Iraqi Kurdistan plans oil pipeline
to Turkey By Robert M Cutler
MONTREAL -The Kurdistan Regional
Government (KRG) in northern Iraq has announced a
plan to construct an oil pipeline to Turkey with a
volume of 1 million barrels per day (bpd), move
hinting at tectonic shifts in the geo-economics
and associated geopolitics of greater Southwest
Asia. The oil is intended to be sold onto
international markets.
The central Iraqi
government in Baghdad asserts that the project is
illegal, but Turkey's Energy Minister Taner Yildiz
is fully on board with the idea, having endorsed
it at the conference in Irbil where it was
announced by KRG Natural Resources Minister Ashti
Hawrami. Last December, Hawrami estimated that the
Kurdish region contained between 3 and 6 trillion
cubic meters of natural gas and 45 billion barrels
of oil.
The central Baghdad government has
never been able to pass a
new law, foreseen in the
constitution, governing new oil and gas ventures.
A draft law, never adopted, has no legal weight.
The Iraqi constitution has specific provisions
only concerning concessions existing at the time
of its adoption.
As a result, specialized
international law experts tend agree that the "Oil
and Gas Law of the Kurdistan Region" holds
authority in the matter of new energy concessions
there, moreover since its provisions mostly
correspond with other pertinent articles of the
federal constitution.
Hawrami specifically
told the conference, as quoted by Reuters:
"Export[ed] crude from the Kurdish region's fields
will still be Iraqi oil." He added that the KRG
would take 17% of the revenues (as allowed by the
Iraqi national budget) and pass the rest along to
the federal center in Baghdad and the Iraq Central
Bank.
According to Hawrami, the pipeline's
first stage would be completed within five months
and carry crude oil from the Taq Taq field. The 1
million bpd capacity would come online by August
next year when the second phase would connect to
the Kirkuk-Ceyhan pipeline. Reports from the
conference also discuss a second oil pipeline from
Kirkuk to Ceyhan that would open in 2014.
Ceyhan is already the terminus for the 1
million bpd Baku-Tbilisi-Ceyhan (BTC) oil export
pipeline from offshore deposits in the Azerbaijani
sector of the Caspian Sea. Turkey has long sought
to develop further the Ceyhan oil terminal so as
to make the city a "pole of attraction" for
industrial growth in Adana province.
The
failure to hold a referendum on the status of
Kurdish regions within four Iraqi governates
(specifically to decide whether they become part
of the Iraqi Kurdistan region and therefore
subject to the just-mentioned "Oil and Gas Law")
provided for in Article 140 and now five years
overdue has also played its role in leading the
KRG to take such initiatives.
The new
agreement hardly marks the first time that the KRG
has unilaterally undertaken new cooperation in the
energy sector with international partners. Last
December, ExxonMobil signed an agreement with the
KRG to explore for energy deposits in regions of
Nineveh province that would be subject to such
referenda.
The city of Kirkuk is probably
the best known of such disputed areas under KRG
control. One of the results of the new agreement
will likely be increasing attempts by the Basra
governate in southern Iraq to assert greater
authority over deals in its own region.
The Turkish Foreign Ministry has been
working in the past few weeks to define the new
"Eurasian" direction of the country's policy in
specific terms. This agreement in principle with
the KRG appears to be one of the first tangible
results of the reorientation of Turkey's foreign
policy away from the discredited "zero problems"
doctrine that blew up in Ankara's face when Tehran
refused to allow it to have zero problems, most
notably but not only in Syria.
The Alawite
minority to which the Assad clan belongs is part
of the Shi'ite wing of Islam, while the Sunni
Kurds are cooperating with the Sunni Turks and
periodically threaten to reveal documents
embarrassing to the Shi'ite Iraqi Prime Minister
Nuri al-Maliki.
However, pure economics
also drives the deal. Iraq is already Turkey's
number two trading partner, and most of that trade
is with the territory under KRG control. Ankara is
determined to become an energy hub, and its
domestic economy also requires increasing amounts
of gas, not all of which demand may be satisfied
by the recent deal with Azerbaijan over the
Caspian Sea offshore Shah Deniz Two field.
Turkey is an attractive market for firms
developing not only oil but also gas resources in
Iraqi Kurdistan, not least because the KRG has a
zero-flaring policy in respect of the associated
gas that is naturally liberated in the course of
developing the given oil reservoirs. Energy demand
and electricity demand in Turkey have grown at a
7% annual rate recently, and this may continue.
Dr Robert M Cutler (http://www.robertcutler.org),
educated at the Massachusetts Institute of
Technology and The University of Michigan, has
researched and taught at universities in the
United States, Canada, France, Switzerland, and
Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian
Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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