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
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.
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
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
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
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."
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
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
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
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