Oil key to any Iraqi Kurdistan
June 23, 2012
Iraqi workers at an oil refinery in Kurdistan.
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Kurdistan president Massoud Barzani. Photo: AFP
Iraq Prime Minister Nuri al-Maliki sees Kurdistan's
oil deals as having the danger of breaking up the
country. Photo: AFP
BAGHDAD/ERBIL, — Iraqi Kurdistan's efforts to
ramp up its oil production and export capabilities
increase the viability of independence as an option
for the region, which is in a months-long standoff
The dispute has seen Kurdistan president Massoud
Barzani launch a series of attacks against Prime
Minister Nuri al-Maliki, while the region cut off
oil exports to Iraq in a payment dispute and also
refused to hand over a fugitive Iraqi vice president
who is wanted for allegedly running a death squad.
The autonomous region in northern Iraq has not made
any overt moves towards independence, although
Barzani has said he could resort to a referendum on
its future if the crisis with Baghdad drags on.
Kurdistan has its own government, security forces,
borders and flag, but it is economically dependent
on the Iraqi government, which is required to pay 17
percent of the national budget to Kurdistan.
The region has signed dozens of contracts with
foreign oil firms aimed at boosting its oil sector
in recent years, and said it intends to build
pipelines that would give it an independent export
capability -- moves that could give it financial
The Iraqi government, which says all oil contracts
must go through Baghdad and regards any that do not
as illegal, has strenuously opposed such deals.
"It is becoming increasingly clear that the Kurds
see expansion of (Kurdistan's) oil sector as the key
to future independence," said Reidar Visser, an Iraq
analyst and editor of the www.historiae.org website.
"By signing those deals, the Kurds are looking at
the long term, when it would be in their favour to
split from Iraq proper by being financially
independent," said Ruba Husari, the editor of
Iraqi Kurdistan does not currently have the ability
to independently export oil, but the region has said
that two pipelines, one for oil and another for gas,
A statement posted on the Kurdistan government
website in May said that natural resources minister
Ashti Hawrami had spoken about "plans for a new gas
pipeline to supply Turkey?s BOTAS gas grid... and in
the next 12 months, a million-barrel oil pipeline to
connect to the Ceyhan pipeline" that feeds an export
terminal on Turkey's Mediterranean coast.
"A pipeline from Kurdistan to Turkey would allow the
Kurds to export crude independently of Baghdad and
cash the proceeds directly," Husari said.
"The Kurds are acting independently in everything
but the name," said Visser.
But he noted that the position of Turkey, with which
Kurdistan has important economic ties, is key,
saying: "It is conceivable that Turkey may prefer to
maintain the nominal unity of Iraq."
Baghdad has pushed back against Kurdistan's oil
deals, especially an exploration contract the region
signed with US oil giant ExxonMobil last October.
"Maliki views these deals as representing a very
dangerous initiative that may lead to the outbreak
of wars" and "breaking up the unity of Iraq," the
premier's spokesman Ali Mussawi said.
The premier "sent a message to American President
Barack Obama ... urging him to intervene to prevent
ExxonMobil from going in this direction," Mussawi
And Iraq's deputy premier for energy affairs issued
a warning to French companies that any contracts
with Baghdad would be scrapped if they signed deals
with local or regional governments in Iraq.
Baghdad "has been blacklisting companies from doing
projects in Iraq proper," if they sign deals with
Kurdistan, Husari said.
"There is little it can do with past contracts, but
all future contracts will have a clause saying that
federal government approval is required for any
project in the oil sector," she said.
But production-sharing contracts that are offered by
Kurdistan are a major draw for companies, as they
are more lucrative than the service contracts the
federal government has awarded,www.ekurd.net
which offer a fixed fee per barrel of oil.
The region's prime minister, Nechirvan Barzani, told
AFP in Erbil that Kurdistan is committed to the
Iraqi constitution, but also said that the Kurdish
people have a right to self-determination.
"It's a question about people. Of course, as a
nation, yes, we have that right, but now we are
dealing with reality," Barzani said.
By W.G. Dunlop
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