Signed, tested, flowing and ready for world markets – Kurds will sell oil via new pipeline with or without Baghdad
The new pipeline linking crude oil from Kurdistan to the Turkish port of Ceyhan is signed, tested, flowing and ready to be presented to world markets. The only hitch appears to be elusive thumbs-up from Baghdad to officially dispatch and sell the oil.
However, having come so far from numerous contracts signed between Erbil and Ankara, millions invested in the planning and construction and testing of the pipeline, the oil gathering pace at thousands of barrels is not designed to sit in Turkish silo’s indefinitely waiting for Baghdad. It’s there to be sold and let there be no doubt, it will ultimately be sold with or without the consent of Baghdad.
Over the past few years, thousands of barrels were sold to Turkey, Iran and local markets via trucks and the oil pipeline doesn’t change the end outcome, only the method of transportation.
Turkey has been careful not to alienate Iraq, who has persistently voiced their discontent at increasingly closer ties Ankara has with the Kurds and with the Kurds growing independence, and has tried to reassure the Iraqi authorities in recent months.
Turkish Energy Minister, Taner Yildiz, stated last week that they would wait for approval from Baghdad prior to shipping the crude and expressed hope that a deal can be reached this month.
But is Turkey really about to rip-up the contracts, abandon the pipelines and its high stakes and interests because Baghdad deems growing independence of the Kurds against their interests? In reality, Turkey is already neck-deep in Kurdistan and is not about to backtrack. It benefits tremendously from easy accessible Kurdish oil and gas, from billions of dollars of trade and having the Kurds as strategic partners at a time of great regional turmoil.
Turkey or any other major power cannot overlook a region that has at least 45 billion barrels of oil and trillions of cubic feet of gas. According to some estimates, Kurdistan Region would rank 10th amongst countries with most oil reserves. Ironically, this doesn’t take into account the Kirkuk province that the Kurds have long sought.
The flows to the pipeline are set to start at 300,000 bpd and rise to 400,000 bpd. The ambitious Kurdish government is targeting 1 million bpd by 2015 and 2 million by 2019.
Every year, the Kurds seemingly fight a battle to secure share of the Iraqi federal budget, and strikingly for Kurdistan, it could soon receive more via the pipeline than the share of the revenues it struggles to receive from Baghdad. Ultimately Baghdad seeks to gain significantly from Kurdish oil as revenue would be received centrally and then split according to previous revenue sharing agreements - a fact that stubborn Iraqi pride overlooks.
All this means is that the Kurds will soon cut the umbilical cord that keeps it reliant on Baghdad. It put the boot firmly on the feet of the Kurds. However, any side-stepping of Baghdad in oil revenues would increase hostilities and serves to ensure that Baghdad digs their heels in over article 140 and Kirkuk and other festering disputes.