x Abu Dhabi, UAEThursday 18 January 2018

Kurdistan stays defiant over oil

Ankara is reluctant to back Kurdistan's plan for an independent export pipeline to Turkey.

The Kurdistan Regional Government plans to build a pipeline to Turkey by the end of next year to export oil independently of Baghdad. Ali Al Saadi / AFP
The Kurdistan Regional Government plans to build a pipeline to Turkey by the end of next year to export oil independently of Baghdad. Ali Al Saadi / AFP

LONDON // The leaders of Iraqi Kurdistan say that by the end of the year they will be able to count on their books 45 billion barrels of oil reserves, enough to eclipse Libya's.

Already, they have attracted ExxonMobil and investments from Abu Dhabi and companies in the United Kingdom to pump out the riches.

And last month, Ashti Hawrami, the oil minister in the Kurdistan Regional Government, announced plans to build a pipeline to the Turkish border by the end of next year, enabling Kurdistan to cash in on exports without relying on Baghdad, which owns the only export pipeline connected to the semi-autonomous region.

The only hiccup? Turkey has yet to sign on to the plan.

"It's a risk which is taken by the private sector," Berris Ekinci, Turkey's deputy director general for energy, water and environment in the ministry of foreign affairs, told an audience in London this week. "I would like to remind you that we already have a pipeline which is operating between Iraq and Turkey, and this is a pipeline with a capacity of 1.6 million barrels per day [bpd], and unfortunately it's operating at about 400,000 barrels per day today."

That pipeline - operated by Somo, Iraq's state-owned oil marketing company - does not transport Kurdish crude at present because of a long-running dispute between Erbil and Baghdad over payments.

Turkey's carefully measured distance between itself and Kurdistan's plan for an independent pipeline reflects the awkward dance between Ankara, Erbil and Baghdad over oil and power.

Baghdad wants to maintain federal control over all of Iraq's energy policy, from exploration contracts to crude exports.

Kurdistan says it should be able to bring in foreign partners to develop the resources on its own terms, and that exports should not be handled solely by Somo.

And Turkey wants oil - although it is not yet willing to alienate either Erbil or Baghdad for the sake of it.

"We very much respect that, first and foremost, that the oil and gas resources will first go to the Iraqi people," Ms Ekinci told the audience, which included Mr Hawrami and Rowsch Shaways, one of Iraq's three deputy prime ministers.

The situation is made more complicated by the PKK, a Kurdish rebel group in Turkeyknown to take refuge in Iraqi Kurdistan. At times, the PKK's skirmishes with the Turkish military have spilled over into Iraqi Kurdistan.

Mr Hawrami conceded: "Turkey does not want to be involved with our internal politics."

The pipeline plan is one more in a string of defiant moves by Kurdistan.

Tensions between Erbil and Baghdad have been high since last November, when Mr Hawrami announced that the Kurdistan Regional Government had granted ExxonMobil six exploration blocks.

Since ExxonMobil already held contracts in southern Iraq, Baghdad considered the Kurdish deal a violation of its blacklisting policy.

Nouri Al Maliki, the Iraqi prime minister, has since written to Barack Obama, the US president, asking the United States to stop ExxonMobil from exploring in Kurdistan, the prime minister's media adviser told Reuters this week.

Baghdad officials are invoking the sanctity of the 2005 constitution. "Oil is something that belongs to all Iraqi people," said Mr Shaways. "The real rule is abiding by the constitution and the rules of the democratic game."

Kurdistan has pressed ahead with its development plans, from boosting output to 200,000 bpd by year-end to the pipeline that would allow it to export independently of Somo.

"I do not believe there is any part of the constitution anywhere giving a cartel the sole right to market Iraq's oil and gas," said Mr Hawrami.

He called the situation "one of the illnesses we have to deal with" and said more transparency was required for exports.

"Where you have a million barrels a day of oil, it will find itself to market," said Mr Hawrami. "Despite the political haggling, that oil will flow.

"We are not interested in the dollars. We only want our fair share of the dollars."


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