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Iraq: Maliki threatens Kurds if they export oil to Turkey

Jan. 15, 2014 at 11:57 AM   |   Comments

BAGHDAD, Jan. 15 (UPI) -- As if Prime Minister Nouri al-Maliki didn't have enough problems battling city-grabbing al-Qaida insurgents in western Iraq, his simmering faceoff with independence-minded Kurds in the north over their drive to export oil to neighboring Turkey looks like it's about to boil over as well.

The Kurdistan Regional Government, which runs the land-locked, semiautonomous Kurdish enclave that borders Turkey, says it started pumping crude from its oil fields directly to Turkey through a newly constructed pipeline to the export terminal at Ceyhan on Turkey's Mediterranean coast in early January.

That openly defied Baghdad, which has branded the operation bypassing the state oil export network as illegal. The only other export outlet for the Kurds is to the south through the Persian Gulf, but Baghdad controls the export terminals there.

Maliki insists the central government has sole authority over Iraq's massive energy resources, and declared the Kurds are in "flagrant violation of the Iraqi constitution."

"This means the stealing of Iraqi wealth and [we] won't allow it," declared Ali Dhari, deputy chairman of the Iraqi parliament's oil and gas committee.

On Sunday, Maliki threatened to cut Kurdistan's share of the federal budget if the KRG, headquartered in the northern city of Irbil, persisted in independently pumping oil to Turkey.

Baghdad tried to use the fiscal weapon in 2013. In March it approved a budget giving the Kurdish region only $646 million of the $3.5 billion they expected.

But that did not prevent the deal with Ankara proceeding amid the great changes now taking place in the Middle East's geopolitical landscape.

The Oil Ministry in Baghdad has threatened to take legal action against any companies that trade in "smuggled oil or gas" from Kurdistan without going through the State Organization for the Marketing of Oil."

More than 40 foreign companies are operating in Kurdistan under production-sharing contracts with the KRG that Baghdad refuses to recognize.

These include Exxon Mobil and Chevron of the United States, Total of France, Gulf Keystone, the Anglo-Turkish Genel Energy, Hungary's MOL, Petroceltic of Britain and DNO of Norway.

The new 40,000 barrels per day pipeline was built by energy-poor Turkey, which seeks to transform itself into the energy hub between the West and the resources of Russia, Central Asia and the Middle East.

It gives the Kurds their first unfettered access to international oil markets after years of wrangling with Baghdad.

The KRG says the first 2 million barrels of crude through the pipeline, primarily from the large Tawke field, will be sold at the end of January. Kurdistan's expected to pump 4 million barrels by February and 7 million by the end of March as oil from the Taq Taq field comes onstream.

Maliki's concerns go beyond the legal issues of who owns the estimated 45 billion barrels of oil the KRG says lie in the enclave that span three of Iraq's eight provinces, along with natural gas reserves of 110 trillion cubic feet.

These reserves are listed under Iraq's reserves of 143.1 billion barrels, the fifth largest conventional oil reserves in the world.

The Kurds are cagey about whether they plan to shoot for independence. But they battled the Baathist regime in Baghdad for decades for self-rule before Saddam Hussein was toppled in 2003.

The current regime, dominated by majority Shiites who have little time for the overwhelmingly Sunni Kurds, fear Kurdistan will declare independence with its energy resources. U.S. officials support that view.

"It's reasonable to speculate that given peace, Kurdistan may export between 2 million and 4 million barrels per day within the next decade," observed energy analyst Euan Mearns.

"With a population of 4 million, Kurdistan could expect to become wealthy like Norway and the Persian Gulf Emirates -- if restless neighbors permit this to happen."

That, Baghdad worries, would encourage other restive regions to break away and splinter the country that emerged from the collapse of the Ottoman Empire after World War I.

Those could include the western Sunni provinces of Anbar, Salahuddin and Diyala where al-Qaida seeks to establish its own state in the heart of the Arab world, a region it's already calling the "Jazeera Emirate" and where its fighters seized the flashpoint city of Fallujah in December and parts of the Anbar provincial capital, Ramadi.

© 2014 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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