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The real deal behind Turkish-Kurdish oil
plans: Pipe Dreams or Reality?
22.6.2012
By Shwan Zulal
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Ekurd.net |
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Kurdistan Regional Government Natural Resources
Minister Ashti Hawrami (R) speaks with Turkish
Energy Minister Taner Yildiz during a joint news
conference in Erbil, May 20,2012 Photo: Reuters
• Read more by the Author
June 22, 2012
ERBIL-Hewlêr,
Kurdistan region 'Iraq', — In May, Turkey and Iraqi
Kurdistan announced they would build pipelines
taking oil and gas from Iraq into Turkey, then
possibly Europe. But behind the energy dream, lurks
a nightmare of militant Kurdish independence
fighters and the spectres of energy giants, Iran and
Russia.
To some it is a dream come true, others think it’s a
nightmare that will never see the light of day. The
May 2012 announcement by Ashti Hawrami, the Minister
of Natural Resources in the semi-autonomous state of
Iraqi Kurdistan that they would build new oil and
gas pipelines to Turkey shook the Iraqi government
in Baghdad.
The first phase of pipeline construction is supposed
to be completed by October this year and the second
phase is due to be finished by August 2013. Another
pipeline is to be built by 2014.
Baghdad reacted unhappily to this announcement,
saying – as they had done with other oil deals –
that the Kurds were working outside of the national
remit. National Deputy Prime Minister for Energy,
Hussein al-Shahristani, was dismissive of the
pipelines and local media were also rather negative
about it.
Yet it appears that Baghdad feels that that the
northern state of Iraqi Kurdistan is slipping out of
its control. For the last five years Baghdad has
been trying to reign in the Kurdish government,
especially when it comes to oil and gas.
Shahristani has blacklisted oil companies operating
in Iraqi Kurdistan and even ensured that, during the
recent lacklustre fourth round of bidding to do oil
work in Iraq, there was a new clause preventing any
oil companies from going into Iraqi Kurdistan
without Baghdad’s permission, as oil major Exxon
Mobil did in November 2011.
It is true though that any such pipeline from Iraqi
Kurdistan into Turkey will face more than a few
challenges.
Needless to say the success of any pipeline will
also hinge on the commercial realities of the deal
and what stockholders would get out of it. Other
dimensions are strategic and security related. Apart
from annoying Baghdad, the Iranians and Russians are
also likely to be unhappy. Iran has a long term
contract,www.ekurd.net until 2021, to supply gas to Turkey at
higher-than-market prices (the two countries are
currently involved in a legal dispute over this
issue). And Russia would see any potential new
supplier to Europe as competition for its own gas.
Additionally Russia is one of Turkey's largest gas
suppliers, supplying 58 per cent of the Turkish gas
consumption.
In early June, Kurdish energy minister Hawrami said
that, by 2015, Iraqi Kurdistan could be producing
one million barrels of crude oil per day, with that
doubling by 2019. However it’s not clear how much of
that would be exported, how much would reach other
countries outside of Turkey or whether the crude
would only be refined and used for power generation
inside Turkey.
Really though, the main obstacle is the political
dilemma facing Turkey - it’s cooperation on the
pipelines means it must recognise a Kurdish entity,
or even a Kurdish identity, something it has never
wanted to do because of its own “Kurdish” problem,
inside Turkish borders.
The outlawed Kurdistan Workers’ Party (or PKK) has
been fighting for greater rights for the Kurds of
Turkey and Kurdish autonomy since the early 1980s.
The group is designated a terrorist organization by
some countries and the violent conflict between
Turkish authorities and the PKK has claimed tens of
thousands of lives over the years. The PKK tend to
be based in the inaccessible Qandil mountains on the
Iraqi Kurdish side of the border and launch their
attacks into Turkey from there. And the PKK has been
known to target the oil and gas pipelines in Turkey.
However, although Turkey would not want to see Iraq
split – “when we consider these [energy] projects,
our priority is the territorial integrity of Iraq,”
Turkey’s energy minister, Taner Yildiz, told the
Financial Times recently - Turkey seems to believe a
trade off can be arranged with the Iraqi Kurdish
government. Although the Iraqi Kurdish authorities
have made it clear that they will not confront the
PKK militarily, they do have the option of cutting
off the guerrilla group’s supply lines and limiting
their activities in the region.
