The expanding Syrian civil war and increased tensions between the Arab Shia dominated government and the non-Shia, non-Arab regions represent major threats to future oil growth, according to Daniel Brett, director of Strategy, oil security services, Blacksand Maritime, Blacksand Group.
“The bombing of the Kirkuk-Ceyhan pipeline is a harbinger of times to come and Baghdad looks increasingly unable to assert itself against a growing insurgent threat. The Sunni insurgency is likely to target critical infrastructure to disrupt the functioning of government without significant economic damage to oil-poor Sunni regions. As such, more attacks are likely to follow and civil war is a possibility, although Iraq’s neighbours, including Turkey, Saudi Arabia and Iran, will have a vested interest in preventing this scenario,” Brett told Oil & Gas Middle East.
The situation in Iraq is complicated by the tension between Baghdad and the KRG. The oil-rich Kurdish region is the country’s most stable area and where the investment is now flowing. Two issues are emerging that threaten to open a new front within Iraq: Kurdish control over oil exports and the administration of Kirkuk which Kurds regard as their capital but lies outside the KRG area. Control of Kirkuk’s oilfields would give the Kurds massive leverage over Baghdad, according to Brett.
In order to avert a constitutional crisis and a potential new front in an emerging civil war, Baghdad has little choice but to allow exports to begin. However, escalating violent tensions in Kirkuk could disrupt the pace at which this may happen as well as reducing the political will to cede to regional demands.
