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    Middle East
     Oct 26, 2006
Iraqis fight over oil spoils
By Mohammed A Salih

ARBIL, Iraq - Through a steadily worsening security situation and deepening political divisions, a dispute is erupting between Kurdish leaders and the Baghdad regime over access to oil resources.

Kurdish authorities and the federal government in Baghdad have exchanged sharply worded statements recently in their rival claims for control over northern oilfields. The row is expected to intensify after the Kurdistan Regional Government (KRG), in

charge of the three northern provinces Arbil, Sulaimaniya and Dohuk, presents an oil bill to the regional parliament.

This would then be a basis of claims from the federal government, and an assertion of rights over oil in the north.

Iraqi Oil Minister Hussain al-Shahristani said on Tuesday that Iraq planned to increase crude-oil production to 4.5 million barrels per day (mbpd) by 2010. Its production, currently at about 2.5mbpd, could rise to 6mbpd by 2012, Shahristani said.

Iraq is believed to have 115 billion barrels of oil reserves, though the government claims reserves of 214 billion barrels. The bulk of the oil is in the south and the northern region around Kirkuk. Japan and Iraq are negotiating details of a US$3.5 billion loan, primarily to be used to rebuild Iraq's oil sector.

Shahristani said Iraq is losing about 400,000bpd in crude-oil exports because of increasingly frequent attacks by saboteurs on pipelines in the northern part of the country.

The US Energy Department's data arm, the Energy Information Administration, estimates that exports averaged 1.6mbpd for September, and domestic consumption somewhere between 500,000bpd and 600,000bpd. In 2005, Iraq earned more than $20 billion in oil-export revenue. Iraqi Kurdistan accounts for about  22.5% of the Iraq's total reserves. Production, which is minimal currently, is targeted to reach 200,000 bpd over the short term and 1 million bpd thereafter.

In an attempt to calm the growing confrontation between the north and Baghdad, US Secretary of State Condoleezza Rice urged Kurdish leaders on her last visit to Kurdistan to make concessions to Baghdad on distribution of oil revenues.

Kurdish leaders agreed to share an unspecified portion of their revenues with Baghdad, but they said they would not hand over control of oil wells to the federal Oil Ministry.

"We have not made any concessions - and the KRG has constitutionally the right to exploit the oil wealth in areas under its control," said Dler Shaways, head of the Economic and Financial Committee of the Kurdistan parliament in Arbil. "It is part of the characteristics of federal systems that regions can govern themselves and control their revenues."

Accusing federal authorities of adopting "a colonialist approach in dealing with Kurdistan", Shaways said, "The regimes in Baghdad have so far used our oil wealth to buy bombs and destroy the country with it."

Disputes first emerged last December, when the KRG officially declared the discovery of oil in the northern town Zakho by a small Norwegian firm. Such oil explorations in the north have led Shi'ite Oil Minister Shahristani to declare that his ministry "isn't committed to oil investment contracts signed in the past ... by officials of the government of the Kurdistan region".

The Kurdish government in turn held out options other than co-existence with the federal government if it refused to recognize its authority over oil wealth in the north.

Over the course of the past three years, since the US-led invasion of Iraq, the Kurdish government has signed three production-sharing deals. These are with the Turkish companies Petoil in April 2003 and Genel Enerji in January 2004, and recently the Canadian company Western Oil Sands.

Much of the disagreement over oil management and revenue distribution has emanated from ambiguities in the text of the national constitution. It gives ownership of oil and gas resources to Iraqi people, but stipulates that "the federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields".

The phrase "present fields" has been interpreted by Kurdish officials as those which are producing oil already, not new fields.

Many see the oil dispute as a major battle of self-assertion for the Kurdish and Iraqi governments. Baghdad fears that Kurds' control of their oil wealth will give them powers challenging the central government's domain of influence.

Sunni Arabs, who constitute the core of insurgency against the US and the Iraqi government, are afraid that the Kurdish example might inspire Shi'ites to follow a similar path in their southern oil-rich regions, and leave their oil-barren central region impoverished.
(Inter Press Service)

A crash course on Iraq (Oct 24, '06)

Heck of a job, Maliki! (Oct 21, '06)

Iraq's oil: A neo-con dream gone bust (May 17, '06)


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