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The new Iraq oil war

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Iraq oilby Pepe Escobar

Iraq has virtually disappeared from the news cycle - displaced by the Arab Spring/Winter seesaw and the ongoing tragedy in Syria.

But when Ashti Hawrami, oil minister of semi-autonomous Iraqi Kurdistan, delivered a particular explosive bit of news over a week ago at the regional capital Irbil, one could feel the tectonic plates of Pipelineistan rippling all across the Middle East - and beyond. 

Hawrami, alongside Turkey’s energy minister Taner Yildiz, announced that essentially Iraqi Kurds would build a one-million-barrel-a-day oil pipeline to Ceyhan, in Turkey, to reach the border by August 2013. Then a second phase would connect it to the Kirkuk-Ceyhan pipeline, and a second pipeline would open in 2014.

Pipelineistan followers will remember that Ceyhan is the gigantic terminal for the Baku-Tbilisi-Ceyhan (BTC) oil pipeline - a pet geopolitical project of the Clinton administration in the US. BTC also carries 1 million barrels of oil a day.

Iraqi Kurdistan is an energy paradise. In December 2011, Hawrami estimated it held between 3 and 6 trillion cubic meters of natural gas and 45 billion barrels of oil.

Iraqi Kurds dream of profiting from this bonanza without consulting Baghdad. Now imagine, as a comparison, if Turkish Anatolia decided to build a pipeline with Iran, for its own needs, without bothering to tell Ankara.    

And this happened after Iraqi prime minister Nouri al-Maliki had characterised Turkey - previous practitioner of a "zero problems with our neighbours" diplomacy - as on the way to becoming a "hostile state", and Turkish flags had been burned in Basra.  

Baghdad, of course, may veto the whole adventure. It has already branded the pipeline as "illegal", even though Hawrami said, "Export[ed] crude from the Kurdish region's fields will still be Iraqi oil." The KRG [Kurdish regional government] would take 17 per cent of the cut and the rest would go to Baghdad and the Iraq Central Bank.

It doesn’t help that relations between the Maliki government and Iraqi Kurds are close to poisonous. Because of - what else - money, the KRG threatened to "cease exports" to Baghdad. Last year, the KRG and ExxonMobil made a direct deal, bypassing Baghdad.

And then, there’s all the geopolitical drama. The Erdogan administration in Ankara also has tremendous problems with Maliki.

Turkey - in its complex neo-Ottomanism lite offensive courting Sunnis all across the Middle East - accuses Shiite Maliki not only of sectarianism inside Iraq, but also of blindly following Iran to prop up Bashar al-Assad in Syria.

Ankara has been a vocal advocate of regime change in Syria. As much as the AKP in power in Ankara has sealed an alliance with Sunnis all across the Middle East, they see Iraqi Kurds as much better allies than a pro-Tehran Maliki.

For his part, Maliki mercilessly blasts Ankara for giving protection to fugitive Iraqi vice-president Tasheq al-Hashemi, accused by Baghdad of running Sunni death squads, according to evidence Turkey insists was obtained by torture.

No problem, as long as we profit from it

This website (subscription only) has been closely following the oil angle of the Kurdistan-Turkey partnership. But it’s an incredibly messy story, mired in myriad contradictions.

Turkey’s second-biggest trading partner is now Iraq. Most of the trade comes from the KRG - to the delight of Turkish companies. Yet for Ankara the key of the equation is to use the KRG to subdue the Kurdistan Workers Party, or PKK, which is essentially based in Iraqi Kurdistan.

Ankara’s position towards a possible balkanisation of Iraq is like smoke coming out of a shisha. Officially, Ankara always stresses Iraq’s "territorial integrity". Thus, in thesis, it would prefer a pipeline approved by Baghdad.

Ankara very well knows that any possible moves towards an independent Iraqi Kurdistan would give a wealth of ideas to Turkish Kurds. That’s its number one priority; "sanitise" cross border Kurdish nationalism. Thus it’s not exactly a good policy to antagonise Baghdad as much as Turkish business interests may need - and crave - Iraqi oil.  

Now for the facts on the ground. Irbil does not decide Iraq’s oil exports; Baghdad does. The Maliki government is actually juggling between the north (Kurdistan) and the south. Production in Basra is going up. This means Kurdistan ceases to be crucial.  
 
In strictly Pipelineistan terms, the fog of incertitude mirrors the Europeans trying to deal with unpredictable gas republic Turkmenistan. Investors in this potential pipeline will note there’s absolutely no guarantee that the KRG, by itself, can actually supply 1 million barrels of oil a day. 

Iraq still does not have a national hydrocarbons law - foreseen in the constitution, with specific provisions related to concessions. It’s on the way - albeit slowly. The KRG will have to be accounted for. Meanwhile, it’s our (Baghdad) way or the highway.   

And it’s all bound to remain extremely murky while there’s no referendum - postponed for five years now - on the status of Iraqi Kurdistan. Crucial Kirkuk is still being disputed. And Basra also wants near to full authority over its own energy deals.

Turkey, though, is in a tremendous hurry. It has been painstakingly positioning itself to Europe, in terms of a transit country for energy, as the indispensable crossroads between East and West.

A KRG-Turkey pipeline would do wonders as a PR move expanding Turkey’s role in providing oil and gas to Europe - now that the interminable Nabucco pipeline opera seems to be condemned to the dustbin. 

And geopolitically, the EU and NATO would be delighted to finally have an alternative to reduce Russia’s Gazprom stranglehold on the European energy market.

This is all inbuilt in the Turkish Foreign Ministry’s new "Eurasian" policy. It looks like the "zero problems with our neighbours" doctrine is being replaced by "a few problems we can profit from".   

Pepe Escobar is the roving correspondent for Asia Times. His latest book is named Obama Does Globalistan (Nimble Books, 2009).


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