Turkey and the Kurdistan Regional Government (KRG) in Iraq on Wednesday announced the signing of a 50-year deal to export Kurdish oil to the north.
KRG Prime Minister Nechirvan Barzani unveiled the deal during a speech to Iraqi Kurdistan's parliament in Irbil, capital of the Kurdish-dominated region in northern Iraq.
The agreement comes amid growing international criticism over the deepening relationship between Iraq's Kurdish region and Turkey — a relationship that bypasses Iraq's central government, straining Baghdad's relations with Irbil and Ankara.
In the opinion of Emre Iseri, a political scientist and energy expert at Turkey's Yasar University in Izmir, Iraq's energy-rich Kurdish region and energy-hungry Turkey are a perfect match.
"Turkey would like to become a regional energy hub, and so Turkey would like to diversify away from Russia and Iran," he said. "It also is thinking about its current account deficit and thinks that it can acquire cheaper oil and natural gas prices from Iraqi Kurdistan."
But Baghdad officials insist only Iraq's central government has the right to export Iraqi crude. Baghdad recently announced plans to take legal action against Ankara at the International Chamber of Commerce’s International Court of Arbitration in Paris. Iraqi officials have said any contracts between Kurdish authorities and foreign energy firms violate Iraq's constitution and are illegal unless formally sanctioned by Baghdad.
While Irbil rejects that position, Ankara has been trying to placate Baghdad for months. According to Soli Ozel, political columnist for the Turkish newspaper Haberturk, Ankara's efforts have largely failed.
"Baghdad protests it and [is] going to court about this," he said. "Obviously they have not looked favorably [on] such transactions and have not changed their minds about it. And the Americans registered their discontent, but that’s where we stand now."
Washington has repeatedly voiced criticism of Ankara’s direct dealings with Irbil, warning it could threaten Iraq's territorial integrity, a position rejected by both Irbil and Ankara.
Some analysts say the KRG is in urgent need of funds from energy sales because Baghdad cut funding to the Kurdish region over its unilateral dealings with Ankara.
With Iraqi Prime Minister Nouri al-Maliki still struggling to form a government following general elections, analysts say Irbil and Ankara could be seeking to exploit the prevailing political instability. However, some say the formation of a new government in Baghdad could lead to greater pressure on both Irbil and Ankara over their deepening energy cooperation.
"The northern Iraqi line seems to be a secure and reliable line at the moment," said Semih Idiz, diplomatic columnist for Al Monitor and the Turkish newspaper Taraf. Whatever the political climate, Idiz says, there will be no turning back.
"[The deal] ties in with other factors [that are related to] Turkey’s own Kurdish problems," he said, explaining the agreement is also a result of regional volatility and strained ties between Baghdad and Ankara. "There [are] political reasons, strategic reasons and also economic reasons for this. And Turkey has been steadily pushing forward with this project, [which indicates] that it is more or less a done deal."
The first batch of Kurdish oil, with an estimated market value of $110 million, was transported through Turkey on May 23. Turkey and the KRG have said the flow of Kurdish oil to international markets will continue despite Iraq's legal efforts to stop it.