Iraqi Kurds count on Turkey as energy hub amid friction

LONDON / ISTANBUL

The Kurdistan Regional Government’s oil exports are expected to climb to 250,000 barrels per day by 2013 and will continue to be shipped through a pipeline in Turkey. REUTERS photo

The Kurdistan Regional Government (KRG) sees itself as a soon-to-be major energy player, hosting the world’s largest oil companies and making use of its own strategic export pipeline system across Turkey, according to the energy minister of the autonomous administration in Iraq’s north.

Ashti Hawrami also said the developments were for the good of all Iraq, despite the fact that KRG policies envisage a northern region in control of its own reserves, estimated at 45 billion barrels, Reuters reported yesterday. “We recognize that we need investment in the infrastructure to boost export capacity, and we are doing that. We are ahead of the game, so we’ll continue with it,” Hawrami told Reuters after speaking at an FT energy conference in London.

KRG’s ambitious goal

Last week, the KRG reached a deal with Baghdad to end a dispute over oil payments and agreed to sustain oil exports of 140,000 barrels per day (bpd) this month - rising to 200,000 bpd for the rest of the year. The dispute involves major energy companies including Exxon Mobil, Chevron and Total who have signed exploration deals with the KRG. The central government in Baghdad says that such contracts are illegal. Ankara-based Genel Energy, a multi-national energy firm trading on London Stock Exchange is also one of the key actors in northern Iraq.

By 2013, the KRG’s exports are expected to climb to 250,000 bpd and will continue to be shipped through a Baghdad-controlled pipeline to Turkey. Hawrami unveiled a plan earlier this year to build pipelines to Turkey in order to rise in exports to 1 million bpd by 2015. “I’m expecting to see more major companies coming in and negotiating for whatever we have within this year - whether by mergers and acquisitions or farming in between companies,” Hawrami told Reuters. He said the region was also looking to expand its gas capacity first to meet domestic requirements, then to increase power generation capacity and fuel industrial use. Turkey and beyond would come in the next year or two, he said.

Turkish Energy Minister Taner Yıldız said in a separate interview with Reuters that Turkey is currently buying 20 to 30 tankers of oil from the KRG, which will increase gradually.

Turkish offer to Baghdad

Turkey’s priority was the decisions made by the central Iraqi government in accordance with their constitution, Yıldız said. “We know that these revenues are collected in a pool for the Iraqi people and shared,” he said.

Iraq produces 2.7 million bpd of oil, which was not enough for the world markets, the minister noted.

“We told the Iraqi Oil Ministry that we have given the green light to oil transports from the south to the north through Turkey. We said we could do it together. The ball is son ow their court,” the minister said.
 
Arbil’s plans indicate the improving ties between Arbil and Ankara, however, Necdet Pamir, the head of the energy committee of Turkey’s main opposition Republican People’s Party (CHP), thinks the instability in the region will hamper any plans.

The terrorist attacks on the Yumurtalık-Kirkuk pipeline, the double line carrying Baghdad crude to Turkey, is a good example of the instability there, he told the Daily News on the phone yesterday. The line carries around 1.4 million barrels per day, he said. “When Saddam [Hussain] was ruling the country there was a deal that obliged the Iraqi government to pay for shortages in supply,” Pamir said, calculating Turkey’s loss from the absence of such a deal since Saddam was toppled in 2003 to be around $1 billion. Pamir called on government to work for stability of the whole region. “No one will benefit from focusing on the north for the sake of short term benefits and continuing meaningless disputes with Baghdad,” he said.