A pipeline for exporting Iraqi oil directly from the Iraqi Kurdistan Region to Turkey is expected to be completed before the end of 2013. On Nov. 27, 2013, Turkish Prime Minister Recep Tayyip Erdogan and Kurdistan Regional Government (KRG) Prime Minister Nechirvan Barzani signed agreements in Ankara regarding oil export through pipelines, gas export, and export payment means. These agreements, concluded on the basis of a preliminary agreement signed on Mar. 25 of the same year, are an important step in turning the Iraqi Kurdistan Region into a strategic energy partner for Turkey.
The gas agreement provides for the export of 20 billion cubic meters per year, at prices lower than those paid by the rest of the exporters to Turkey. The first phase of the 15-year oil agreement provides for the export of 400,000 barrels of crude oil per day. Export levels are expected to increase with increased production in the region. A price formula has yet to be announced.
Recently, contradictory statements were issued by the three parties concerned — Baghdad, Erbil and Ankara — regarding a potential oil export understanding and agreement among them. In this article, we will try to summarize some of the positions that give an idea about the rampant chaos in Iraq — a chaos that has wreaked havoc on the country’s security and its most important economic resource. According to al-Mada press, Iraqi Oil Minister Abdul Karim Luaibi issued a statement from the sidelines of meetings of the Organization of Petroleum Exporting Countries (OPEC) in Vienna on Dec. 4. He asserted that “the KRG accepted to place oil exports from the Kurdistan region to Turkey under the supervision of the central government [in Baghdad].” Luaibi confirmed that the KRG had agreed to deposit oil export revenues in a UN account in New York opened specifically for Iraqi oil revenues. “The KRG has agreed that the central government will control the quantity and quality of crude oil to be exported from its territory and to manage its revenues,” said Luaibi. “The KRG will export oil using the metric measurement system managed by the Ministry of Oil in Baghdad. This understanding could lead to the conclusion of a formal agreement this month, under which KRG authorities will resume oil exports via the Kirkuk-Ceyhan pipeline.”
In fact, the conclusion of this deal is an important step towards resolving the outstanding issues between Baghdad and Erbil, taking into account that the KRG oil policy was implemented in 2003 based on Baghdad’s previous injustice towards the Kurds. This oil policy was adopted to challenge Baghdad, starting first with the KRG’s rejection of the draft oil law in parliament. Then it entered into direct agreements with international companies, and now it is directly exporting oil without the federal government’s consultation or approval.
It is worth mentioning that the Iraqi Oil Report, issued in English and distributed electronically, published statements on Dec. 5 made by Turkish Energy Minister Taner Yildiz and KRG Minister of Natural Resources Ashti Hawrami during an energy conference held on Dec. 2 in Erbil. Hawrami said, “According to the KRG-Turkey agreement, Kurdistan’s government shall first settle its obligations towards international oil companies operating in [the Kurdistan Region] and then allocate the necessary funds for the purchase of oil products from Turkey. Only then, after we satisfy our needs of local fuel, Kurdistan will allocate during the coming months or years its remaining oil revenues to Baghdad.” He added, “The KRG will be entirely responsible for direct coordination with parties involved. It will also be responsible for the marketing of crude oil. We will resort to third parties. We will also rely on Turkey’s help. As for the State Organization for Marketing of Oil (SOMO) [the official party set by the constitution], it will be welcomed to join as an observer.” Barzani confirmed that an agreement had been reached on the executive and official steps needed to move forward with the project.
However, head of the Kurdish Change Movement Judge Latif Amin, (whose party won the second highest number of votes in recent Kurdish parliamentary elections) stated that “the KRG is a caretaker government; it does not have the right to enter into foreign contracts and agreements.” He added, “The parliament is the only party that confers legitimacy to the government. Upon the expiry or dissolution of the parliament, the government is considered a caretaker government as clearly confirmed in Paragraph 2 of Article 64. This means that Barzani’s government is not entitled to conduct any sovereignty-related acts, including the conclusion of international contracts.”
Furthermore, the US State Department announced on Dec. 5 its refusal of oil export from anywhere in Iraq without the Iraqi government’s consent. The reason behind this refusal is the negative effect the move may have on Iraq’s unity and stability, as reported by The New York Times.
Direct oil exportation by the KRG, without relying on SOMO, is risky for the Iraqi oil economy. Moreover, Iraq continues to pay compensation to the states affected by its occupation of Kuwait. Will Kurdistan bear this responsibility too or will the burden fall on Baghdad alone? Is this allowed by the United Nations? Since Kurdistan is part of Iraq, will it continue receiving its share of Iraq’s oil revenues while oil is exported from its territory and for its own account?
The export of Iraqi oil without federal government approval is yet another step towards the dismantling of Iraq. Adopting an oil policy that refuses to recognize the role of the federal government and its position in the oil industry paves the way for Iraq’s secession and dismantling.
If the KRG’s separation from Iraq is bound to happen, which is expected in light of the developments in Turkey and Syria, this separation would better be done peacefully and constitutionally, i.e. by implementing the right of self-determination for the Kurds. This dispute and the attempts to blackmail Baghdad to make concessions that harm issues related to Iraq’s sovereignty and economic interests are mere reflections of the weakness of governance and the current situation of the country. Given the seriousness of the situation affecting Iraq’s main economic source, it is time a popular referendum be held on this matter, instead of leaving it subject to political bickering between forces
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