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Who is to control Kurdish oil, and protect
it from sabotage?
29.9.2006
September 28, 2006 | Erbil, Kurdistan Region (Iraq) |
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The Kurds say they will; the central government
in Baghdad begs to differ
IRAQ'S Kurds like to describe themselves as the
orphans of history and geography. In the carve-up of
the Ottoman empire after the first world war, they
found themselves welded to a state in which they
never felt at ease, stuck in the toughest of
neighbourhoods. Nor has geology been the blessing
that it might have been.
Rather than benefit from the oil that swills under
their northern homeland, Kurds argue that they have
often been its victim.
Under Baathist rule, the Kurds were frozen out of
jobs in the oil industry, while thousands of
families were forcibly removed from their homes and
land round the oil-rich city of Kirkuk. This
lingering sense of injustice at the hands of the
central government formed the backdrop to an
extraordinary briefing last week about oil prospects
in the region, given by Kurdish officials to a group
of international energy executives in London.
Iraq is thought to have plenty of undiscovered oil
but the insurgency and legal uncertainty have made
companies wary of looking for it. Now, proudly
waving a new petroleum law that is set to pass
through the Kurdish regional parliament in Erbil in
October, Ashti Hawrami, the Kurds' new minister for
natural resources, told the gathering that the
Kurdish Regional Government (KRG) had the authority
to exploit any new oil and gas reserves discovered
in the self-rule zone. |
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It was the Kurds' intention, he said, to manage
jointly with the central government any existing
energy resources in areas that either fall within
the KRG's current boundaries, or will do so should
the Kurds succeed in extending their proposed
federal region in a referendum due at the end of
2007.
Although northern Iraq's oil reserves are not as big
as the giant southern fields round Basra, Mr Hawrami
said the area had “good potential”, estimating
reserves at around 45 billion barrels of oil and 100
trillion cubic feet of natural gas. He also held out
the prospect of a second export pipeline from Kirkuk
to the Turkish port of Ceyhan, which would run
through Kurdish-controlled territory, thus giving it
greater protection from sabotage attacks.
Mr Hawrami assured his audience that his plans were
in keeping with Iraq's new federal constitution and
would be legally enforceable. Until now, only small,
independent explorers have set up in the Kurdistan
region. The KRG has signed production-sharing
contracts with a Norwegian oil company, DNO, which
is already drilling for oil near Zakho, and with
Turkey's PetOil and Genel Enerji, which is exploring
near Taqtaq. Memoranda of understanding have been
signed with other independents, and Mr Hawrami said
that the KRG was set to sign further
production-sharing contracts in October, and was
also talking to several oil majors. Revenues would
be shared according to the law, he said, stressing
his co-operation with the central authorities.
Not so fast. No sooner had Mr Hawrami spoken, than
his counterpart in Baghdad, the federal oil
minister, Hussein Shahristani, appeared to pull the
rug from under his feet, telling the state-owned al-Sabaah
newspaper: “The ministry isn't committed to oil
investment contracts signed in the past...by
officials of the government of the Kurdistan
region.”
Mr Shahristani, who has the support of the ruling
Shia alliance, insists that contracts signed without
the approval of the central government should be
nullified and that all the country's oil
exploration, production and export contracts should
be placed in the hands of his ministry in Baghdad.
Any new energy contracts should wait until Iraq
produces a new hydrocarbon law, possibly sometime in
the new year. Oil officials in Baghdad have hinted
at blacklisting companies that currently work in
Kurdistan.
This tussle between Baghdad and the Kurds over
control of Iraq's northern energy resources is also
alarming the country's Sunni Arab minority. Many
Sunni leaders believe that the decentralisation of
Iraq's oil, as envisaged in the constitution, is the
latest example of a conspiracy to break Iraq into
three parts: a Kurdish north and a Shia south, both
of them rich in oil, and a revenue-starved Sunni
centre.
This week their simmering concerns boiled over on
the floor of parliament as members of the largest
Sunni block, the Sunni Accordance Front, denounced
some of their leaders as traitors for agreeing to a
deal over a Shia-proposed bill to put flesh on the
federalism enshrined in the constitution. The deal,
which allowed the federalism bill to be read in
parliament, also allows for a committee to consider
amending the constitution.
Sunni politicians are banking on amendments that
will dilute the constitution's federal provisions.
They have all-but accepted the Kurds'
autonomy—though not their attempts to develop their
natural resources—but are vehemently opposed to the
creation of a powerful Shiastan in the south. Yet
any constitutional amendment must be approved in a
referendum of all Iraqis. And it is unknown whether
a sufficient majority of Shias and Kurds will say
“yes” to a dilution of federalism.
economist com
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