News / Middle East

Iraqi Kurdistan Pushes Limits on Oil, Autonomy

KRG president Massud Barzani, right, and Iraqi President Jalal Talabani open a ceremonial valve during an event to celebrate the start of oil exports from the autonomous region of Kurdistan, Irbil, Iraq, June 1, 2009.
KRG president Massud Barzani, right, and Iraqi President Jalal Talabani open a ceremonial valve during an event to celebrate the start of oil exports from the autonomous region of Kurdistan, Irbil, Iraq, June 1, 2009.
With Kurds asserting themselves throughout the Middle East, Iraq’s semi-autonomous Kurdish region has stepped up its profile on the world's oil scene.
A series of recent petroleum deals signals a direct challenge to Baghdad's claim of total control over the country's oil exports and a possible step by the Kurds toward their longstanding aspirations for increased autonomy, or outright independence.
Kurdish Areas of Turkey, Iran, Syria and IraqKurdish Areas of Turkey, Iran, Syria and Iraq
Kurdish Areas of Turkey, Iran, Syria and Iraq
Kurdish Areas of Turkey, Iran, Syria and Iraq
Within the last few months, Iraq's Kurdistan Regional Government, or KRG, has begun construction on a major international oil and gas pipeline project with neighboring Turkey that would allow the Kurds direct access to world markets via the Mediterranean.
The KRG has also expanded exploration deals with foreign oil majors and boosted a growing crude-for-products trade with Turkish companies.
The moves reveal that Iraqi Kurds want to make their own economic choices.
Deals cause tensions
The deals have not only rankled Iraq's central government but also deepened the diplomatic rift between Ankara and Baghdad.
And they present internal problems for energy-hungry Turkey, too, which is fighting insurgents among its Kurdish minority who have long pushed for more freedoms.
Ankara faces enormous risks were it to throw its economic support solely behind Iraq's Kurds.
"Turkey wants to retain Iraq’s territorial integrity and political stability. It doesn’t want to encourage any kind of autonomy in Turkey or with any of the other Kurdish populations nearby," said former U.S. international energy envoy David Goldwyn.
"Also, Kurdistan’s economic prosperity keeps Kurds happy there and is a significant commercial opportunity for Turkish companies. So [there are] complicated, mixed interests on both sides," he said.
Rich oil reserves
The Kurdish-run districts of northern Iraq have significant, nearly untapped reserves.
But years of legal disputes between the KRG and federal authorities in Baghdad have kept its oil largely excluded from international markets. Most oil produced in Kurdistan is sold locally for up to $60 a barrel, well below world prices.
With its sole grip on federal authority, Baghdad receives all Iraqi oil revenues and distributes a share to the Kurdistan region. Iraq also controls the vast, lucrative oil fields in the south.
In April, the KRG temporarily halted exports to protest what it said were overdue payments from the central government. Shipments were restarted in August and increased in September, when Iraq’s federal Cabinet ratified a new agreement with the Kurds.
Kurdish Oil Minister Ashti Hawrami told an energy conference in London the deal could lead to exports reaching 250,000 barrels per day by 2013. Kurdish officials project levels of one million barrels a day by 2015.
The heady outlook is contingent on the KRG’s recent deal with Ankara, which bypasses the federally-controlled Iraqi pipeline and is due to be operational by early 2014.
"If the new pipeline[s] go through," said Middle East expert Gregory Gause, "Baghdad’s leverage over the Kurds would be reduced to zero."
Over-stated oil claims
But some analysts say Kurdish oil claims are over-inflated.
Roughly 75 percent of Iraq’s proven reserves are concentrated in the south. The Kurds control only about six percent of the remaining northern reserves while another 20 percent is in the disputed Kirkuk area, according to the U.S.-based Revenue Watch.
"Kurdistan does not have 45 million barrels of oil as it claims. Most of that is in disputed territories that would never be included or accepted by the central government," said Denise Natali, a Kurdish expert at the National Defense University in Washington, D.C.
Iraq's southern oil fields are the country's "real jewel," she said.
But Iraq remains in political turmoil and the south, in particular, has faced repeated deadly attacks from extremist elements seeking to destabilize the country.
For now, the Kurdish regional government provides better financial terms to oil companies. "Its stable political environment is attracting international investment in a way Baghdad has been unable to do," Gause said.
Last year, ExxonMobil became the first oil major to sign with the KRG, aggravating relations with Baghdad "by taking exploration blocks located squarely in disputed territories," according to a report by the International Crisis Group.
Chevron, France’s Total and Russia’s Gazprom have followed. An estimated 45 smaller petroleum companies also are operating in Kurdistan.
Last month, Iraq’s finance ministry belatedly transferred an initial $650 million payment to the Kurdish government to reimburse two of these firms. But Baghdad does not view the compensation as an endorsement of the Kurdish contracts.
In a further slap to the Iraqi government, diplomatic sources said last month that Exxon is looking to sell its stake in a flagship project to develop the giant West Qurna-1 oil field in southern Iraq, because profits there are thin.  
Exxon has declined to comment.
Kurds cautioned
Former envoy Goldwyn cautioned Kurdish leaders not to overplay their hand.
"The Kurds have some serious cards. But if Baghdad continues to refuse to reimburse costs once those costs become significant — four-five years out — [it] could decidedly hamstring the KRG’s economic development," he said.
Iraq's federal government maintains it alone has the right to negotiate contracts and export oil and gas. The Kurdish view is that Iraq’s federal constitution provides delegated authority to the provinces over their own petroleum production.
"The constitution gives us the right to develop our oil infrastructure and share it with the rest of the country," said Fuad Hussein, chief of staff for the KRG presidency.
"Each community, each citizen, has a share in the wealth, along with the Iraqi government," he said.
Ultimately, Goldwyn and others say, the crux of the dispute is about sovereignty, not money. In the near term, the Kurds will remain part of Iraq even as they seek to increase their oil hand.

