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Kurdistan Oil & Gas Development

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Re: Kurdistan Oil & Gas Development

PostAuthor: Anthea » Mon Sep 10, 2018 11:37 pm

Islamic State Bombs Kirkuk Oil Pipeline

Islamic State militants have bombed an oil pipeline in Kirkuk, northern Iraq, the top security official of the Kurdistan government told local news outlet Rudaw. The terrorists launched two bombs at the pipeline yesterday, Idris Rafaat said, and the fire has yet to be extinguished.

It was not immediately clear which pipeline the Islamic State militants had blown up and what the effect on shipments from northern Iraqi fields will be.

Last year, after the Mosul offensive, the central Iraqi government said it had defeated Islamic State. However, terrorist cells remain, and the fight with these continues. Kurdistan is one of the places where there are cells, and according to Rafaat, the central government cannot do a lot about it.

"Due to the Peshmerga not existing in the region, a security vacuum has been created and the Iraqi Federal Police cannot control it as they are strangers in the area,” he said, as quoted by Rudaw. The official referred to the takeover of Kirkuk by the central Iraqi government last year, after an ill-fated independence referendum in Kurdistan angered Baghdad. It then promptly retook control of the oil fields around the northern Iraqi city.

Meanwhile, protests in southern Iraq continue as people challenge the government on issues ranging from clean drinking water to jobs. Oil fields have been natural targets for protests, but the government security forces have been swift to disperse them, including by using force.

Despite the unstable situation, Iraq is pumping oil at record rates, Oil Minister Jabbar Al-Luaibi said on Sunday, as quoted by Bloomberg. At 4.36 million bpd, the production rate is within the quota set for the country by OPEC, but it has the capacity to increase this to 4.75 million bpd, Al-Luaibi said, excluding oil from Kurdistan. Exports, he added, averaged 3.59 million bpd.

https://oilprice.com/Latest-Energy-News ... eline.html
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Re: Kurdistan Oil & Gas Development

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Re: Kurdistan Oil & Gas Development

PostAuthor: Anthea » Mon Oct 08, 2018 9:50 pm

nytimes.com
Update: Kurdistan and the Battle Over Oil
Kurdistan and the Battle Over Oil

In an election that did not capture the attention of most of the world, residents of the semiautonomous Kurdistan region of Iraq voted in a parliamentary election last Sunday — a year after a failed vote for independence. The election, whose results have been hotly debated, is the latest chapter in the long and tortured struggle over control of the oil-rich region

The Times talked to Janine di Giovanni for an update on the conflict in Kurdistan and its meaning to the oil and gas industries. Ms. di Giovanni is a senior fellow at the Jackson Institute for Global Affairs at Yale University. She has worked for over 30 years as a reporter in conflict zones in the Balkans, Africa and the Middle East. Her most recent book, “The Morning They Came For Us: Dispatches From Syria” has been translated into 26 languages. The conversation has been edited and condensed.

What makes Kurdistan — and Kurdish oil — so important?

Kurdistan is crucial because of its vital location — straddling Iran, Syria, Turkey and Iraq. Ever since the Kurds were denied their own state after World War I, they have been focused on a search for self-determination. The Kurds’ key leverage is oil: Kurdistan has roughly one-third of Iraq’s total oil reserves, much of it located under the sands near the city of Kirkuk, which was once a stronghold of the Islamic State in Iraq and Syria (ISIS.)

Kurdistan’s neighbors — with their own restive Kurdish minorities — worry that oil will fuel the Kurdish push for independence from Iraq. Kurdish autonomy, they fear, would destroy the already precarious equilibrium in the region. Kurdish statehood is the last thing the Iranians, the Turks and the Iraqis want.

Less than a decade ago, Kurdistan was being heralded as the new Dubai. What happened?

Well, first and foremost, the Islamic State happened. Although ISIS (also known as ISIL, for the Islamic State of Iraq and the Levant) was years in the making; by late June 2014 its impact on Kurdistan was huge. I was in Baghdad back then and recall the media reports that ISIS fighters were within 30 miles of Irbil, the capital of Iraqi Kurdistan. Having fighters so close terrified the oil expatriates who had gone to Kurdistan and turned it into a petroleum boomtown. The parties ended. The construction stopped. Shopping malls and the high-rise apartments were left half built as oil prices plummeted.

In short, Kurdistan’s economy was hit by the financial and humanitarian costs of the war against ISIS and a collapse in business confidence. This led to an exodus of international oil companies and other key investors. The result was a severe financial crisis from which the region has yet to recover. Oil prices have bounced back, but it has become clear that Kurdistan’s oil reserves were overstated and that the region’s production is not sufficient to cover its operational costs.

