Kurdistan as the next major oil producer?
There are already predictions that Kurdistan will seek independence and quickly aim to become a major oil producer. Barely on the oil majors’ radar five years ago, the semi-autonomous is now one of the biggest draws in the energy industry. The Kurdistan Regional Government (KRG) sees production from the region, now about 200,000 barrels a day, rising to 1 million barrels per day by 2015 and 2 million barrels per day by 2019.
The regional government is seeking greater autonomy from Baghdad, which insists only the central government has the right to sell Kurdish oil. The path to sustained exports from Kurdistan now lies with either a permanent deal with Baghdad, say analysts, or the establishment of the region as an independent sovereign state.
Recently, Kurdish peshmerga forces took control of production facilities at two northern Iraqi oilfields replacing Arab workers with Kurdish personnel. The national oil ministry in Baghdad condemned the takeover at the Kirkuk and Bai Hassan fields and called on the Kurds to withdraw immediately to avoid “dire consequences”.
The move came a month after Kurdish forces took control of the nearby city of Kirkuk, following the withdrawal of Iraqi armed forces in the face of a lightning assault by Islamic State militants, who have seized large parts of north and west Iraq.
Kurdistan holds an attraction over Iraq
Most oil majors cite unattractive terms of Iraqi contracts as being behind their decisions to explore more lucrative Kurdish deals.
French oil major Total, rattled Baghdad two years ago by signing a deal with Kurdistan. Christophe de Margerie, Total chief executive said “if Kurdistan were a huge petroleum region, we wouldn’t have waited until 2010. It is too early to make a judgement. You can’t yet see what we call a production curve… You have to avoid underestimating or overestimating the potential.”
Total bought stakes in two exploration blocks in Kurdistan in 2012 from US peer Marathon Oil, drawing an angry response from the Iraqi government which has tried to bar companies from dealing directly with Arbil.
Elsewhere in Iraq, Total has a relatively modest exposure as partner at the south-eastern Halfaya field. France’s opposition to the US-led 2003 invasion of Iraq did not endear French companies to the new authorities.
Other players in Kurdistan include ExxonMobil, Chevron, Gazprom, Afren, Genel amongst others. Baghdad says the roughly 50 deals the KRG has signed with international oil companies and independents are unconstitutional and has barred those oil companies from participating in Iraqi oil licensing rounds.
Frank Uzuegbunam