Mark Snowiss

Mark Snowiss is a Washington D.C.-based multimedia reporter.  He has written and edited for various media outlets including Pacifica and NPR affiliates in Los Angeles. Follow him on Twitter @msnowiss and on Google Plus

You May Like

Isolation, Despair Weigh on Refugees in Remote German Camp

Refugees resettled near village of Holzdorf deep in German forestland say there is limited interaction with public, mutual feelings of distrust

Britons Divided Over Bombing IS

Surveys show Europeans generally support more military action against Islamic State militants, but sizable opposition exists in Britain

Russia Blacklists Soros Foundations as 'Undesirable'

Russian officials add Soros groups to a list of foreign and international organizations banned from giving grants to Russian partners

This forum has been closed.
Comment Sorting
by: Yere from: Boston
November 13, 2012 12:39 PM
I really dislike the way some so called analysts such as Denise Natalie talk about Kurdistan and its potential oil reserves. Natalie, can you tell us what's the source of your information that Kurdistan has no 40.5 B barrel of oil? Are you a geologist or just an armchair analyst who can estimate oil reserves of Kurdistan from DC?! US Geologica S has said Kurdistan has over 40 B barrel of oil, not the Kurds. To give you some instructions, there is no such thing as central government, its federal government. If one does not understand the Iraqi constitution, how can she estimate Kurdistan oil. Do some more study before making comments.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
With HIV, Can We Get to Zero?i
Carol Pearson
November 29, 2015 1:23 PM
The theme of this year's World AIDS Day is "Getting to Zero." The U.N. says new HIV infections have been reduced by 35 percent since 2000 and AIDS-related deaths are down by 42 percent since the peak in 2004. VOA's Carol Pearson takes a look at what it might take to actually have an AIDS-free generation.

Video With HIV, Can We Get to Zero?

