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turkish-kurdish oil pipeline
a blessing or a curse?

Hiwa Barznjy
The November meeting between the Turkish and Iraqi Kurdish PMs seems to have ended in a tacit agreement to build a new oil pipeline between the two territories. But Baghdad disagrees. Local oil industry experts say…
12.12.2013  |  Erbil

On Nov. 27, the Prime Minister of the semi-autonomous region of Iraqi Kurdistan, Najirvan Barzani, met with his Turkish counterpart, Recep Tayyip Erdogan. Before the meeting, it was announced that the pair would be discussing the oil pipeline that is being built to transport fuel between Iraqi Kurdistan and Turkey as well as a second possible pipeline.

After the meeting though, there were no official announcements made about any agreements. However the news came out eventually, via the Reuters news agency – apparently the two politicians had come to terms on several issues, mostly to do with the building of the pipeline which was to begin early next year. They had not signed any agreements though.

Neither the Iraqi Kurdish nor the Turkish have denied that report. But despite the apparent success of the meeting and the plans to build a pipeline, it seems that both sides are also trying their best not to anger politicians in Baghdad.

These moves are seen as Iraqi Kurdistan’s latest step toward energy autonomy. The region, which has its own parliament, legalisation and military forces, operates relatively independently from the rest of Iraq and over recent years, has been seen as a more stable and secure place from where international businesses are happy to operate –not to mention that the region has vast oil reserves.

Although Iraq and Iraqi Kurdistan are supposed to share oil revenues, the Iraqi government in Baghdad has still not managed to formulate or agree upon a definitive set of laws on the subject. However the Iraqi Kurdish have come up with their own version of oil and gas legislation. They have also been signing contracts with big players in the international oil industry – over 50 of them, by some counts - much to Baghdad’s annoyance. Baghdad says these kinds of contracts are illegal and unconstitutional – all oil industry business must go through Baghdad.

So it was no surprise that when news of the Turkish-Iraqi Kurdish talks on an oil pipeline broke, that senior politicians in Baghdad announced their opposition. This included the Iraqi Prime Minister, Nouri al-Maliki, and his Deputy Prime Minister for Energy, Hussein al-Shahristani. The Turkish ambassador was summoned to Baghdad and told that Iraq opposes any such agreement.

Part of al-Maliki’s staunchness on the subject appears to derive from US support of his position on the matter. In a press briefing, US State Department spokesperson, Jane Sacchi, said that Washington did not support the export of oil from any part of Iraq without the consent of the federal government. The US seemed to want officials in Erbil and Baghdad to resolve their differences before going any further.

“Turkey\'s intense courtship of KRG has … raised eyebrows in Washington which fears KRG\'s independence could lead to a break-up of Iraq,” Reuters reported.

This didn’t seem to affect Barzani’s determination though. At a recent conference on energy held in the Iraqi Kurdish capital, Erbil, he reiterated the Iraqi Kurdish government’s determination to cooperate with neighbouring Turkey.

“Our cooperation with Turkey in the field of energy has become a way to show the other face of a new Iraq,” Barzani told conference goers. “It does not pose a threat in any way, to any party. It is our political, national and legitimate right and we are not ready to abandon it.”

The oil pipeline project is already under way. “A first [Kurdish]-sponsored oil pipeline, which is almost complete, will link up to an existing Iraq-Turkey pipeline and begin carrying Kurdistan\'s oil to world markets from December,” Reuters wrote. “The existing pipeline from Kirkuk to Turkey\'s Mediterranean port of Ceyhan is currently carrying only a fraction of its 1.6 million barrels per day capacity, and could in theory pump up to 700,000 barrels per day of Kurdistan\'s oil. But as Kurdish output grows, with several new fields coming online this year and next, a second pipeline will be needed.”

A new pipeline will be able to carry at least 1 million barrels per day of crude oil and Turkey will also be interested in bringing more gas, more cheaply, from Iraqi Kurdistan - at least 10 billion cubic meters per year or more.

Iraqi Kurdistan is already exporting between 30,000 and 50,000 barrels of oil per day into Turkey by truck but the new pipelines will increase that significantly.

The revenue from sales of oil and gas would come through the Iraqi Kurdish government but they insist they will give the required 83 percent back to the government in Baghdad. The Iraqi Constitution says that Iraqi Kurdistan is supposed to get 17 percent of all oil revenues in Iraq, with the rest being distributed throughout the country.

Most Iraqi Kurdish politicians seem to think that exporting oil to, and through, Turkey is a good idea. However there are also some doubts as to how the whole thing will eventually pan out. Because of the antipathy between Iraqi Kurdistan and Baghdad and the so-called “illegal” manner of contracting as well as ongoing problems of corruption in Iraqi Kurdish officialdom, many of the oil industry projects in the northern region are conducted in a non-transparent way. Some have even described them as secretive.

Concerned politicians believe that this will be the same for the Turkey pipeline. They feel that if Baghdad and Iraqi Kurdistan were cooperating there might be more transparency on the issue.

The conflict will go on until Iraq’s Supreme Federal Court makes a ruling, says local oil industry expert, Taher Majid. Each of the parties believes it is absolutely right while the other party is absolutely wrong and both are coming up with constitutional justifications, which are not necessarily correct, or which are open to interpretation, he explained.

The huge potential revenues from the project have meant that both Iraqi Kurdistan and Turkey are willing to turn a blind eye to US and European concerns, say local economist Hardwan Naqshabandi.

Independent Kurdish MP, Mahmoud Othman, doesn’t think the Europeans see Iraqi Kurdistan as separate from the rest of the country. So they may well support Baghdad in this. And, Othman warns, the Turkish may eventually choose not be faithful to either partner, neither the Iraqi Kurdish nor the Iraqis in Baghdad.

Economist Naqshabandi warns that the pipeline project – and other oil contracts – must become more transparent. It is essential, he says, if Iraqi Kurdistan wishes to flourish.

“The Iraqi Kurdish government needs to decide whether it wants to be the new Norway or another Nigeria,” he concludes, referring to the fact that Norway manages its oil resources carefully and has flourished from them whereas Nigeria has been riven by conflict because of its oil resources.