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Fuel for the fire in Iraq

The Iraqi Kurds' quest for independence, to be tested in a forthcoming referendum, will force politicians to face up to the issue of disputed oilfields

The fate of the mighty Kirkuk oilfield has become the elephant in the room in Iraqi political discourse. "No one's discussing it," a retired oil-sector executive says, "because no one can see an easy solution."

The future of Kirkuk's oil is inextricably woven into the fate of the city itself and who should control it. The two sides contesting it speak with passion that brooks no discussion.

On the question of Kirkuk oil, the current state of affairs amounts to an uneasy truce—with an unspoken agreement to limit discussion of such an emotive issue. It's complicated, too.

The Peshmerga forces of the Kurdistan Regional Government (KRG) took control of Kirkuk in mid-2014 to protect it from advancing Islamic State (IS) fighters. In the process, they commandeered the Avana Dome of the Kirkuk oilfield and the nearby Bai Hassan field.

These were formerly operated by the federal state's North Oil Company (NOC) and constitute major assets. Today they provide around 380,000 barrels a day of output for the KRG, more than half its total production (580,000 b/d).

NOC still operates the Baba Dome of the Kirkuk field, along with the Jumboor and Khabaz fields, with production averaging around 150,000 b/d. In a clear signal that the Baghdad government intends to maintain a hold on Kirkuk, Iraq says it's in discussions with Tehran on building a 250,000-b/d export pipeline from the city to Iran. The two sides have selected a company to carry out a feasibility study.

Kurdish opposition

The KRG response has been swift and predictable. A Kurdish official says that "any oil deal, or discussions about the province's output, without involving the Kirkuk governorate and its provincial council will not be successful".

The Iran export proposal won't necessarily be opposed by all Iraqi Kurdish groups. The Patriotic Union of Kurdistan (PUK), which has historically enjoyed close relations with Tehran, might quietly enjoy seeing a plan develop that undermines the dominant Kurdish Democratic Party (KDP). The PUK has frequently accused the KDP of monopolising the oil sector for its own gain, rather than for the benefit of the Kurdish region as a whole.

It's possible still for the authorities in Baghdad and Erbil to sit down and work out a deal over Kirkuk's oil that benefits both sides. But it's hard to imagine how such a formula could be constructed. The retired Iraqi oil executive is pessimistic. "The KRG," he says, "will never give back an asset that provides the bulk of its exports. And they'll never allow NOC to cling to fields in and around Kirkuk."

No one in Iraq wants another war. But this is the kind of problem that has the potential to ignite confrontation, one where compromise is off the agenda.

In the view of the president of the Kurdish region, Masoud Barzani, writing recently in the Washington Post, "Kurdistan's case for independence is compelling" as the Kurds missed out on statehood after World War One when the territories of the defeated Ottoman empire were divided up into new nations.

In later times, he continued, "the newly established state of Iraq was supposed to be an equal partnership between Arabs and Kurds. That hopeful dream soon gave way to a grim reality. All Iraqi governments suppressed the Kurds." A referendum on independence is scheduled for late-September.

Not all Kurds sing from the Barzani hymn sheet. Within the PUK some say the time isn't right for independence, while the Goran movement, which received more votes than the PUK in the most recent elections, accuses the KDP of using the issue for domestic political advantage. The Kurdistan Islamic Group has also questioned Barzani's motives.

At the same time, Iran and Turkey, with sizeable Kurdish minorities of their own, are uneasy at the idea of Turkish Kurds achieving statehood. The KRG needs to be wary of Turkey, for nearly all its oil exports are piped across the east of that country to Ceyhan on the Mediterranean coast. Turkish companies have invested heavily in the Iraqi Kurds' energy and economic sectors, and the two sides have signed an agreement for the cross-border supply of Kurdish natural gas.

So the stakes are high on a number of fronts. Iraqis as a whole will be hoping that Kurdish leaders think carefully of all the implications before pushing the button for independence. Iraq has been living under one dark cloud or another for too long and a military clash over Kirkuk might be the last straw for many. For Iraqi politicians as a whole, burying heads in the sand is no longer an option.

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