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legal loopholes in oil industry threaten iraqi kurdistan’s environment

Hiwa Barznjy
The region of Iraqi Kurdistan is brimming with untapped oil resources. And multi-national oil companies know it. But because of the grey legal area in which oil contracts are being signed, none of the oil companies…
14.11.2013  |  Erbil
An oil refinery in Basra pumps out polluting smoke. The same thing is happening in Iraqi Kurdistan.
An oil refinery in Basra pumps out polluting smoke. The same thing is happening in Iraqi Kurdistan.

With its mostly stable environment and government, the semi-autonomous region of Iraqi Kurdistan is experiencing an oil rush. Apparently the region has an estimated 45 billion barrels of oil under it. But while oil companies line up to do business here and cities like Erbil boom, there are also environmental issues to consider.

Legislation in the region, which has its own laws, military and parliament distinct from the rest of Iraq, says that the local Ministry of Natural Resources should be ensuring that oil companies doing business in Iraqi Kurdistan stick to rules about pollution and compensation.

For example, earlier this year the Minister of Natural Resources in Iraqi Kurdistan, Ashti Hawrami, said that Iraqi Kurdistan would most likely be exporting 250,000 barrels of oil a day during 2013. That figure could rise to 1 million barrels per day by 2015.

If one assumes that Hawrami is correct and that, despite plans for pipelines, one knows that most of the Iraqi Kurdish oil is presently being exported by tanker trucks and that each truck can carry 45,000 litres of oil, then that means there must be around 1,055 trucks carrying oil around Iraqi Kurdistan every day. This traffic alone means accidents, spillages, exhaust emissions, road damage, noise pollution and a range of other hazardous impacts. And that is without even considering the environmental impacts from the actual oil exploration, which involves the production of toxic gases and other ill effects.

“Oil companies coming to the region start their explorations with major chemical equipment,” local environmental activist, Dayari Ali, says. “And they pay absolutely no mind to environmental considerations. Recently one of the companies working in the Bazian area ended up working with huge amounts of mud [this is one method of oil extraction] and it actually led to the flow of oil into local water sources.”

Not all of the pollution is so obvious right now, Ali notes. Some of the effects will only become obvious in 10 to 15 years when there are more cases of cancer in the region.

“Basically the Ministry of Natural Resources wants to attract the largest number of oil companies here, to extract the most oil, without caring at all about the environment,” Ali concluded.

It is particularly difficult to enforce the laws around this topic at the moment. The oil industry in Iraqi Kurdistan is working in a kind of twilight zone. The government of the semi-autonomous region in Erbil has concluded deals with multi-national oil companies but the federal government of Iraq, in Baghdad, who should be in charge of the whole country by rights, says these deals are actually illegal and should not be honoured.

As news agency Reuters explained in a recent article, “Baghdad insists it alone has the sole authority to sign deals and export oil, but Kurdistan says the constitution allows it to agree to contracts and ship oil independently of Baghdad”.

What the oil industry is doing in Iraqi Kurdistan is, to some extent what the US-based Wall Street Journal recently described as “global wild-catting” – the publication was writing about the latest deals done by Tony Hayward, Chief Executive of London-based Genel Energy and formerly head of BP.

“Mr Hayward … has joined a breed of wildcatters who deploy a risky and sometimes lucrative strategy: Look for oil in politically or geologically fraught lands after cutting deals with governments that claim the lands, even if those claims are in dispute,” the publication wrote. “Global wildcatters like Mr. Hayward are playing a growing role in the oil industry. These oilmen operate on what the 56-year-old Mr. Hayward calls “the political frontier”. They sometimes defy the wishes of Washington and the United Nations, which say companies can amplify conflicts and foment instability by entering disputed lands.”

And part of the blueprint for this kind of behaviour is what’s going on in Iraqi Kurdistan, the newspaper concludes. “A decade ago, big oil companies weren\'t there, largely because of security concerns. Genel made a deal with Kurdistan\'s leaders anyway, becoming one of the first Western prospectors to drill there. Rivals eventually followed.”

Which is why it is still hard to enforce any kind of environmental or social legislation for oil companies operating in Iraqi Kurdistan.

NIQASH tried to obtain comments on this issue from several of the offices of international oil companies operating in Iraqi Kurdistan. One manager, who spoke on the condition that it was off the record and that the name of his company not be mentioned, said that they did abide by the regulations and that the company had been providing health services and building schools and clinics in the area in which they worked as well as following environmental guidelines.

“But we don’t always tell the locals what we are doing,” he said. “It’s more important for us to make sure the local Ministry is aware of what we’re doing.”

Having said that, he agreed that not all of the oil companies working in the region were as community minded. The Ministry of Natural Resources, he said, turned a blind eye to bad behaviour.

“Because of the political situation at the moment, a big part of the oil company work together with the Ministry is done under highly confidential terms,” he explained. “That’s why the Ministry just overlooks those who don’t necessarily abide by the oil and gas laws.” After all, in the eyes of the federal government in Baghdad, the Iraqi Kurdish authorities are not exactly abiding by the country’s laws either.

In the meantime, the region’s Environmental Protection and Improvement Board appears to be helpless in the face of any oil company infringements.

“The Board supervises all the oil companies in order to protect the environment,” the head of the Board, Samad Mohammed Hussein, told NIQASH. “We’ve issued a lot of orders to try and reduce any damage. We have also issued lots of fines. But unfortunately we have only been able to apply them to oil refineries that operate locally. We can’t force the exploration and extraction companies to do anything because they’re working directly with the Ministry of Natural Resources.”

“Iraqi Kurdistan shouldn’t be developed at the expense of the environment,” Hussein said, adding that he believed that the Board was becoming more serious about punishing infringements and forcing oil companies to do things like filter toxic emissions more efficiently.

Meanwhile just over the border from Iraqi Kurdistan in the disputed territory of Kirkuk, Imad Baqir al-Bayati, who heads the technical department for North Oil, part of Iraq proper’s Ministry of Oil, says that the Iraqi federal government plans to allocate US$50 million toward environmental protection in Kirkuk. Iraqi Kurdistan’s Ministry of Natural Resources appears to have no such plan – nobody would go on the record with a comment to NIQASH.

Currently, environmental activist Ali says, the best way to protect the region’s environment is to continue to use civil society groups and media coverage to pressure the oil companies to abide by local regulations. He also thinks filing suits against them in international courts might work. “If we leave this problem for another ten years, it’s just going to get worse,” Ali argues. “And then it will be very difficult to fix any problems.”