Despite Hurdles, Kurdistan's Oil Pipedream Will Be Realized

Iraq’s autonomous Kurds are moving closer to crossing a long-awaited  milestone: Their own oil exports.

This is true despite news that the latest talks between Baghdad and the Kurdistan Regional Government (KRG) had failed to achieve a breakthrough.

What is important, however, is that the talks are advancing. They have not hit a brick wall.

“Iraq’s Prime Minister Nuri al-Maliki and KRG Prime Minister Nechirvan Barzani emphasized the importance of reaching an agreement over the outstanding issues between the Kurdistan Region and Iraq," said a statement from the Iraqi premier’s office, after a fifth round of talks in Baghdad.

The Kurds have been locked in weeks of rollercoaster diplomacy, as Baghdad put in all the stops to prevent Erbil from selling oil to and via Turkey.

But there have been insider indications that, if not resolved, the disputes are nearing solutions.

Before the latest round of talks in Baghdad, Qassim Mohammed, a Kurdish-bloc MP in the Iraqi parliament, said on Saturday that the oil differences between Baghdad and Erbil are expected to end this week.

There had been a “big convergence” to resolve the oil crisis, he told Shafaq News.

“The convergence in positions happened between the federal government and the regional government during the past few days about the crisis,” he said. “The export of oil will take place this week in the form of a final agreement after the arrival of a delegation from the region to attend the joint meeting."

Another indication that things were on track came from Mehmet Sepil, the president of Anglo-Turkish firm Genel Energy and the man who the Reuters news agency described as someone “who has knowledge of the talks.” He said he saw a deal approaching.

 “We have never been this close to a deal," he told Reuters in an interview. "The issues that caused an impasse have been identified. There's been quite a bit of progress made."

Then there was news that Kurdish Prime Minister Nechirvan Barzani was in  Istanbul on Friday for a meeting with his Turkish counterpart, Recep Tayyip Erdogan. Barzani had his energy minister in tow. So did Erdogan.

All of this means that the Kurds appear very close to their dream of underwriting their own economic future. Soon, oil revenues could turn Kurdistan’s economic boom into a rocket.

The oil row has been over the Kurds saying they have liberal legal rights over their vast energy resources and the Arab government in Baghdad fearing that greater economic independence could energize calls for Kurdish independence.

But from the very beginning of the row it has been obvious that, one way or another, Kurdish oil will flow overseas.

It was obvious in October 2011, when ExxonMobil became the first US company to begin projects in Kurdistan, even after Baghdad threatened to blacklist all firms working under direct agreements with the Kurdistan Regional Government (KRG).

Soon after, other companies followed, including Chevron, Total of France and Gazprom Neft of Russia. These companies are so powerful that they can change national policies. They had come to Kurdistan because it was obvious there was money to be made.

At a major oil and gas conference in Erbil in December, Premier Barzani noted that foreign oil companies, “with full confidence have come here and invested with their own capital to search for oil.”

For all its complexities, the reality of Kurdish oil is very simple:

-The oil and gas is in the hands of the Kurds, not the central government. Baghdad can issue writs, but the Kurds can get their hands on the oil.

-There has never really been any doubt that the Kurds will sell their own oil and gas, and Turkey next door will buy them. After all, Turkey’s entire policy appears to be underwritten by achieving economic parity with Europe, making industrial growth a prerequisite.

-The Kurdistan Region remains the only stable portion of violence-torn Iraq. There is no guarantee for steady supplies of Iraqi oil. There are greater guarantees of steady supplies from Kurdistan.

-Baghdad can only do so much to stop Kurdish oil.  Excessive force would only push the Kurds toward the same independence that is Baghdad’s greatest fear.

Turkey, a regional power of no mean might, has decided on Kurdish oil. This was plainly said by Turkish Energy Minister Taner Yildiz in an interview with Rudaw in December.

 “I would say frankly that Turkey will not sit idly about its nearby sources (of energy),” he said.