On April 16, 2014, authorities in the northern Iraqi province of Ninawa laid the foundation stones for the first oil refinery in the area. The move comes after a succession of crises between the Shiite Muslim-led federal government in Baghdad and Sunni Muslim-led provincial authorities in Ninawa.
Of course, as conflicts between Ninawa\'s neighbouring region of Iraqi Kurdistan and Baghdad have proven, undertaking big oil projects without Baghdad\'s express permission can be risky. The Iraqi Kurdish have been moving toward oil production independence for some time now and the most recent projects have seen what some have described as a damaging ”financial blockade” of the semi-autonomous region by Baghdad.
“It is not true that the contract Ninawa has signed with the KAR Group to build a refinery in the Hamadaniyah area, in the east of Mosul, is illegal,” Ninawa\'s governor, Atheel al-Nujaifi, told NIQASH. “The council was included at every step. The company, KAR, won the contract after it was put out to tender – the company beat out some other companies, including a Turkish one,” he noted.
Additionally Ninawa would be cooperating with Iraqi Kurdistan to get the oil refined. “This cooperation reflects the hope for a common future based on Arab-Kurdish cooperation,” al-Nujaifi continued. “We aim to build a stable region, where resources are developed, rather than used to kill our sons.”
Some local analysts have already suggested that this oil industry contract is a first step toward Ninawa becoming a more independent region, in a similar way that Iraqi Kurdistan is independent.
“Arabs and Kurds are partners in this region, regardless of whether that partnership is a success or a failure,” al-Nujaifi said. “So it is better to integrate rather than to compete because we need each other to build our region first and foremost, and then secondly, to build Iraq as a nation.”
However not everyone agrees. A spokesperson for Iraq\'s Ministry of Oil, Asim Jihad, said that his own ministry\'s plans to build an oil refinery in Ninawa had been hampered by security concerns. Jihad also said that the oil refinery project was being implemented without the permission of, or cooperation with, the Ministry of Oil. Which was why, Jihad, said the Iraqis would not be refining any oil there.
There were also local opponents to the plan. In a statement distributed to local media, Dildar al-Zibari, a member of Ninawa\'s provincial council, criticised the contract, saying that it was a risky proposition: the area where the refinery was to be built was actually under the control of the Iraqi Kurdish military, known as the Peshmerga, and that crude oil was being supplied by Iraqi Kurdistan but that this supply was not guaranteed.
Some of these issues were highlighted in a study put together by a number of local oil industry analysts – these included a former federal Minister of Oil, Issam al-Chalabi, as well as Saadallah Al Fathi, former head of the Energy Studies Department in the OPEC secretariat in Vienna and Faleh al-Khayat, former director of planning for Iraq’s Ministry of Oil.
Their study raised questions about how much oil would be refined there, the conditions in surrounding areas – including environmental, security and geological conditions – as well as what kind of guarantees there were for the oil refinery\'s continued operation.
A big question mark also sat over the choice of location for the refinery, very close to Iraqi Kurdistan. “If the refinery was going to work with oil from the Khormala field, which was in Iraqi Kurdistan, how can the supply of oil be guaranteed?” the study asked. “Additionally does Ninawa have the first right to buy the refined oil from Khormala – or will it depend on as-yet-undeveloped fields in Makhmour, east of Ninawa?” And what would happen to the oil refinery after the expiration of the 20-year contract with KAR – who would it belong to then?”
At a recent press conference, the head of the provincial council\'s committee on oil, Hashim Brifkani, played down objections, saying that 24 out of the 36-member council had voted in favour of the project. Brifkani also said that most of the objections to the project were politically motivated, based mostly on the objectors\' problems with Iraqi Kurdistan. Additionally objectors to the plan did not have the interests of the people of Ninawa at heart.
The project would supply oil, increase employment and investment and help produce electricity in the province, Brifkani added enthusiastically.
Meanwhile researcher Mohammed Tahseen believes a deal like this one is a firm indicator that Ninawa too, is taking steps away from the central government, with a view to becoming a semi-autonomous region. The refinery is another move toward financial independence.
One of the biggest issues is the location, he stated. It would be built in one of the disputed areas – that is, land that the central government in Baghdad says belongs to Iraq proper, but which the government in semi-autonomous Iraqi Kurdistan says belongs to their region. “In the end the whole issue relates to the ongoing conflict between the central government, the provincial authorities in Ninawa and the Iraqi Kurdish government,” Tahseen says. “The same conflict is being played out in other areas too, like health, education and security.”