The theme of this year's World AIDS Day is "Getting to Zero." The U.N. says new HIV infections have been reduced by 35 percent since 2000 and AIDS-related deaths are down by 42 percent since the peak in 2004. VOA's Carol Pearson takes a look at what it might take to actually have an AIDS-free generation.

Video Political Motives Seen Behind Cancelled Cambodian Water Festival

For the fourth time in the five years since more than 350 people were killed in a stampede at Cambodia’s annual water festival, authorities canceled the event this year. Officials blamed environmental reasons as the cause, but many see it as fallout from rising political tensions with a fresh wave of ruling party intimidation against the opposition. David Boyle and Kimlong Meng report from Phnom Penh.

Video African Circus Gives At-Risk Youth a 2nd Chance

Ethiopia hosted the first African Circus Arts Festival this past weekend with performers from seven different African countries. Most of the performers are youngsters coming form challenging backgrounds who say the circus gave them a second chance.

Video US Lawmakers Brace for End-of-Year Battles

U.S. lawmakers are returning to Washington for Congress’ final working weeks of the year. And, as VOA's Michael Bowman reports, a full slate of legislative business awaits them, from keeping the federal government open to resolving a battle with the White House over the admittance of Syrian refugees.

Video Taiwan Looks for Role in South China Sea Dispute

The Taiwanese government is one of several that claims territory in the hotly contested South China Sea, but Taipei has long been sidelined in the dispute, overshadowed by China. Now, as the Philippines challenges Beijing’s claims in an international court at The Hague, Taipei is looking to publicly assert its claims. VOA’s Bill Ide has more from Beijing.

Video After Terrorist Attacks, Support for Refugees Fades

The terrorists who killed and injured almost 500 people around Paris this month are mostly French or Belgian nationals. But at least two apparently took advantage of Europe’s migrant crisis to sneak into the region. The discovery has hardened views about legitimate refugees, including those fleeing the same extremist violence that hit the French capital. Lisa Bryant has this report for VOA from the Paris suburb of Cergy-Pontoise

Video Syrian Refugees in US Express Concern for Those Left Behind

Syrian immigrants in the United States are concerned about the negative tide of public opinion and the politicians who want to block a U.S. plan to accept 10,000 Syrian refugees. Zlatica Hoke reports many Americans are fighting to dispel suspicions linking refugees to terrorists.

Video Thais Send Security Concerns Down the River

As Thailand takes in the annual Loy Krathong festival, many ponder the country’s future and security. Steve Sandford reports from Chiang Mai.

Video Islamic State Unfazed by Losses in Iraq, Syria

Progress in the U.S.-led effort to beat Islamic State on its home turf in Iraq and Syria has led some to speculate the terror group may be growing desperate. But counterterror officials say that is not the case, and warn the recent spate of terror attacks is merely part of the group’s evolution. VOA National Security correspondent Jeff Seldin has more.

Video Belgium-Germany Border Remains Porous, Even As Manhunt For Paris Attacker Continues

One of the suspected gunmen in the Nov. 13 Paris attacks, Salah Abdeslam, evaded law enforcement, made his way to Belgium, and is now believed to have fled to Germany. VOA correspondent Ayesha Tanzeem makes the journey across the border from Belgium into Germany to see how porous the borders really are.

Video US, Cambodian Navies Pair Up in Gulf of Thailand

The U.S. Navy has deployed one of its newest and most advanced ships to Cambodia to conduct joint training drills in the Gulf of Thailand. Riding hull-to-hull with Cambodian ships, the seamen of the USS Fort Worth are executing joint-training drills that will help build relations in Southeast Asia. David Boyle reports for VOA from Preah Sihanouk province.

Video Uncertain Future for Syrian Refugee Resettlement in Illinois

For the trickle of Syrian refugees finding new homes in the Midwest city of Chicago, the call to end resettlement in many U.S. states is adding another dimension to their long journey fleeing war. Organizations working to help them integrate say the backlash since the Paris attacks is both harming and helping their efforts to provide refugees sanctuary. VOA's Kane Farabaugh reports.

VOA Blogs