It is not yet clear as to whether this is on the
bargaining table. But it is possible that it is, if
Turkey is serious about doing a deal with the KRG,
not just posturing.
As Chris Bowers, the British Consul General in
Erbil, put it during a conference held in London
this week, Iraq Petroleum 2012, “Turkey used to see
the Kurdistan region through the prism of security -
but now it looks at [Iraqi Kurdistan] through the
prism of energy.”
“Turkey may have a historical fear of Kurdish
nationalism but it has slowly come to terms with the
huge benefits that stability and constructive
relations with the Kurds bring,” Kurdish editor
Bashdar Pusho Ismaeel wrote recently in local
newspaper, the Kurdish Globe. “Ultimately money
talks and no rational government can ignore the
massive trade and energy opportunities that come
with a growing economic power-house such as
Kurdistan. Iraq is already Turkeys biggest trade
partner, with Kurdistan accounting for the majority
of that trade.”
There are also obvious international and regional
ramifications. The discussion over pipelines is just
a small part of ongoing problems between Erbil and
Baghdad with wider, geo-political influencers also
at work.
And lately relations between the Shiite Muslim-led
coalition government in Baghdad, headed by Iraqi
prime Minister Nouri al-Maliki and the authorities
in Iraqi Kurdistan do not appear to be getting any
friendlier.
In recent weeks, high ranking Iraqi Kurdish
politicians have practised a kind of shuttle
diplomacy between Turkey and Iraqi Kurdistan and
statements have been made that indicate an
increasing closeness between Erbil and Ankara and
the growing distance between Baghdad and Erbil.
Both Iraqi Kurdistan, and now the Turkish, have
sheltered the Iraqi Vice President Tariq al-Hashimi,
against whom al-Maliki issued an arrest warrant late
in 2011, sparking a political crisis. It appears
that mainly Sunni Muslim Gulf countries like Qatar
and Saudi Arabia are also happy to see Turkey
causing trouble for al-Maliki’s government.
Additionally Turkey has expressed its opposition to
the conflicted Syrian regime whereas Iran has been
more supportive; the Iraqi government has been
mostly treading the stormy diplomatic waters
in-between.
Nonetheless, although the pipeline deal has been
announced, it is not yet clear what is driving such
a deal for Turkey. Some have described current
Turkish foreign policy as “neo-Ottoman-ism”.
Does Turkey intend to isolate PKK? Or it is a
political statement aimed at Baghdad, and indirectly
at Iran, a country that continues to become more
influential in Iraq? Or both? At the moment, Turkish
motives seem to involve a combination of all of the
above but it is hard to say which is the major
driving force for Ankara at the moment.
Meanwhile Iraqi Kurdistan have made it clear that
they are eager to further strengthen the bilateral
relationship with Turkey and that they relish the
idea of being able to sell oil and gas directly to
Turkey, and then on to Europe. However the red line
for the Kurdish leadership is using military force
against PKK.
One thing that is clear is that sooner or later
Iraqi Kurdistan’s oil must reach the market.
Comments made by Tony Hayward, former CEO of BP and
current CEO of Genel Energy, a Turkey-based oil
company with interests in Iraqi Kurdistan, at Iraq
Petroleum 2012 indicate that many believe this.
Hayward seemed to be covertly critical of Baghdad’s
role in preventing international oil companies from
operating in Iraqi Kurdistan – but as Hayward said,
it would only be a matter of time before the oil
made it to market.
His remarks sum up the inevitable and make it clear
that it is in Turkey’s interest to take advantage of
its strategic position as an energy transit nation –
something the Turkish would love the Europeans to
take serious note of too. And Turkey’s energy
hunger, combined with the potential economic
advantage, makes the possibility of a
Kurdish-Turkish pipeline more than just a pipe
dream.
Shwan Zulal, is a
political and security analyst. London &
Kurdistan/Iraq. oil and gas sector, specialising in Kurdish PSCs
and Hydrocarbon Law and advising investors in the
Kurdistan Region and Iraq with legal background.
Zulal is a regular contributing writer for ekurd.net.
He also runs a blog on to the same subject
http://kurdishviews.blogspot.com
This article first appeared on
Niqash.org
Copyright © 2012 ekurd.net
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