Kurdistan Regional Government Natural Resources Minister Ashti Hawrami (R) shakes hands with Turkey's Energy Minister Taner Yildiz during a joint news conference in Arbil, about 350 km (217 miles) north of Baghdad, May 20,2012. (photo by REUTERS/Azad Lashkari)

Gas Reserves, Pipeline to Change Energy Reality for Iraqi Kurdistan

Author: Sabah (Turkey) Posted July 4, 2012

Northern Iraq is developing new strategies for the extraction of oil, which it hopes will allow it to secure future opportunities and take its place in the global economy. Three trillion cubic meters of natural-gas reserves were recently discovered in the region, which will make northern Iraq a new key player in the energy realm.

SummaryPrint The construction of a pipeline between Turkey and Northern Iraq will enter into its second phase by the end of the year. Metin Can reports that aside from lowering Turkish energy costs, the pipeline will give Kurdistan greater autonomy from Iraq’s central government and increase its regional income tenfold over the next six years.
Author Metin Can Posted July 4, 2012
Translator(s)Timur Goksel

The Kurdistan Regional Government (KRG), which is the preeminent authority in northern Iraq, is working on several ambitious projects for the extraction of underground resources. Underground oil and gas supplies make up the largest share of the authority’s revenues. Every day, new resources are added to the KRG’s inventory. According to a report by the American Energy Institute, Iraqi Kurdistan has 50 billion barrels of oil. The same report estimates its natural-gas reserves at three trillion cubic meters.

Turkey consumes 40 billion cubic meters of gas and 6 billion cubic meters of liquified natural gas (LNG) each year, which means that the estimated gas reserves of Northern Iraq could potentially meet Turkey’s demands for 300 years. Steps are now being taken for the development of new oil and gas partnerships between Northern Iraq and Turkey.

Taner Yildiz, the Turkish minister of energy, recently made statements about deals regarding the import of crude oil from Northern Iraq, causing much excitement in the process. He mentioned that Turkey may buy crude oil from Northern Iraq in return for processed oil products. The schism between the KRG and the Iraqi central government in Baghdad, which has emerged due to the KRG’s inability to collect its fair share of oil revenues, has shone a brighter light on the proposed deal.

Escalation

The conflict between the government in Baghdad and the KRG is over marketing rights for the oil. Baghdad has accused the KRG of selling oil to third parties without first notifying the central authority. The involvement of large US oil corporations in this affair has further annoyed Baghdad. The KRG's Natural Resources Minister Ashti Hawrami says that the KRG has until now refrained from conducting any unauthorized sales, except for selling oil residues through open bidding. Baghdad’s tough response to these claims — including the set of embargoes it has imposed on Northern Iraq — has raised tensions.

A pipeline for one million barrels per day

New pipelines in the region are receiving a lot of attention. The first phase of construction of the pipeline to Turkey will be finished by the end of this year. According to KRG authorities, the second phase will be finished by August 2013. The pipeline will have the capacity to move one million barrels of oil a day, and will be connected to the Kerkuk-Yumurtalik pipeline in Turkey.

Northern Iraq’s income to increase tenfold

The KRG is in the process of preparing new development plans based on scientific projections. According to a paper by Azad Sadoon of Nawroz University, in 2018 nearly $108 billion of oil will be exported from the region compared to the current $10 billion per year. This means that its regional income will increase tenfold over six years. This will do wonders for the socioeconomic structures of the region.

Northern Iraq’s importance in the natural-gas market

Genel Energy PLC, which has been operating in Northern Iraq since 2002, is one of the most influential players in the region. Mehmet Sepil, the chairman of the board of Genel, says that his company has seven licenses for exploration in Northern Iraq, and that the region will be the new key player in the natural-gas sector.

Sepil said: “Today Turkey buys natural gas through pipelines from Russia, Azerbaijan and Iran. It also imports LNG. The average Turk pays about $400-500 for gas. Diversifying supply by tapping into Northern Iraqi reserves will contribute to Turkey’s energy security and help cut down costs. In next ten years, Northern Iraq may be providing 30 billion cubic meters of gas per year to Turkey. Given that Turkey’s current consumption is 40-45 billion cubic meters, it is easy to understand the significance of the volume of gas from Northern Iraq. The entry of a new player into Turkey’s gas-supply market could compel Turkey’s traditional gas suppliers to ease the conditions of sales.”

Read More: http://www.al-monitor.com/pulse/business/2012/07/new-energy-player.html

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