Kurdistan’s Oil Policy And Iraq’s Disputed Territories

Since the overthrow of Saddam Hussein in 2003, the Kurdistan Regional Government (KRG) has been following its own independent oil policy. Part of that has included attracting foreign companies to invest in the disputed territories that stretch across Ninewa, Salahaddin, Tamim, and Diyala provinces. This is part of the Kurds’ larger plans to annex these areas. Several companies entered into such deals, but most of them were small to medium sized. At the end of 2011, Kurdistan pulled off a coup when it got Exxon Mobile to agree to terms for six blocks, three of which were in the disputed areas. What’s more, it’s not clear that all the corporations knew that they were going to work in those places, and the KRG has officially denied that it has signed any contracts for them. By inking deals there, the Kurds hope to create facts on the ground to help their claims to the land, and solidify their control over them.

Map of Exxon's deals and its blocs that are in disputed areas (Independent)

The Kurds have signed several oil deals with foreign companies in the disputed territories. On May 17, 2012, England’s Afren Oil announced that it found new oil deposits at the Ain Sifni field, part of which stretches into disputed areas of Ninewa. Back in October 2011, the Kurdistan Regional Government (KRG) signed a deal with Exxon Mobil for six oil and gas blocks. Three of those fields, Bashika, Qara Hajjer, and Qush Tappa were outside of Kurdistan in Ninewa and Tamim provinces. The first such contract was with America’s Prime Natural Resources for the Shakal field, followed by the United Arab Emirate’s Dana Gas for the Khor Mor field, then Turkey’s Norbest for the Hawler field and America’s Hunt Oil for the Ain Sifni bloc in 2007. In 2009, Canada’s Shamaran Petroleum Corporation entered a deal for the Pukhana field, Australia’s Oil Search for Taza, and Canada’s Longford Energy for Chia Surkh. All of those companies were medium sized energy firms, but Exxon was a completely different matter. It is one of the largest oil corporations in the world. That marked a dramatic change in the Kurds’ strategy. The central government has called all of the KRG’s oil contracts illegal, because they did not go through the Oil Ministry. Baghdad could also ignore most of the them, because of the size of the companies. It could not do that with Exxon. It could force the regional and central governments to reconcile their energy policies, and confirm the Kurds’ hold over the disputed areas.

Map of the disputed territories of northern Iraq (UNAMI)

The Kurds have not always been up front about their intentions to work in the disputed areas. Not all the businesses were aware that they were signing for work in the disputed areas for example. Exxon might not have known exactly where three of the blocks they were going to develop were located. That’s because the KRG has tried to obscure where the areas are, and officially denies that they have oil operations there. The Kurds have also ordered all security and energy companies that work for them to remove any maps that show the Green Line, which is the border between Kurdistan and the disputed areas. The Kurdish Natural Resource Minister Ashti Hawrami has publicly said several times that there is no Green Line. In 2008, he said that as long as the Kurds controlled an area that was all that mattered. This ignored the work of the United Nations and the 2005 Iraqi constitution. In the 1990s, the U.N. mapped the Green Line based upon minefields and roads created by Saddam Hussein. The Transitional Administrative Law drawn up by the Coalition Provisional Authority and the 2005 Constitution both said that the Kurds could only control areas that they had under their authority before the 2003 invasion. After the fall of Saddam, the Kurds moved in their forces south of the Green Line, and have set up administrative and security control of them since then. Getting energy firms to enter the territories was just one more step at integrating them into Kurdistan. Minister Hawrami was just expressing the unofficial line of the KRG in his statements, which is that it already has de facto control of the areas, and can do what they want there.

The Kurdistan Regional Government has been signing deals for the disputed areas for years now, and they may finally be coming to fruition. Nothing much was said about them at first, because they were with rather small companies and only for exploration work. Now the Kurds have a contract with Exxon that could completely change the status quo. Baghdad has objected to all of the Kurdish deals, but is in a real bind with this latest one. It cannot ignore Exxon, because it is one of the biggest energy companies in the world, and already has a contract with the Oil Ministry for a field in Basra. That means no matter how much Baghdad complains about it, there is no reversing the deal. The Kurds have also finally realized their dreams of convincing a major oil corporation to work with them. Both of those facts could eventually get the two sides to compromise on their energy policies. Finally, the Kurds already have administrative and security authority over the disputed territories, and now their oil contracts mean that they are leading the economic development of the areas as well, solidifying their control over them. While the central government may never finally decide the fate of the contested areas of northern Iraq in the immediate future, they are for all intense and purposes operating as part of Kurdistan as these oil deals prove.

KRG Natural Resource Minister Ashti Hawrami’s Comments About The Green Line And Disputed Territories

“There is no hardl line drawn somewhere that says this is KRG controlled territory and these are disputed territories, it is all gray areas. We provide the security; administratively we run the towns and villages in that area. It is and has always been under control of KRG, under our security.”  UPI, Nov. 2007

"You show me the green line in the constitution. You show me a green line that officially anybody signed on it. There are many green lines. But what counts really is what is currently under the KRG authority." UPI, Jun.2008

“Iraq Oil Report (IOR): Taking into consideration the development you have had, which will be part of the discussion to update the draft law, how do you deal with the contracts that are in disputed territories?

Hawrami: No, we don’t have anything in disputed territories.

IOR: There are blocks, such as the Hunt block…

Hawrami: It is not, it is within Kurdistan.

IOR: It’s not within disputed territories?

Hawrami: We are administering, we have elections, we have everything which is run from Kurdistan. What are you talking about? We have everything contracted by Kurdistan, within Kurdistan. Remember there is disputed territories; I’m not expert in that. There is no particular line. It comes down to who is in charge of it, now or then. It is bigger than where you draw a line. It needs to be fundamentally sorted out, so it’s a different article, different thing. It’s not my department. I don’t want to get involved with that.” Iraq Oil Report, Nov. 2011

Law of Administration For the State of Iraq For the Transitional Period, 2004

Article 53 (A) 

The Kurdistan Regional Government is recognized as the official government of the territories that were administered by that government on 19 March 2003 in the governorates of Dohuk, Arbil, Sulaimaniya, Kirkuk, Diyala and Neneveh. The term “Kurdistan Regional Government” shall refer to the Kurdistan National Assembly, the Kurdistan Council of Ministers, and the regional judicial authority in the Kurdistan region.

SOURCES

Hadi, Hemn, “Afren confirms major oil discovery in Kurdistan Region,” AK News, 5/17/12

International Crisis Group, “Iraq And The Kurds: The High-Stakes Hydrocarbons Gambit,” 4/19/12

Al-Jurani, Nabil, “Iraq boosts oil export capacity in Gulf,” Business Week, 4/20/12

Lando, Ben, “ALL ABOUT KURDISH OIL : Q&A: Ashti Hawrami, the Kurdish minister of natural resources,” Iraq Oil Report, 11/15/11

- “Analysis: Kirkuk project battle heats up,” UPI, 11/28/07

- “Hunt Oil knew KRG oil deal in disputed territory,” Iraq Oil Report, 8/25/11

- “Iraq’s Khurmala oil field sees national struggle again,” UPI, 6/17/08

Law of Administration For the State of Iraq For the Transitional Period