Iraqi Kurds on path to oil ‘independence’

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By Fareed Hassan

Azzaman, May 30, 2014

Iraqi Kurds are brandishing their own ‘oil weapon’ against the central government in Baghdad, saying their own oil fields are capable of making them financially self-sufficient.

The Kurds, according to their own regional prime minister, can now export up to 250,000 barrels of oil a day via Turkey and the export volume may hit 500,000 barrels by the end of the year.

“The export of oil is a necessary step towards the economic independence of the (Kurdish) region,” said Nejervan Barzani, Kurdish region’s prime minister.

The first shipment of oil originating in the Kurdish north has already found its way to international markets. Officially, the Kurds say they have sold more than 1 million barrels via a pipeline to Turkish terminals on the Mediterranean.

The Kurdish region is landlocked and the only route for exports is via Turkey. It is not clear whether Turkey will sacrifice its booming trade with Iraq and allow the Kurds to proceed with exports without Baghdad’s consent.

The remarks by Barzani might have come as a surprise for Baghdad, whose government has been trying to bring the booming Kurdish oil industry under central government control and supervision.

Baghdad has repeatedly accused the Kurds of developing their own oil fields and exporting oil on their own and stashing royalties in their own coffers in addition to their share of national oil exports, which is estimated at 17% of each dollar the country earns.

The Kurds received up to $20 billion from the central government as their share of oil royalties. The government has threatened to slash their share and recently stopped transferring hard cash to the region.

But instead of relenting, the Kurds went ahead with exporting their own oil and in quantities that may make up for the loss of central government income.

The Kurds have invested heavily in their oil industry and signed numerous deals with foreign firms to develop oil fields in their region.

The region’s reserves are estimated at 45 billion barrels, enough to lure oil majors, earn the Kurds enough hard cash and make them independent of Baghdad in economic terms.

The row over oil development and exports is one of other thorny issues between the sides. Demarcation of the borders of Iraqi Kurdistan, already a self-governing region, is one of them.

Some of the most prolific Kurdish oil fields lie in the so-called disputed areas, land that both sides claim to be their own.