How did the failed independence referendum impact Kurdistan’s oil output, and what’s the situation like now?

The 2017 referendum was catastrophic in terms of the Kurdish economy and oil production. Shortly after 92 percent of Kurds voted to leave Iraq, Baghdad and the regional countries responded harshly. The most brutal response was that the disputed oil producing city of Kirkuk fell to Iraqi forces. The city was taken out of the Kurds’s hands after they had fought a hard battle to liberate it from ISIS. It was a bitter humiliation, a political suicide for Kurdish leader Masoud Barzani, who resigned. But most of all, it denied the Kurds of the Kirkuk oil.

What’s keeping Kurdistan from reaching its full oil-production potential?

In my view, there are two key factors going on. The first is corruption, which is endemic to the region and embedded in the society. Then there’s Kurdistan’s complex internal politics; chiefly between the main Kurdistan Democratic Party (K.D.P.) and the Patriotic Union of Kurdistan, as well as with smaller fringe groups. Those two major parties, who’ve both been accused of graft, each look in different directions for patronage and support. The P.U.K. to Tehran, while the K.D.P. is traditionally more aligned with Baghdad, the United States and Western-aligned regional countries. And these rivalries have important petroleum implications.

How so?

Take a recent 2016 export agreement. Two years ago, as internal political rivalries worsened within Kurdistan, its regional government (officially the Kurdistan Regional Government or K.R.G.) and Baghdad agreed to export 150,000 barrels of oil per day through Kurdish pipelines to the Turkish port of Ceyhan. The resulting revenue was to be shared by both governments and marked an important new era in relations between the Iraqi and Kurdish leaders. Yet the agreement only exacerbated internal Kurdish tensions. The P.U.K. accused the K.D.P. of lacking transparency; the K.D.P. accused the P.U.K. (who had always been close to Tehran) of selling Kirkuk’s oil via trucks to Iran, and keeping the money for themselves.

Are you optimistic about the future of Kurdistan to ultimately develop as both a nation and major oil producer.

I would like to be, because I love Kurdistan — I love Iraq. I’ve been working there since the time of Saddam Hussein. But signs are not positive. In January, the United States Institute of Peace issued a report that said that Kurdistan was on the brink of “economic collapse.” A rapid solution is needed, and will most likely have to come from the central government in Baghdad, to reassure investors that they are needed to rebuild Kurdistan after ISIS tore it to shreds. The only way for that to happen is for the two to renegotiate Kurdish oil policy and revenue sharing in terms of the Iraqi national budget. That is the core of it.

In terms of Kurdistan becoming independent, the country must develop core institutions which they have failed to do — there must be rule of law and transparency and the level of corruption must be crushed. Both Baghdad and Irbil point fingers and offer accusations, but the lack of transparency is at the core of the distrust.

Iraq has a Kurdish president, Barham Salih, as part of the new government in Baghdad. How might this new leadership change things?

The post of president is largely ceremonial and always goes to a Kurd under an unofficial agreement following the fall of Saddam Hussein. Mr. Salih is a moderate Kurd and former P.U.K. deputy, and there is hope in him; following his election, the Iraqi foreign minister spokesman, Ahmed Mahjoub, announced, “Iraq is starting a new phase, a new era.” Mr. Salih is a British-educated engineer and an avid supporter of higher education for the young, which is desperately needed to get the economy back on track. Mr. Salih is also well-regarded in Washington.

https://www.nytimes.com/2018/10/08/busi ... r-oil.html
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Re: Kurdistan Oil & Gas Development

PostAuthor: Anthea » Thu Nov 15, 2018 9:53 pm

Kirkuk oil: Billions of dollars leverage at stake for Kurdistan and Iraq

Baghdad and Erbil are under intense pressure to strike a deal to export Kirkuk’s oil through the Kurdistan Regional Government’s (KRG) pipeline, an issue that strikes at the heart of many problems between Erbil and Baghdad

Whether this deal will simply be yet another a stopgap or will address the core issues remains to be seen, though analysts believe both sides would benefit from finally reaching a substantive agreement on the matter.

"The subject of working again with the Kurdistan Region in the oil sector was presented by the previous government,” Iraqi Prime Minister Adil Abdul-Mahdi told reporters on Tuesday.

“Both sides have good relations and we will cooperate in a way which will be in the interests of all parties and the Iraqi people. We will strive for this and we want to continuously follow up on it,” he said.

The KRG is hopeful they will reach an agreement soon, government spokesperson Safin Dizayee told Rudaw.

The timing is crucial as markets react to US sanctions on Iran. US President Donald Trump said he wanted to avoid skyrocketing prices and there is speculation Washington even made the Kirkuk deal a precondition to granting Iraq a waiver on some imports from Iran.

