Pipeline is Ready and Kurdish Oil Will Flow

ERBIL, Kurdistan Region - The oil pipeline from Iraqi Kurdistan to Turkey is ready to transport 300,000 barrels a day, and as much as a million barrels by 2015. Kurdistan will soon become a net contributor to the national income of Iraq.

This was the happy message broadcasted by Kurdish officials at the Kurdistan-Iraq Oil & Gas Conference held in the Kurdistan capital of Erbil. Some eight hundred professionals involved in the oil and gas industry attended the third conference in its kind in Iraqi Kurdistan.

Central in the speeches during the opening session were the fast growth of Kurdistan’s oil industry – from nothing in 2003 to 300.000 barrels a day - and the message this sends to the Iraqi government in Baghdad.

The development has speeded up in the past two years. The 46 oil rigs that are active in Kurdistan are twice as many as last year, and still more are on the verge of production. Many fields have turned out bigger than expected. And while the Iraqi gross domestic product grew three percent this year, the Kurdish economy shows a growth of over 10 percent.

The Turkish Energy Minister Taner Yildiz played the peace dove between Erbil and Baghdad, after a week of political mediation and high level visits. While he was begging for dialogue, the Kurdish side was making its case. Yes, we want to talk within the framework that has been agreed to with Baghdad, Kurdistan’s Oil Minister Ashti Hawrami said, “but at the same time business goes on.”

Talks are focussing on Baghdad’s disagreement to the way Kurdistan conducts its oil business, as the Iraqi government demands all income from it to flow into the Iraqi coffers. The Kurds will not wait for an agreement for the pipeline to start transporting oil from Kurdish oil fields to the markets, Hawrami stressed. “The pipeline is ready, all preparations are finished and we will start.”

He said this would happen even without Baghdad getting a penny in the beginning.

While the production is still relatively small, Kurdistan has to use the income to cover its costs and pay the oil companies for part of their investments. The minister promised that “as soon as we are so lucky to have a surplus revenue, it will be the property of all Iraqis.”

Hawrami showed a chart of the uneven development of the money allocated from the Iraqi budget to Kurdistan in relation to its contribution to the budget. The Kurds demand 17 percent of the Iraqi budget, but in reality get just over 10 percent. That gap will only grow in the next years as a result of the growing Kurdish oil revenue, he said.

Next year, Kurdistan is contributing more than the amount it gets from the Iraqi budget, and by 2020 Kurdistan’s contribution will be 25 percent.

“The conflict with Baghdad is all about revenues,” Hawrami said. “If we solve it, than all other issues become solvable too.”

But the Kurdish Minister of Planning Ali Sindi added a complication to the bill Kurdistan sends to the Iraqi capital. He proclaimed that Baghdad should expect a demand for damages of a total $50 billion dollars, for the seven years that Kurdistan received less than the 17 percent it feels entitled to.

Next to that, Erbil will be claiming damages for the over the thousands of villages that were destroyed from 1963 to 1991 by the past Iraqi regimes. During these operations, people were forced from villages to towns and the agriculture was destroyed. Sindi put that bill at $380 billion.

Prime Minister Nechirvan Barzani declared that the Kurds are committed to working with Baghdad, but not on Baghdad’s terms. With the growing Kurdish contribution to the Iraqi budget, the situation is changing, he stressed. “We have to sit down as equal partners.”

The partnership with the Iraqis is hard for the Kurds because of the actions of past regimes, the bad memories and the suffering, he said. “It is difficult to trust anyone who wants to decide on our destiny.”

Kurdistan is not a threat to anyone, Barzani stressed. At the same time he pointed to the Kurdish rights to be treated as an equal partner, as written in article 112 of the Iraqi Constitution. “That is our right and we cannot compromise. History will prove that it is also in the best interest of Iraq.”