Kurds Anger Baghdad Over Proposed Natural Gas Pipeline

The Kurdistan Regional Government (KRG) has started a new argument with Baghdad over Iraq’s natural resources. On August 27, 2010 KRG Prime Minister Barham Saleh announced that the Kurds had signed an agreement with Germany’s RWE to build a gas pipeline and distribution network in Kurdistan. In June, the KRG Natural Resource Minister claimed the region had 100-200 million cubic feet of gas reserves. Saleh said this would be exploited under the RWE deal to provide for domestic needs, with the surplus being exported. The Kurds are hoping to be a partner in the Nabucco gas pipeline from the Middle East to Turkey and Europe. The European Union hopes that it will break the region’s dependence upon Russia for gas. At the end of August, a Nabucco planning committee told the press that they wanted to include Iraq in the network. The KRG Prime Minister and Natural Resource Minister both claimed that this deal followed the Iraqi constitution, and that any profits would be deposited in an account in Baghdad. 

The Oil Ministry immediately reacted angrily to the Kurds’ announcement. The ministry denounced the KRG’s plan, saying that any contracts to exploit and sell energy resources overseas had to go through it.

This is just the latest fray between the regional and central governments. First, the Kurds went public with their oil smuggling to Iran. Then they stated that they would be producing 1 million barrels of crude a day in a few years. Both were meant to push Baghdad back to the negotiating table to allow the KRG to export petroleum once again, which has been on hold since the fall of 2009. Now Kurdistan has gone ahead with another independent energy contract with a foreign company. This happened just before the Oil Ministry planned to auction off three natural gas fields in the rest of the country in October. Who has the authority to sign these deals, Baghdad or the KRG has been on on-going dispute since the 2005 constitution was passed. That document actually says that the government will work with the provinces to develop oil and gas, but neither side has been willing to do that. Both claim that they have the right to exploit Iraq’s natural resources, but have rarely ever consulted with each other. Whether these on-going problems will be resolved will be up to the next government, which will likely be just as divided as the last one, preventing any major movement on the country’s issues.

SOURCES

Agence France Presse, “Baghdad slams ‘illegal’ RWE gas deal with Iraqi Kurds,” 8/29/10

Iraq Business News, “German’s RWE Signs Kurdistan Gas Deal,” 8/28/10

Iraqi Constitution, 2005

Ismael, Turkan, “German firm strikes deal with Iraqi Kurds to transport Iraqi gas to Europe,” Azzaman, 8/29/10