Kur­dis­tan oil pipe­line cuts the re­main­ing um­bil­i­cal cord of Bagh­dad

The Kurdish Globe - - NEWS - By Bash­dar Pusho Is­maeel

A con­sis­tent bone of con­tention be­tween the Kur­dis­tan Re­gion and Bagh­dad has been oil re­sources. The heated de­bates around ex­plo­ration rights, rev­enue shar­ing and in­ter­pre­ta­tion of con­sti­tu­tional clauses have seen the is­sue go round in cir­cles for sev­eral years.

The jos­tle for con­trol of oil has only grown as oil ma­jors have flocked to Kur­dis­tan, ig­nor­ing threats from Bagh­dad, and as Kur­dis­tan has added con­tin­ual bil­lions to its oil re­serve fig­ures. Com­pa­nies con­tinue to make dis­cov­er­ies in the Re­gion with To­tal and Marathon only re­cently an­nounc­ing a fresh dis­cov­ery.

The rea­sons for Bagh­dad’s un­ease with grow­ing Kur­dish eco­nomic in­de­pen­dence are hardly a se­cret. Con­trol of oil rev­enues and oil in­fra­struc­ture is like an um­bil­i­cal cord that Bagh­dad has over the Kurds. With the ex­cep­tion of con­trol of oil rev­enues and res­o­lu­tion of dis­puted ter­ri­to­ries, Kur­dis­tan would be all but in­de­pen­dent.

In this light, Bagh­dad foot-drag­ging over the res­o­lu­tion of na­tional hy­dro­car­bon oil laws and Ar­ti­cle 140 is clear to see.

The na­tional bud­get and share of oil rev­enues is cur­rently a tap which Bagh­dad can use to in­flu­ence and pres­sure the Kur­dis­tan Re­gional Gov­ern­ment (KRG). Oil pro­duc­tion to date in Kur­dis­tan has been stop-start at best ow­ing to dis­putes.

Such is the am­bi­tion of Kur­dis­tan that lit­tle be­fore com­ple­tion of the first his­toric oil pipe­line to pump crude from Kur­dish oil fields, a sec­ond pipe­line was al­ready ac­tively planned for com­ple­tion in 18-24 months that would dras­ti­cally im­prove pro­duc­tion ca­pac­ity and bring the Kurds closer to their ul­ti­mate tar­get of 3 mil­lion bpd.

With oil ex­ports and rev­enues set to rise in greater Iraq, in the­ory so should 17% of the bud­get al­lo­cated to Kur­dis­tan. If oil is eq­ui­tably shared on an 83-17 split then both Er­bil and Bagh­dad ben­e­fit. In other words, most of the Kur­dish oil rev­enues would ac­tu­ally go to Bagh­dad.

But dis­tri­bu­tion of the na­tional bud­get has been any­thing but clear-cut with the Kurds ar­gu­ing that they re­ceive closer to 11%, not to men­tion the bil­lions of dol­lars in un­paid bills to for­eign com­pa­nies in the Re­gion that the Kurds de­mand.

In­de­pen­dent con­trol of oil ex­ports puts the gloves firmly in the hands of the Kurds. While they can now achieve the 400,000 bpd or so de­manded by Bagh­dad for share of the bud­get, Kurds will not be at the mercy of Bagh­dad – if it boiled down to it, Kur­dis­tan could keep spe­cific por­tion of its oil rev­enue (and any debt that it deems to have been un­paid) and only then pay Bagh­dad.

Bagh­dad has used the re­cent thaw­ing of its dif­fi­cult ties with Ankara to warn against any ex­port of Kur­dish crude through the new pipe­line with­out its con­sent.

Iron­i­cally, as the Bagh­dad-Ankara ties nose-dived, the Er­bil-Ankara re­la­tions were hit­ting new heights, un­der­pinned by bil­lions of dol­lars of trade and Kur­dish strate­gic rel­e­vance in the chang­ing Mid­dle East­ern pic­ture.

Re­cently, Kur­dis­tan Prime Min­is­ter Nechir­van Barzani vis­ited Ankara and met with Turk­ish of­fi­cials, where the topics were likely to be ex­pand­ing eco­nomic ties, oil ex­ports and the Syr­ian con­flict.

For now, Ankara will aim to keep Bagh­dad sweet by promis­ing no to im­port Kur­dish oil with­out their con­sent. But in re­al­ity, Tur­key is al­ready arm deep in Kur­dish oil and its boom­ing econ­omy. It has al­ready sup­ported the con­sti­tu­tional rights of the Kurds with re­gards to oil ex­plo­ration and the 17-83 rev­enue split.

Ankara may not want to alien­ate Bagh­dad, as it has re­cently looked to kick­start re­la­tions with Bagh­dad and Tehran that it strongly needs for any favourable res­o­lu­tion to the Syr­ian con­flict and to avoid any re­gional iso­la­tion at a crit­i­cal junc­ture.

As for the Kurds, its new oil ex­port in­fra­struc­ture lit­er­ally adds the fuel for in­de­pen­dence. How­ever, the real gamechanger would be ad­di­tional pipe­lines in­de­pen­dent of the Iraqi Kirkuk-Cey­han pipe­line and ex­clu­sively on Kur­dis­tan soil and once ex­ports reach 1 mil­lion bpd, let alone the 3 mil­lion bpd that Kurds hope for.

It’s no se­cret that the bil­lions of dol­lars that Kurds could then ac­quire would far out­weigh any of the 17% (or less) that Bagh­dad would of­fer. This is not to men­tion any po­ten­tial gas ex­ports to Europe, which would fur­ther pla­cate Kur­dis­tan on the world en­ergy map (and per­haps on the map as a new found in­de­pen­dent state)

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