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Kurdish struggle for Iraq's oil
4.1.2007 |
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January 4, 2007
Erbil, Kurdistan Region (Iraq)
One of the most common sights in Erbil is that of a
mountain of jerry-cans stacked by a busy roadside.
As a car draws up, a young man will rush over to the
window and be handed a bundle of Iraqi dinars by the
driver. In return, a cherry-coloured liquid will be
poured in to the car's petrol tank.
Welcome to a petrol station in Iraqi Kurdistan.
Despite sitting on huge reserves of oil, it is still
difficult for people of this region to get access to
petrol through formal means.
Instead, cars and trucks fill up at these illegal
roadside operations.
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Drivers get petrol for their cars from informal
roadside stalls in Erbil city
Photo:BBC |
19-year-old Mustafa, who works at one, says he has
to smuggle fuel from Iran because the petrol from
domestic refineries is too low grade.
"We buy the Iranian one, which has this red colour,"
he says.
"It's not legal, of course, and it's expensive. We
don't make much profit. We wouldn't be doing this if
the government distributed good petrol."
Slow progress
Iraqi Kurdistan suffered decades of repression by
Saddam Hussein's regime during which more than
100,000 Kurds are believed to have perished.
After the 1991 Gulf War, it had autonomy but
remained isolated. Now, though, it is finally
beginning to prosper.
Since the fall of Saddam in 2003, investment has
started to flow and the region has had greater
access to central government revenue from Baghdad.
And while much of the country is engulfed in
violence, life in the Kurdish-administered regions
of northern Iraq goes on in relative peace.
However, the Kurds are yet to benefit from the oil
reserves beneath their territory - an issue high on
the agenda for the Kurdish Regional Government (KRG).
The KRG has tasked foreign experts such as Jerry
Kiser, from Kansas in the US, with getting the oil
out.
"We've identified lots of opportunities but there's
no pipelines or access to market," he says.
"In a country that has vast amounts of reserves
proven but none producing, the single highest
line-item burden on the government is the importing
of fuels.
Mr Kiser argues that progress has been slow because
international oil companies are still reluctant to
come and work in northern Iraq.
"Lots of people come to meet the minister but nobody
is really doing anything," Mr Kiser says.
Currently, only two small foreign operators are
working in Kurdistan.
Kirkuk question
Only an hour away from Erbil is the city of Kirkuk,
a major oil centre with a majority Kurdish
population which is nonetheless outside Iraqi
Kurdistan and is therefore under the control of the
central government in Baghdad.
Kirkuk's citizens are expected to hold a referendum
in 2007 to decide whether to stay with Baghdad or to
join the Kurdish-controlled areas.
Should the referendum be in favour of the KRG, then
the Kurds should have direct access to one of the
biggest oil fields in the country.
The prime minister of Iraqi Kurdistan, Nechirvan
Barzani, says that the Kirkuk issue is not just
about securing more oil.
"Kirkuk is Kurdish," he says. "No-one can dispute
that, but we understand that oil does not belong to
just the Kurds. It belongs to everybody in Iraq."
Under Saddam Hussein's regime, he argues, the
proceeds of Kurdish oil bought weapons which were
used against Kurds.
"For the first time in history the people of
Kurdistan, they feel they are part of Iraq. If we
are part of Iraq, then they have to give us a fair
share of Iraq's oil," Mr Barzani says.
In fact, though, Kirkuk's position could be more
difficult to settle.
The city has a large mix of ethnicities, including
Arabs, Turkomen, and Assyrians living alongside the
Kurds.
It is also extremely violent, with US forces engaged
in daily gunfights with local militias.
Its oil installations are attacked regularly and it
is costing millions of dollars to repair an oil
pipeline that has been blown up.
But Mr Barzani is confident that if it came under
Kurdish control, Kirkuk could be secured in a matter
of months.
"After the referendum the situation will be totally
different. We need some time, maybe one year. We are
sure about that, we can bring back security to the
area."
Great Game
The Kurds may have their eyes firmly on the oil in
neighbouring regions, but there is also an
increasing foreign interest in the future of
Kurdistan's oil.
Almost every night, a fresh foreign trade mission
can be found entertaining local officials in the bar
of the city's top hotel.
As well as Americans, there are groups from Europe
and the Far East.
But it is Iran and Turkey that seem keenest to gain
a foothold.
For Jerry Kiser, it is Iran in particular which has
increased its influence in the region in recent
months.
The Iranians, he says, are already benefiting from
300,000 barrels a day flowing across the border from
southern Iraq thanks to smuggling systems set up by
Saddam and still operating.
But on a more long-term basis, he says the country
is actively looking for projects and companies to
recruit and fund.
"They advise me that they have $1bn to invest in the
Iraqi oil sector," he says.
"They have their eyes on lots of cross-border
fields. It's a reality that's hard for Americans to
swallow. Americans may have been playing chequers,
but Iranians are playing chess."
BBC
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