UK Government is warming up to the Iraqi Kurdistan Region  28.6.2011
By Shwan Zulal - ekurd.net

In spite of these warnings, many UK and some US oil exploration companies along with Chinese, Koreans and others have entered into PSCs and PSAs in Kurdistan Region and some have already started exporting oil.

In a recent a article, the UK Foreign Secretary, William Hague, has praised the KRG (Kurdistan Regional Government) and it appears that there is a shift in UK policy towards Kurdistan Region. The Foreign Secretary seems to be trying to build bridges with KRG and give the signal that UK is ready to do business in Kurdistan Region. Hague's comments and the recent visit by UK former PM, Sir John Major, to the Region addressing Kurdish Parliament and opening the British Consulate in Erbil, indicate a clear shift in UK government policy towards Kurdistan Region.

The US has so far failed to acknowledge Kurdistan Region publicly and encourage investment in the oil and gas sector. This policy reflects on lack of US companies operating in Kurdistan. This policy is partly due to US administration's efforts not to be seen taking side with the Kurds and upset other Iraqi factions not mentioning the neighbouring countries and the Arab world. Furthermore, it is a clear indication that the US is committed to a united Iraq. This policy has disadvantaged US companies and slowly eroding US's strong relations with Kurdistan Region.

Meanwhile, Chris Bowers, the British Consul General in Erbil, stressed the need to invest in the gas infrastructure in Kurdistan Region and highlighted the issue. Bowers, reiterated UK's commitment to enable Kurdistan Region in Iraq to supply gas to Turkey and Europe in order to contribute to EU energy security.

It is no coincidence that British HOIL (Heritage Oil) has discovered one of the biggest gas finds in Miran block near Slemani (Sulaimaniyah) earlier this year. While the discovery is the largest in Iraq for 30 years,www.ekurd.netinvestors were disappointed that it was not oil and the company share price suffered as investors to fright. The main issue with gas finds in Kurdistan is lack of infrastructure. While some smaller oil producers can use Tankers to ship oil as a desperate measure if there are no pipelines, when dealing with gas it is a much more complicated process, therefore pipelines and infrastructure is essential.

UK government appear to be giving the impression that they would like to promote UK based companies to develop the gas infrastructure in Kurdistan, which is to be welcomed, as British companies are leaders in the field.

While the most talked about project in Kurdistan Region is connecting the Region to the Southern Corridor though Turkey and supply Europe. The political implication of such project is still under discussion. Turkey would probably want reassurances and try to stifle Kurdish independence ambitions and Baghdad has its own ideas of preventing Kurdistan Region from selling its oil and gas directly. This was evidence in the latest understanding between EU and Iraqi deputy PM for energy, Hussein Shahristani. Meanwhile Europe needs to diversify its energy supply and stop overdependence on Russian gas.

Developing infrastructure would be the key to Kurdistan Region's success. And having UK on board as a partner and allowing British companies taking a lead in the Region's development would be a bonus for Kurdistan Region's future.

While these developments are very exciting, KRG must accelerate reforms and curb institutional and personal corruption. The investment legislation must be overhauled and replaced with concrete laws that reassures investors. The more transparent KRG becomes the more credibility it would acquire. Once overdue reforms carried out, multinational companies and influential states like UK and US would find it politically much easier to do business in Kurdistan Region.
  

Shwan Zulal is a Kurdish Blogger, a regular contributing writer for ekurd.net, interested in political and legal Reform in Kurdistan, KRG, Iraq and current Kurdish affairs, including oil exploration companies and relevant legislations. You may visit Zulal's website at http://kurdishviews.blogspot.com/

Copyright © 2011 ekurd.net

Top