Taner Yildiz, Turkey’s energy minister, said on Sunday (19 September) that he had given Iraqi oil minister, Hussein al-Shahristani, reassurances that Turkey would not allow any exports of Iraqi Kurdistan-produced oil or gas to pass through its midstream infrastructure without the blessing of Iraq’s central government. Hydrocarbons “exported outside of the Iraqi government framework won’t be recognised”, al-Shahristani told media during a joint press conference, with Yildiz adding that “any gas produced in Iraq is the property of all Iraqis. We aren’t a part of any of the agreements outside the Iraqi central government”, Platts reports.
The Iraqi government is in dispute with the autonomous Kurdistan Regional Government (KRG) about the ownership and power over natural resources, as the KRG has successfully attracted junior and midsize IOCs to explore its acreage under production-sharing agreements (PSAs). The Iraqi government is claiming its sole right to sign upstream contracts with oil companies, and refuses to recognise the PSA framework, as Iraq proper uses technical service contracts (TSCs). Recently Germany’s RWE struck a gas infrastructure co-operation deal with the KRG, aiming to help the region develop its gas export capacity and become a supplier to the Nabucco pipeline project taking gas to Central Europe. “The [Baghdad] central government is not accepting any kind of agreement if they are not in it,” Yildiz was quoted by Platts as saying. “Turkey would therefore block gas produced under the RWE-KRG deal transiting its country”.
Significance
IHS senior Middle East energy analyst Samuel Ciszuk said that the KRG’s landlocked status means that the region in effect is dependent on Turkey allowing it transit for any of its exports.
“Neither Iran nor Syria, for geographical and political reasons, represent any viable option—at least for the foreseeable future,” he said. “As IHS Global Insight has said, an export solution can only be found through a deal between the central government of Iraq and the KRG. Talks about this are likely part of the ongoing negotiations to form a new central government in Iraq following the March general election, with the Kurdish faction—speaking very much in unity on the national level—making sure that it is essential to any potential coalition in order to safeguard a deal giving it maximum autonomy. Controlling its own hydrocarbon revenue would of course be a vital demand, but other controversial issues are also high on the agenda, such as the status of the oil hub and major city Kirkuk as well as other border areas where Kurds are the majority population but which do not officially belong to any of the autonomous region’s three governorates.”
Ciszuk added that: “With strong popular Kurdish nationalism demanding no concessions on such issues, the Kurdish parties are finding it hard to compromise, while resurgent Iraqi nationalism among the Shi’a and Sunni population is making the strongest political factions in Iraq proper similarly disinclined.”
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