ERBIL, Kurdistan Region – Kurdish Peshmerga forces moved into the Bai Hassan and Makhmur oilfields on Friday morning “to secure the oilfields after learning of orders by officials in the federal Ministry of Oil in Baghdad to sabotage the recent mutually-agreed pipeline infrastructure linking the Avana dome with the Khurmala field,” said Kurdistan’s Ministry of Natural Resources (MNR).
“The nearby Bai Hassan field and the other fields located in Makhmour district are now safely under KRG management. The KRG expects production at these fields to continue normally. Staff at the North Oil Company that previously operated these fields have been informed that from tomorrow they will be expected to cooperate with KRG management. Those who do not want to do so can leave,” said the MNR in a statement.
The MNR statement said that the new pipeline linking Khurmala with Avana was designed and constructed with the express purpose of facilitating export from the Makhmour, Avana and Kirkuk area fields through the KRG pipeline network to help increase revenues for Iraqis, at a time of great need and at a time when most of the Iraq-Turkey pipeline is under ISIS control.
The KRG defended its move of taking over the oil facilities, saying that it had been built and paid for by the Kurdish government.
“However, the KRG learned on Thursday that some officials in the federal Ministry of Oil gave orders to a number of NOC staff to cease their cooperation with the KRG and to dismantle or render inoperable the valves on the new pipeline,” read the statement.
The MNR explained in the statement that “The Avana and Makhmour fields have been unable to export since March because the main Iraq-Turkey pipeline has been damaged by terrorist attacks.”
Kurdish authorities feared damages to the Bai Hassan and other fields after Iraqi Jets bombed the Gayara oil refinery near Mosul on Thursday to drive out militants of the Islamic State (IS).
Kurdish forces moved into Kirkuk and other areas outside their formal borders last month to fill the security vacuum left by retreating Iraqi troops. The KRG said the advance had been to prevent Islamic State (IS) extremists from wresting control of the oil-rich provinces.
The Bai Hassan oil fields, 55 kilometers northwest of the city of Kirkuk, produce nearly 195,000 barrels of oil per day (bpd). The fields have strategic importance for the KRG because they are connected by pipeline to Kurdistan’s own independent oil pipeline in Khurmala, near Erbil.
The Kurdish takeover of the fields follows a series of tit-for-tat measures between Baghdad and Erbil. On Thursday, Baghdad slapped a ban on cargo flights flying into the Kurdistan Region, after Kurdish ministers in the Iraqi cabinet announced they would boycott government proceedings to protest statements by Iraqi Prime Minister Nouri al-Maliki, who accused Erbil of harboring extremists.
The Iraqi oil ministry warned the Kurds of serious consequences over the oil fields, calling the move illegal.
"The oil ministry strongly warns the Kurdistan Region of the seriousness of this irresponsible behavior,” it said, calling it “an encroachment on the Constitution and the national wealth.”
The MNR said that they have plans for the use of the new oilfields they took over on Friday.
“From now on, production at the new fields under KRG control will be used primarily to fill the shortage of refined products in the domestic market. This will ease the burden on ordinary citizens caused by the failure of the federal authorities to protect the country's vital oil infrastructure in the region,” said the MNR statement.
In January Baghdad froze Erbil’s share of the national budget, putting the KRG under strain. Now however, Erbil says that revenue from the new oilfields will “make up for the huge financial deficit triggered by the illegal withholding of the KRG’s 17 percent share of the federal budget by Baghdad.”