With the exception of small amounts trucked to Iran via tankers for a time, oil exports from Kirkuk have stopped since the fields came under Iraqi control in October 2017.

Pumping Iraqi oil into the KRG’s pipeline could add as much as 400,000 bpd into the world market - 300,000 from Kirkuk and possibly 100,000 that Iraq is currently pulling out of the ground in Nineveh province.

The KRG has made some preparations. The Ministry of Natural Resources (MNR) announced last week it had boosted capacity in the export pipeline, bringing it up to 1 million bpd and saying the extra capacity could be used by Baghdad “to export the currently stranded oil in Kirkuk and surrounding areas.”

But Baghdad has reportedly been dragging its feet and one well-placed source said the US is getting frustrated with Baghdad’s “excuses.”

The Iraqi government has floated several alternatives to using the KRG’s pipeline. It considered repairing its own to Turkey or building an entirely new one - though either way that route would require an agreement of some sort with Erbil as the entire border with Turkey lies within the Kurdistan Region.

Now Baghdad has reportedly said they need Kirkuk’s oil for domestic refining.

“This is not credible,” said the source familiar with the talks, explaining that Iraq does not have the capacity to refine the volume produced in Kirkuk. Even if Iraq refines the maximum amount it could, some 200,000 bpd of oil would still be available to put into the export pipeline.

The official stance of the US State Department is that they don’t comment on what is an internal Iraqi matter, but a spokesperson acknowledged, “We recognize that Iraq could contribute to increased global output.”

US Deputy Assistant Secretary of State for Iraq and Iran Andrew Peek visited Iraqi Finance Minister Fuad Hussein on Wednesday. Hussein is involved in the oil negotiations.

The two discussed “political and economic matters of joint interest,” Hussein’s office stated.

Washington’s roving envoy Brett McGurk also recently paid visits to both capitals.

‘It’s a no-brainer’

It’s not only Washington putting pressure on Baghdad. UK Consul General in Erbil Martyn Warr recently said Britain has been pushing for this deal “for months.”

“It’s a no-brainer,” he tweeted.

The UK is not an uninterested partner — British oil giant BP signed a deal with Baghdad this year to triple production in Kirkuk.

Ultimately, Baghdad needs the money. The Iraqi government has already lost billions of dollars in potential revenue from Kirkuk’s oil and it would be hard put to justify continued financial losses.

Relations between the regional and federal governments are on the upswing. Kurdish politicians are in the Iraqi capital, taking up positions like president and finance minister. Erbil and Baghdad struck a deal this week to scrap checkpoints on major roads between the Kurdistan Region and Iraq. Making a deal on oil from the disputed areas could be another big step forward.

Both Abdul-Mahdi and KRG Prime Minister Nechirvan Barzani would benefit from a sustainable deal and neither have met with the latter facing a new parliament and what is sure to be an uncertain process government formation.

Still, the KRG stands to benefit from transit fees and earn legitimacy for its independent oil sector, and Baghdad can earn some badly needed cash.

But the deal must be considered within the larger context of the dispute between the regional and federal governments over the legality of Erbil’s independent oil exports and issues of revenue sharing, says Bilal Wahab, Wagner Fellow at the Washington Institute for Near East Policy where his focus areas include Kurdistan, energy, and the economy.

The legality issue is currently before the Iraqi Supreme Court, though the six-year-old lawsuit has again been delayed. The court ruled on Wednesday to postpone a hearing until December 9 after experts examining the matter failed to produce a unified report.

The revenue issue is again on the table as the cabinet and parliament debate the 2019 budget.

The KRG is exporting 400,000 bpd from its own fields. Adding 300,000 bpd from Kirkuk and potentially 100,000 bpd from Nineveh into the Kurdish pipeline would give Erbil control over 800,000 bpd. That’s a lot of leverage in the hands of a region that just a year ago voted for independence from Iraq.

“Baghdad is resistant to go ahead with this move because that would boost the legitimacy of the KRG position,” said Wahab.

“I think what Baghdad wants is for this to be a part, or at least a beginning of a more comprehensive agreement with the KRG rather than just a narrow focus on Kirkuk,” he said.

“So the question here is, will a deal on Kirkuk be just a tactical deal and therefore short-term and short-lived, as happened in the past when we had about a dozen gentlemen’s handshakes between the KRG and Baghdad over exports and every time they break apart because the balance of power or the dynamics on the ground change. Or will this pressure actually create incentives to resolve the larger questions of revenue sharing and the legality of the oil and gas industry.

“I think it could go either way, but the opportunity is definitely there for a more comprehensive understanding by KRG and Baghdad.”

http://www.rudaw.net/english/business/15112018
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