Platts Oilgram News reports the semiautonomous Kurdistan Regional Government is engaged in a "war of words" with Baghdad over jurisdiction of oil in the country.
KRG oil sent from the Turkish port of Ceyhan was sold to an Israeli buyer in June. The central government in Baghdad said the oil sales are a violation of constitutional provisions. The U.S. government, eying growing instability in Iraq, said oil exports are illegal without Baghdad's express consent.
The Platts special report, published Tuesday, said an oil pipeline from the north of the Iraq to Turkey is out of Baghdad's reach. Nevertheless, the Kurdish region has its own challenges.
"The biggest obstacles hindering further Kurdistan oil development remain the region's immaturity as a major hydrocarbon producing province and its lack of energy infrastructure," the emailed report stated.
Platts said the Kurdish region has the capacity to export hundreds of thousands of barrels of oil, but that by itself won't be enough to transform the Kurdish region's economy.
The report added that, while enjoying relative autonomy, the Kurdish government might resist the urge to secede from Iraq. A "marriage of convenience" with Baghdad would allay the concerns of regional allies while at the same time stemming the tide of growing sectarian divisions in Iraq, it said.