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Iraq's oil-rich Kurds move steadily toward independence
by Staff Writers
Erbil, Iraq (UPI) Sep 26, 2013

Iraq's semi-autonomous Kurdish region is moving ever closer to declaring independence, thanks largely to its oil reserves of 45 billion barrels and increasingly close energy links with neighboring Turkey.

Iraq's central government is diametrically opposed to Kurdistan breaking away for fear it will encourage other federal regions to seek greater autonomy at Baghdad's expense, and can be expected to do all that it can to prevent that.

But the Kurdish enclave already operates like a de facto state with its own legislative, executive and judicial branches, its own army, and firm economic foundations provided by the oil and large reserves of natural gas as well.

Kurdistan is on the cusp of an oil boom, with international companies lining up to get a stake in the world's newest petrostate which since the 1990-91 Gulf War has enjoyed an unprecedented level of political and economic stability in a region where turmoil has long been the norm.

Exxon Mobil, Chevron and Total of France have all turned their backs on Baghdad, despite its vast energy riches, to develop Kurdistan's oil industry.

Other companies, like BP, are coming on to join around 40 small and medium-sized independents who set up several years to get exploration moving.

But Turkey's support is critical right now if the Kurds are to move forward toward the independence for which they battled Baghdad and Saddam Hussein's grotesque regime for decades, and suffered horrific losses in the process.

Saddam waged a scorched-earth genocidal war against the Kurds. The blackest day was March 16, 1988, when the Iraqi dictator's forces smothered the eastern town of Halabja with poison gas, massacring 5,000 men, women and children.

Now another showdown is steadily building between Baghdad and the Kurdistan Regional Government in Erbil, the Kurdish capital.

This one is focused on the Kurds' energy reserves and the KRG's claims that the Kirkuk oilfield of northern Iraq, which holds about one-third of Iraq's reserves of 150 billion barrels, is Kurdish because it was part of Kurdistan under the Ottomans.

Baghdad, which is scrapping with Erbil over oil revenues, will never surrender those fields and the prospect of conflict is real.

For now, though, the primary focus is the Kurdish fields, whose reserves are sure to expand once full-scale exploration gets under way.

Much to Baghdad's annoyance, the Kurds are currently exporting 30,000-40,000 barrels of oil per day by road tanker to Turkey, and then by sea from the Mediterranean port of Mersin.

But that will rise sharply when a Turkish consortium builds a new pipeline from Kurdistan's big Taq Taq and Tawke fields into Turkey, totally bypassing Baghdad's export pipelines. Exports could be boosted to 250,000 bpd, possibly rising to 400,000 bpd.

Under a wide-ranging energy partnership concluded earlier this year, Turkey, which has no energy resources of its own, could soon be importing 353 billion cubic feet of gas, about 20-25 percent of its annual consumption.

So far there's no infrastructure for delivering it, though analysts believe that could be remedied within 30 months.

For obvious reasons, these highly sensitive projects have been shrouded in considerable ambiguity since Ankara does not want to provoke Baghdad, or Iran, which increasingly dominates Baghdad -- not yet, anyway.

"Turkey and the KRG have been carefully avoiding a major confrontation with Baghdad while creating confusion over their projects in northern Iraq," the U.S. global intelligence consultancy Stratfor observed.

"The further Turkey goes in these energy endeavors with the Iraqi Kurds, the more resistance it will encounter from Baghdad -- and by extension, Iran...

"The KRG is even escalating the pressure... But a decision to bypass Baghdad-controlled infrastructure and receive payment for oil independent of the central government is one fraught with danger, and it is unlikely that Turkey is ready for that level of confrontation," Stratfor said.

Baghdad claims sole authority over all oil operations, from exploration to production and exports.

"The only acceptable option for oil exports is through the federal pipeline network," a senior Baghdad official stressed. "We consider any other trade, whether it be through Iran or Turkey, as smuggling. It's illegal."

Meantime, Baghdad government troops are locked in an armed confrontation with Kurdish forces along Kurdistan's southern border, including tanks and artillery. It's a standoff that the energy rivalry could ignite.


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