BAGHDAD: A controversial oil exploration deal between Iraq’s autonomy-minded Kurds and a Norwegian company got under way this week without the approval of the central government here, raising a potentially explosive issue at a time of heightened ethnic and sectarian tensions. The Kurdistan Democratic Party, which controls a portion of the semi-autonomous Kurdish enclave in northern Iraq, last year quietly signed a deal with Norway’s DNO to drill for oil near the border city of Zakho. Iraqi and company officials describe the agreement as the first involving new exploration in Iraq since the US-led invasion in 2003. Drilling began after a ceremony on Tuesday during which Nechirwan Barzani, prime minister of the Kurdish northern region, vowed “there is no way Kurdistan would accept that the central government will control our resources,” according to news agency reports.
In Baghdad, political leaders on Wednesday reacted to the deal with astonishment. “We need to figure out if this is allowed in the constitution,” said Adnan Ali Kadhimi, an adviser to Prime Minister Ibrahim al-Jaafari. “Nobody has mentioned it. It has not come up among the government ministers council. It has not been on their agenda.”
The start of drilling, called “spudding” in the oil business, is sure to send shivers down the spines of Iraq’s Sunni minority. They fear a disintegration of Iraq into separate ethnic and religious cantons if regions begin to cut energy deals with foreign countries and governments. Sunnis are concentrated in Iraq’s most oil-poor region. Iraq’s neighbours also fear the possibility of Iraqi Kurds using revenue generated by oil wells to fund an independent state that might lead the 30 million Kurds living in Turkey, Iran and Syria to revolt.
Iraqi legal experts and international oil industry analysts have questioned the legality of the deal. Oil industry trade journals had expressed doubts that it would come to fruition. Iraq’s constitution, approved by an Oct. 15 national referendum, stipulates that “the federal government with the producing regional and governorate governments shall together formulate” energy policy. But it also makes ambiguous reference to providing compensation for “damaged regions that were unjustly deprived by the former region.”
Iraq’s Kurds have argued that the country’s existing oil fields and infrastructure, such as those in the largely Kurdish cities of Kirkuk and Khaneqin, should be divvied up by the central government but that future oil discoveries should be controlled by each oil-producing region.
In his speech on Tuesday, Barzani, the nephew of Kurdish politician and former guerilla leader Massoud Barzani, eschewed the language of the law and couched the deal in political terms. He invoked the Kurds’ years of deprivation at the hands of the Sunni-dominated government of military dictator Saddam Hussein.
“The time has come that instead of suffering the people of Kurdistan will benefit from the fortunes and resources of their country,” he said during the ceremony. The Kurds, who during the last few years of Saddam’s rule maintained sovereignty in northern Iraq under the protection of US warplanes, made millions in transit and customs fees while letting the Baghdad government smuggle oil to Turkey in violation of UN sanctions. Since the end of the sanctions, the Kurds have sought ways to make up for that lost income.
The eastern administrative half of the Kurdish autonomous region also is rushing to sign energy deals with foreign companies without Baghdad’s approval. The government of the Patriotic Union of Kurdistan, based in the city of Sulaymaniyah, has signed an electricity agreement with a Turkish company and explored a possible oil deal with a foreign partnership near the city of Chamchamal, where several dormant oil wells are located.
The trend has alarmed other Iraqis. During months of painstaking constitutional negotiations, Kurds insisted on the authority to cut energy deals without the capital’s approval, though again the charter left for the National Assembly that will be elected on Dec 15 to determine how oil resources would be allocated.
The language in the constitution regarding the power of regions to pen such contracts was a major reason that the vast majority of Sunnis voted against the charter during the Oct. 15 elections. The announcement of the DNO drilling sent waves of surprise among Iraqis on Wednesday. “This is unprecedented,” said Alaa Makky, a leader of the Iraqi Islamic Party, an important Sunni Arab political group. “It’s like they are an independent country. This is Iraqi oil and should be shared with all the Iraqi partners.”
Makky said Kurds are trying to have it both ways, controlling the Iraqi presidency and several powerful ministries in the national government while also trying to lay claim to extra-constitutional powers in the north. Jalal Talabani, a Kurd, is the Iraqi president.
However, Helge Eide, managing director of Oslo-based DNO, said he believed the new Iraqi constitution gives the Kurdish north jurisdiction over certain drilling and oil exploration activities.
Iraq currently exports about 2 million barrels of oil a day to foreign markets, according to the International Energy Agency in Paris. But experts say it could export much more with improvements to dilapidated oil infrastructure and exploitation of untapped reserves. — Dawn/The Los Angeles Times News Service
