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
x
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

Karzai's Legacy: Missed Opportunities?

Afghanistan's president leaves behind a much different nation than the one he inherited, yet his legacy from 13 years in power is getting mixed reviews More

Video Secret Service Chief Under Fire for White House Security Breach

Julia Pierson faces tough questions from lawmakers after recent intrusion at White House, says: 'It is clear that our security plan was not executed properly' More

Frustrated, Liberian Students Want Ebola Fight Role

Thousands have volunteered to go to counties, rural villages to talk to people in their language about deadly virus More

This forum has been closed.
Comment Sorting
Comments
     
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.
Malaysia Struggles to Stop People Joining Jihadi
X
Mahi Ramakrishnan
September 30, 2014 2:16 PM
Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Iran's Rouhani Skeptical on Syria Strikes

Iranian President Hassan Rouhani expressed skepticism Friday that U.S.-led airstrikes in Iraq and Syria could crush Islamic State militants. From New York, VOA’s Margaret Besheer reports the president was also hopeful that questions about Iran’s nuclear program could be resolved soon.
Video

Video US House Speaker: Congress Should Debate Authorization Against IS

As wave after wave of U.S. airstrikes target Islamic State militants, the speaker of the Republican-controlled House of Representatives says he would be willing to call Congress back into session to debate a formal, broad authorization for the use of military force. VOA’s Michael Bowman reports from Washington, where legislators left town 10 days ago for a seven-week recess.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Video

Video Ebola Robs Liberians of Chance to Say Good-Bye to Loved Ones

In Liberia, where Ebola has killed more than 1,500 people, authorities have worked hard to convince people to allow specialized burial teams to take away dead bodies. But these safety measures, while necessary, make it hard for people to say good bye to their loved ones. VOA's Anne Look reports on the tragedy from Liberia.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid