Er­bil and Ankara to sign a strate­gic agree­ment

The Kurdish Globe - - EDITORIAL -

The Iraqi Prime Min­is­ter Nouri al-Ma­liki has tried to per­suade the Amer­i­can oil gi­ant Exxon Mo­bil to with­draw from Kur­dis­tan and re­sume its in­vest­ment in the West Qurna 1 field, which is un­der the con­trol of Bagh­dad. Exxon’s CEO Rex Tiller­son met the Iraqi Prime Min­is­ter in Jan­uary, but has not made any prom­ises, and met with Kur­dis­tan Re­gion’s Pres­i­dent Mas­soud Barzani in Zurich, Switzer­land the next day, where he re­it­er­ated his com­pany’s com­mit­ment to its con­tracts with the Kur­dis­tan Re­gional Government (KRG). In a report pub­lished by Reuters on the devel­op­ment of Kur­dis­tan Re­gion in the oil and gas in­dus­try, Exxon Mo­bil lawyers and top ex­ec­u­tives have been ex­am­in­ing their de­ci­sion which could change the bal­ance of power in Iraq if they pull out of Qurna 1 oil filed in South­ern Iraq.

Exxon Mo­bil’s en­try into Kur­dis­tan Re­gion’s oil sec­tor has had an sig­nif­i­cant im­pact on the devel­op­ment of this re­gion. It con­se­quently en­cour­aged sev­eral other oil giants to sign agree­ments with KRG for ex­plor­ing oil, in­clud­ing French gi­ant To­tal, Rus­sian gi­ant Gazprom and Amer­i­can gi­ant Chevron.

Safety and Sta­bil­ity in

Kur­dis­tan

Kur­dis­tan Re­gion is safe, which has prompted in­ter­na­tional in­vestors, and the KRG has been very keen on en­cour­ag­ing new busi­nesses to start-up. This is in con­trast to South­ern ar­eas of Iraq, where there is no se­cu­rity or safety for work- ers. Un­for­tu­nately the Iraqi government has not played a pos­i­tive role in at­tract­ing in­ter­na­tional oil com­pa­nies to help de­velop the poor eco­nomic in­fra­struc­ture of this war torn coun­try. Con­se­quently, oil giants have been more keen to sign con­tracts with Kur­dis­tan Re­gion, as op­posed to cen­tral and South­ern parts of Iraq.

Oil au­ton­omy

Dur­ing the last few years, Kur­dis­tan Re­gion has been rel­a­tively au­tonomous in the en­ergy in­dus­try, Reuters re­ports. This au­ton­omy and devel­op­ment in Kur­dis­tan has even pushed Exxon Mo­bil to sac­ri­fice its con­tracts in the south for the sake of hav­ing con­sis­tent and fast de­velop- ment with a promis­ing en­ergy in­dus­try in the re­gion. An en­ergy ex­pert ar­gues that sign­ing an agree­ment with Exxon Mo­bil was a big step to­wards de­vel­op­ing Kur­dis­tan re­gion, and since the agree­ment this re­gion has changed dra­mat­i­cally. Ac­cord­ing to the report by Reuters, Kur­dis­tan Re­gion is very rich in oil and gas re­sources. This has at­tracted many in­ter­na­tional en­ergy com­pa­nies, with many other com­pa­nies eye­ing the re­gion for fu­ture in­vest­ments. The ques­tion now has be­come, how Kur­dis­tan can ex­port its oil rather than whether it has the abil­ity to pro­duce oil.

Kur­dis­tan will not wait

for Bagh­dad

Un­til re­cently Kur­dis­tan’s oil was ex­ported via a pipe­line that is con­trolled by the cen­tral government. How­ever, this line of ex­port was put on hold last month due to Bagh­dad’s re­fusal to pay oil com­pa­nies’ fees. Reuters re­ports that KRG au­thor­i­ties will not wait for Bagh­dad any more, and as a re­sult they have started to ex­port crude oil to Turkey and get re­fined fuel prod­ucts in re­turn. Although the vol­ume of ex­ports is small but as per Reuters it is an in­di­ca­tion for reach­ing greater goals in the fu­ture, and ac­cord­ing to an en­ergy ex­pert “Kur­dis­tan has reached a point in oil and gas sec­tor, where it would not re­turn back and the KRG would no longer sup­port a cen­tral­ized oil and gas pol­icy”.

Er­bil-Bagh­dad ties have al­most reached a dead­lock since last year, while KRG has strength­ened its ties with neigh­bor­ing Turkey over the months. A diplo­mat who is aware about the talks be­tween Er­bil and Ankara has said that the two par­ties are about to sign a very large agree­ment cov­er­ing all ma­jor en­ergy as­pects. The agree­ment is ex­pected to cover all as­pects of ex­plor­ing and pro­duc­ing Kur­dis­tan’s oil by Turk­ish com­pa­nies, mar­ket­ing and ex­plor­ing the Re­gion’s oil and gas to Turkey. In the fu­ture this could lead Kur­dis­tan to world mar­kets through Turkey. How­ever, in the present Kur­dis­tan Re­gion will no longer be de­pen­dent on Bagh­dad for oil ex­ports. Con­se­quently Turkey would not de­pend on Ira­nian or Rus­sian oil and gas ei­ther.

Rev­enue in­de­pen­dency

Reuters report ar­gues that ex­plor­ing oil is a great success for the Kurds since the re­gion would re­ceive the rev­enues of its oil ex­ports di­rectly and it would no longer de­pend on its 17% share in the Iraqi bud­get as the only source of rev­enue for the re­gion. Robin Miles, an ex­ports at the Ma­n­arco con­sul­tancy com­pany states that, “As­sume that Kur­dis­tan ex­ports 1 mil­lion bar­rels of oil per day; the rev­enue of this ex­port would be much more larger than the bud­get shares it cur­rently gets from the cen­tral government”.

Re­la­tions get balanced

Com­ment­ing on the ties be­tween Kur­dis­tan and Turkey, a se­nior KRG of­fi­cial says that Turkey has a sig­nif­i­cant im­pact on the eco­nomic devel­op­ment in Kur­dis­tan. The KRG of­fi­cial ar­gues that “When we start ex­port­ing oil and gas, ev­ery­thing would change, and our re­la­tions would reach a com­plete bal­ance”. Reuters also says that the Turk­ish government is ea­gerly work­ing to­wards im­prov­ing ties be­tween Ankara and Er­bil. Se­la­hat­tin Ci­men, Deputy En­ergy Min­is­ter of Turkey says “co­op­er­a­tion be­tween the KRG and the Turk­ish government for ex­port­ing oil to world mar­kets would strengthen the re­la­tions that al­ready ex­ist be­tween us.”

Turkey's En­ergy Min­is­ter Taner Yildiz and Kur­dish Nat­u­ral Re­sources Min­is­ter Dr. Ashti Hawrami speak dur­ing the "Kur­dis­tan Re­gion's Road to Devel­op­ment Con­fer­ence in Er­bil, May 21, 2012.

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