Editorial comment
A bid for independence
Reports from the Kurdistan Regional Government (KRG) claim that the oil pipeline running from Iraqi-Kurdistan via Turkey is operating normally, despite growing unrest in Northern Iraq and Syria.
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The pipeline, which came online last December, is KRG’s attempt to export oil independently of Iraq. Sources say that the pipeline is pumping 120 000 bpd of crude, connecting to the Kirkuk-Ceyhan pipeline on the Turkish side of the border. This crude is transported to the port at Ceyhan and exported via tanker. According to Julian Metherell, CFO at Genel Energy Plc, the London-based exploration company active in Kurdistan, some five cargoes have been loaded in Ceyhan. Metherell confirms that, of these, one tanker has gone to Singapore, one to Israel and a third is docked off the coast of the US, where it is the subject of a legal dispute.
You might have seen news reports of this fateful tanker, the United Kalavyrta, moored off the coast of Texas, loaded with Kurdish crude oil and unable to dock. Washington has opposed the direct sale of oil from the autonomous Kurdish region, wary of creating any further divisions within Iraq. At the time of writing, the tanker has been stranded off the coast of Galveston for two weeks, unable to continue its journey to port. Iraq asserts that the cargo is stolen and, as such, appealed to US magistrates for assistance in recouping the load. A federal magistrate in Houston has ordered US marshals to seize any oil that is offloaded onto smaller vessels for passage to shore. The stalemate continues.
Back in Iraqi-Kurdistan, Genel reports that production remains safe and secure, with record volumes being pumped. Genel, whose CEO is ex-BP Plc chief Tony Hayward, expects to sign a gas deal with Turkey this year. The agreement would cover the supply of 10 billion m3/yr of gas to Turkey by 2017. Genel is confident about a huge rise in piped oil exports, despite the difficulties it faces regionally: the Isis (IS) insurgents in Iraq have claimed seven oilfields and two refineries over the last few months. Yet, despite growing security risks, the companies active in the field say their oilfields continue to operate.
Mr Hayward is keen to stress that all is calm around key oilfields in the Kurdish region of Iraq, which has historically been a beacon of relative stability in the region.
Kurdistan has long harboured aspirations of exiting Iraq and becoming an independent state and, with this, generating its own oil revenues. Under the Iraqi constitution, Kurdistan receives a 17.5% share in Iraq’s oil revenues, but the KRG insists that Baghdad underpays. Kurdistan has exported oil on its own initiative since 2009, in deals with ExxonMobil, Chevron and Gazprom.
Speaking to The Guardian newspaper in July, Sardar Aziz, a senior adviser to the cross-party energy committee of Kurdistan’s parliament, said that he wanted a sovereign Kurdistan to use its oil wealth wisely – like Norway does.1
New oil and gas discoveries in the region of Kurdistan have proved to be very encouraging: there are 57 oil and gas fields, with estimated proven reserves of 45 million bbls of oil and 100 - 200 trillion ft3 of natural gas. The KRG Ministry of Natural Resources has established a programme to increase production capacity from 200 000 bpd to 2 million bpd by the 2020. Some 40 oil and gas companies are active in Kurdistan, although at the time of writing, Chevron Corp. and ExxonMobil are reported to be evacuating staff from Kurdistan territory, in the wake of continued regional aggressions. Despite optimistic reports, the future for the Kurdistan oil and gas industry is tied to the turmoil around it.
http://www.theguardian.com/world/2014/jul/14/kurdish-technocrats-discuss-kurdistan-oil-wealth
