the “ancient sectarian hatreds” narrative of their involvement in Iraq that it becomes nigh impossible for the media (even if they wanted to) to provide any kind of alternative to the history they’ve worked so hard to build. To do so would be to begin hacking away at the foundations of a belief system. Unfortunately, even the centre left Brits have contracted this disease.

  8. Steve,
    American public opinion and media pessimism do not determine the fact on the ground in Iraq. Historically Iraq is a very tolerant place where a diversity of customs and religions survived better than anywhere else. Extreme sectarianism has always been associated with foreign intervention. On the other hand, Iraqis cannot accept US occupation and at the same time reject Iranian interferences; all foreign interventions should be removed in order to get stability. Our day will come, we the optimists.

  9. Faisal,

    Thank you for your response. I agree with your overall view of Iraq and its people. My comments were about the effects of American media narrative building from the beginning of the occupation onwards which have, indeed, made an enormous contribution to the pain that Iraq has suffered during that period.

    Had the view of the overwhelming majority of Iraqi’s prevailed in the post-invasion political arena the way that US and coalition forces were utilized would have been entirely different. For the sake of brevity I will use but one example: the training of Badr and Peshmerga militia’s and their use against resistance groups would not have taken place, nor would the entrenchment of those groups in the interior ministry have been allowed to happen.

    The American military has always allowed itself to believe it was supporting Iraqi unity when the diplomatic community was pushing a highly divisive and destructive decentralisation program. This fundamental contradiction was wholly encouraged by the use of information that became the life blood of American discourse – that Iraqi’s could not live together in a country that was nothing more than a modern day illusion.

    It remains to be seen whether the majority can withstand this ongoing assault. That Iraqi’s managed to hold firm through 2006 gives us reason to be optimistic. I do hope your day will come but be prepared for Americans to claim the credit.

  10. Salah said

    I do hope your day will come but be prepared for Americans to claim the credit.

    Steve, I think this already been the case after the surge and all these scenario of uncle SAM.

    Many US official and military spoken they are their to keep things in order

  11. Yes indeed, Salah. And just to keep everything in a nice, straight line the military now speaks of “third party counterinsurgency”. Very neat.

  12. Salah said

    “third party counterinsurgency”.

    Hah.. this is the new Obama’s name of old Bush’s “WOT” (War on Terror)

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