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Oil determines Iraq’s future
Iraq, May 4, 2014
Around 1.5 million barrels of oil produced by Kurdistan region stored in Turkish port of Ceyhan and waiting marketing seems to be one of the major factors that will decide on the political future of Iraq.
The parliamentary election launched recently will end up with 328 parliament members, who themselves will choose the country’s new prime minister.
Whether Prime Minister Nouri Al-Maliliki wins a third term or not seems less significant than the tough bargaining that is likely to happen in choosing a new leader.
In the heart of that political bargain lies the future of Iraq as a unitary state, a federal one or more a loosely connected regions.
Most analysts expect that no clear winner will emerge from elections, which will open the door wide open for potential deals here and there with the aim of securing the top government post. And in this Erbil, or the seat of the Kurdistan regional government, finds itself in the crucial position of tipping the balance this way or another.
The Kurds, with decades of yearning for more independence to run their own affairs, will find in current situation a good opportunity to further its cause for more independence in managing their own business; some even think they can push for complete separation.
The gist of such debate is the oil issues and whether the central government in Baghdad will concede the right of dealing with world market to Erbil or not.
Despite the fact that the Kurds occupy key positions in the central government like the presidency and some important portfolios like foreign affairs in addition to running their own business in their region, but control of oil receipts and the Kurdistan share proved to be a sensitive issue that can push the Kurds for more extreme positions to the verge of independence.
Over the past several months, Kurdistan managed to negotiate separate and independent agreements with foreign oil companies, a sovereign step that is usually reserved for the central government.
Baghdad threatened first that any foreign company signs a deal with Erbil will be barred from doing business in the rest of the country, but foreign oil firms including big ones, found it more lucrative to do business with Erbil than with Baghdad.
Moreover, Turkey and in a subtle way went ahead with Erbil when it allowed building a pipeline carrying crude from the region, without exporting it so far, and on the assumption that a deal will be reached somehow between Baghdad and Erbil.
That did not happen so far, which keeps the door for more bargains wide open not only between Baghdad and Erbil, but between Ankara, Baghdad and Erbil.
Turkey may find itself in the central position to influence emerging developments. And that can start with some kind of an arrangement to sell the Kurds crude still in the waiting in Ceyhan.
To what extent the new prime minister will be willing to reach a deal with the Kurds allowing them to go their own way in exporting the region’s oil that is the issue, which will add more time and effort to the typically long bargaining process expected to take place in the post elections period.
As it stands now, whoever will emerge as the new prime minister is set to be in a weaker position. And such situations will have their ramifications not only for Iraq, but also for the oil industry in the entire region.
The position adopted by the Kurds regarding their oil, is replicated somehow by the Libyan region of Brega, which is demanding more autonomy and some degree of independence in running its own affairs starting with the oil produced in its territory.
This type of trend had started actually in Sudan.
Despite decades of civil war, it was the discovery of oil in the southern part of the country that gave the call for referendum some credibility and the new state of South Sudan that came into being three years ago was seen as a gift of oil.
It remains to be seen how such development will impact the industry and the region, which so far has proved to be the last resort as far as energy reserves and continuous supplies to the rest of the world.
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Iraq, May 4, 2014
Around 1.5 million barrels of oil produced by Kurdistan region stored in Turkish port of Ceyhan and waiting marketing seems to be one of the major factors that will decide on the political future of Iraq.
The parliamentary election launched recently will end up with 328 parliament members, who themselves will choose the country’s new prime minister.
Whether Prime Minister Nouri Al-Maliliki wins a third term or not seems less significant than the tough bargaining that is likely to happen in choosing a new leader.
In the heart of that political bargain lies the future of Iraq as a unitary state, a federal one or more a loosely connected regions.
Most analysts expect that no clear winner will emerge from elections, which will open the door wide open for potential deals here and there with the aim of securing the top government post. And in this Erbil, or the seat of the Kurdistan regional government, finds itself in the crucial position of tipping the balance this way or another.
The Kurds, with decades of yearning for more independence to run their own affairs, will find in current situation a good opportunity to further its cause for more independence in managing their own business; some even think they can push for complete separation.
The gist of such debate is the oil issues and whether the central government in Baghdad will concede the right of dealing with world market to Erbil or not.
Despite the fact that the Kurds occupy key positions in the central government like the presidency and some important portfolios like foreign affairs in addition to running their own business in their region, but control of oil receipts and the Kurdistan share proved to be a sensitive issue that can push the Kurds for more extreme positions to the verge of independence.
Over the past several months, Kurdistan managed to negotiate separate and independent agreements with foreign oil companies, a sovereign step that is usually reserved for the central government.
Baghdad threatened first that any foreign company signs a deal with Erbil will be barred from doing business in the rest of the country, but foreign oil firms including big ones, found it more lucrative to do business with Erbil than with Baghdad.
Moreover, Turkey and in a subtle way went ahead with Erbil when it allowed building a pipeline carrying crude from the region, without exporting it so far, and on the assumption that a deal will be reached somehow between Baghdad and Erbil.
That did not happen so far, which keeps the door for more bargains wide open not only between Baghdad and Erbil, but between Ankara, Baghdad and Erbil.
Turkey may find itself in the central position to influence emerging developments. And that can start with some kind of an arrangement to sell the Kurds crude still in the waiting in Ceyhan.
To what extent the new prime minister will be willing to reach a deal with the Kurds allowing them to go their own way in exporting the region’s oil that is the issue, which will add more time and effort to the typically long bargaining process expected to take place in the post elections period.
As it stands now, whoever will emerge as the new prime minister is set to be in a weaker position. And such situations will have their ramifications not only for Iraq, but also for the oil industry in the entire region.
The position adopted by the Kurds regarding their oil, is replicated somehow by the Libyan region of Brega, which is demanding more autonomy and some degree of independence in running its own affairs starting with the oil produced in its territory.
This type of trend had started actually in Sudan.
Despite decades of civil war, it was the discovery of oil in the southern part of the country that gave the call for referendum some credibility and the new state of South Sudan that came into being three years ago was seen as a gift of oil.
It remains to be seen how such development will impact the industry and the region, which so far has proved to be the last resort as far as energy reserves and continuous supplies to the rest of the world.
[You must be registered and logged in to see this link.]
