Kurdish oil flowing to Turkey to boost KRG's autonomy
Kurdish oil flowing to Turkey to boost KRG's autonomy
Ozgur Kucuk, Istanbul, Today's Zaman
18 August, 2013
The completion of a controversial pipeline that will transport Iraqi Kurdistan's oil to Turkey might bring about major changes in Iraqi Kurds' relations with Baghdad on the one hand and with Turkey on the other.
Kurdish and international oil investors have said they expect the strategic. pipeline to be ready for use by the end of this year, carrying around 300,000 barrels per day. It might also be used to transfer natural gas to Turkey and other European markets.
"I am certain that Kurdistan's exports via the pipeline will very soon become reality," Ashti Hawrami, minister of natural resources for the Kurdistan Regional Government (KRG), said during an energy conference held in London in June.
Hawrami told Sunday's Zaman that Kurdish oil is exported with Baghdad's full knowledge.
“Fifty percent of the income goes to foreign companies and the rest will go to [Iraqi] state coffers," he added.
Turkish Energy Minister Taner Yıldız said in a televised speech on Wednesday that Turkey's petroleum infrastructure is ready for the oil that Turkey will receive from Iraqi Kurdistan.
Once operational, the strategic pipeline is expected to strengthen the Kurdish position vis-à-vis the federal government in Baghdad and will give the Kurds, who have long faced discrimination in the region, more independence in their relations with the Iraqi government.
KRG sees oil as way to open up to Europe
The Kurdish government in Arbil and the central authorities in Baghdad do not see eye to eye on how to manage the country's vast oil resources. Invoking articles of the Iraqi constitution, Kurds argue that they are permitted by the charter to explore for and manage their oil resources. Baghdad vehemently disputes the claim and says federal authorities should have the final say in managing oil and gas, as they are public resources that belong to the whole nation.
Kurdish officials have made clear that they are not going to concede control over natural resources in Kurdistan to the Iraqi government.
Speaking during an energy conference in Germany in April, KRG Prime Minister Nechirvan Barzani said, "If Europe wants to access gas from the fields in Kurdistan, it will be the KRG that takes the lead in negotiations."
The Kurdistan region is also home to vast reserves of natural gas, estimated at 100 to 200 trillion cubic meters.
The pipeline is also likely to take the already warm political and economic relations between Iraqi Kurdistan and neighboring Turkey to new heights. As one of the 20 largest economies in the world, Turkey is ever hungry for energy resources. Oil exports from the Kurdistan region can help meet Turkish needs.
Kurdish officials say they plan to reach a production target of 2 million barrels per day by 2015. If that target is achieved, the Kurdistan region will become a major player on the international energy map. Kurdish oil reserves are estimated at around 45 billion barrels.
With Kurdish oil passing through Turkey, the government in Ankara will also be ideally positioned to use oil exports against Kurds in the future, should any disputes between the two sides arise. Turkey's increased reliance on Kurdish oil exports would, however, mean that Iraqi Kurds would also be able to use their oil resources and exports against Ankara.
The construction of the pipeline has continued in recent months despite intense pressure from both Washington and Baghdad. The US and Iraq worry that the pipeline could significantly reshape power relations in the region and push Iraqi Kurds toward Ankara at the expense of Baghdad.
Senior US administration officials, including Secretary of State John Kerry, have publicly voiced concerns about the pipeline project. But following a meeting between Turkish Prime Minster Recep Tayyip Erdoğan and US President Barack Obama in May at the White House, US complaints concerning the pipeline have stopped. Although unconfirmed, many suspect the Turkish side managed to convince the Obama administration to support its energy deals with the Kurdish government.
‘Baghdad not willing to lose Turkey'
Ankara-Baghdad relations could improve, however, as Baghdad is not likely to be willing to lose a customer such as Turkey, according to a source with good knowledge of Iraqi energy matters. Baghdad and Arbil both have energy deals with Turkey, and if Baghdad's relations with Turkey deteriorate, Arbil would stand to gain. This may suggest that Arbil and Baghdad would be butting heads, but Baghdad already accepts that Arbil has signed oil deals with Ankara.
On the relations between the KRG and Baghdad, Primoz Manfreda, the editor and writer for the Middle East Issues website at About.com, says, “There is little Maliki can do to thwart the trade between Turkey and the KRG.” He suggests that neither has the upper hand, noting: “A direct armed clash is in nobody's interest. Baghdad and Arbil will remain locked in futile talks over the common oil legislation (delayed for years, and key to attracting more foreign investment in Iraq), with neither able to defeat the other.”
Turkey sees the KRG and Iraq as an important part of the solution to its energy woes. Turkey's problematic current account deficit (CAD), which has in recent times ranged between 6.5 and 10 percent of the country's gross domestic product (GDP), is roughly comparable to its energy import bill -- with its rises and falls tied to fluctuations in international oil prices as much as anything else. Ankara wants to decrease its dependence on expensive Russian natural gas and on Iran, a long unreliable energy supplier that US and EU sanctions are making more so. Iraq and its Kurdistan region are one way out of the bind. According to a 2012 International Energy Agency (IEA) report, Iraq will play a pivotal role in world oil markets in the coming decades and could produce up to 8.3 million barrels a day in 2035, but only if “a resolution of differences over governance of the hydrocarbon sector … opens up the possibility for substantial growth also from the north of Iraq.”
It seems likely that Iraqi Kurdistan will continue to develop its oil and gas resources and export routes to get them out of the country, including direct ones via Turkey. The dance between Baghdad, Arbil and Turkey over these exports and unrelated issues will also continue. The United States can be a more effective interlocutor with the parties, and especially with its ally Turkey and friends in Arbil, if it is seen putting pressure on Iraqi Prime Minister Nouri al-Maliki to more fully respect Iraq's broader power sharing arrangements and, more narrowly, to pursue a compact with the country's north that will give it energy trade latitude, while also paying homage to Baghdad's prerogatives.