October 11, 2006

Iraq’s petroleum wars

By Darya Ibrahim

The Kurdistan Regional Government (KRG) has always insisted that the Iraqi constitution allows them to drill newly discovered oil sources. However, many in the central government in Baghdad have often contested the legality of contracts drawn up on this basis by the KRG. In an interview with Al Sabah newspaper on 24 September, Iraqi Oil Minister Hussein Shahristani said: “The Ministry is not committed to investment contracts signed by the Kurdistan Regional Government; we shall review the terms of these contracts.”

The statement drew a furious response from KRG Prime Minister Nechirvan Barzani, who issued a detailed statement in response on 27 September.

In the meantime, reports surfaced in Cawder weekly Kurdish-language newspaper on 25 September, saying that the central government has stopped work on oil wells near the Hamrin Mountains. Cawder reported: “Iraq's Oil Ministry decided to stop drilling 128 oil wells in Kurdistan, and a source inside the ministry added that the main reason for ignoring the project is because the fate of these regions rich in oil are to be decided by a referendum under article 140 of the Iraqi constitution, it may be that they become part of the Kurdish region.”

The drilling started on these wells in Khashm Ahmer, 18km east of Kifri, Glabat and Gumar and Nadoman in Khanaqeen, in 2003. However, although the drilling should have been finished in 2004, they have not been finished and have now been abandoned.

Hama Jaza Salih, Advisor to the Kurdish Regional Government and Oil Engineer, who built the first oil refinery for the KRG, explained that not all those places listed in the Cawder article were traditionally Kurdish areas, giving the example that Khashm Al Ahmar is also known as Uzeim, which is actually an Arab town. Salih goes on to say that these wells were initially part of a plan drawn up to help Iraq to start producing the same number of barrels of oil per day as it did before the war. Therefore the afore-mentioned wells were drilled in the Kirkuk Governorate.
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However, Salih says that when these plans changed some of the drilling stopped, but not just in the Kurdish areas. He adds that while some of those not in the Kurdish region were finished, they may still finish some of those in the Kurdish region, especially the one in the village of Palkana, 10 km from Kifri. Salih explained that the KRG had a masterplan in 1994 to produce 30,000 barrels of oil per day from Shiwashok area near Koya/Taqtaq, but this agenda came to a halt, partly because of the UN Oil-for-Food program, and partly due to another reason, which he said he did not wish to discuss.

“But this masterplan that we had decided to work on was very important for the oil industry in Kurdistan; 30,000 barrels per day is a huge quantity, and it would have solved our petrol problems today,” he says. “But this plan is being reexamined right now, and we hope to start working toward it again.”

“However, in light of the Iraqi Oil Minister's comments in the Al Sabah newspaper, it would not surprise me if the central government is trying to obstruct the development of the oil industry in the Kurdish region,” says Salih.

From his statement issued on 27 September, it appears that the Kurdistan Prime Minister does not doubt that the Central Government is indeed interfering in the Kurdish oil industry, saying: “As the elected Kurdistan official ultimately responsible for my government’s oil contracts, I resent Dr. Shahristani’s efforts to sabotage foreign investment in Kurdistan’s oil sector. The KRG is working to develop petroleum in Kurdistan, an area that previous Iraqi regimes had declared off limits as a means of punishing our people.”

Barzani then outlined how ineffective the Iraqi Oil Ministry has been since the fall of Saddam Hussein, saying that it had failed to implement any new projects in the rest of Iraq and had done nothing to try and attract foreign investment to Iraq. He then said: “Dr. Shahristani would better spend his time getting his ministry working rather than tearing down our achievements.”

The issue of oil looks set to remain a contentious issue, especially with the oil rich Kirkuk region up for grabs in next year’s proposed referendum. If it was Shahristani's intention to ruffle Kurdish feathers, at such a crucial point in the province law negotiations among other things, then he certainly achieved his goal. The Prime Minister's parting shot to Shahristani was: “The people of Kurdistan chose to be in a voluntarily union with Iraq on the basis of the constitution. If Baghdad Ministers refuse to abide by that constitution, the people of Kurdistan reserve the right to reconsider our choice.”

Printed with permission. From Soma