The International Resource Journal: The Kurdish Battle for Kirkuk

The Kurdish Battle for Kirkuk
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admin on 14 November, 2009 05:41:00
 
On Wednesday October 28th 2009, Masoud Barzani, President of the Kurdish Region
of Iraq, demanded that oil-rich Kirkuk in northern Iraq, about 250 kilometres
north of the capital of Baghdad, be declared part of the Kurdish autonomous
region.
Kirkuk is a big issue as Iraq faces January's parliamentary ballot. The legal
brains of the nation are faced with an impossible task: to make voting list
amendments which favour either the Kurdish or Arab Kirkuk citizens of the
region. The Kirkuk quandary goes back a very long way. Historically, the Kurdish
people see Kirkuk as theirs, even calling it their "Jerusalem," however, as the
oldest known state of occupation in Iraq, Kirkuk is home to a rich mix of
ethnicities including Kurdish, Assyrian, Turkmen and Arabic. In the aftermath of
the gulf war in 1991, Kirkuk suffered ethnic cleansing at the hands of Sadam
Hussein, who relocated vast numbers of Sunni Arabs into Kirkuk and continued
ethnic registration changes put in place by previous governments.
It has been said that successive central (Baghdad) governments have implemented
conscious ‘Arabization' of the city as part of their struggle to retain
control over the precious oil reserves within. Kirkuk is central to the Iraqi
oil industry and as a result it is integral to the economy of the nation.
"We will not accept any (other) solution for Kirkuk," President Barzani told
reporters in Erbil. "We want it to be annexed to our region because the majority
of its population are Kurds."
The same day that President Barzani demanded control of Kirkuk, the new Kurdish
Regional Government (KRG) was sworn in. In his inaugural speech, Prime Minister
Barham Salih, the new Kurdish President, spoke of "the agenda of renewal and
reconstruction."
"The (Iraqi) Constitution guarantees coexistence among the Iraqi factions, and
the majority of the Iraqi people have voted for this Constitution. The issue of
Kirkuk, Khanaqin,   Sinjar and other disputed areas, the oil and gas and revenue
issue and the power sharing issue can only be resolved through commitment to the
Constitution," he said.
IRJ now takes a closer look at the history of the oil industry in the troubled
Kirkuk region, the actions taking place today as the KRG and Baghdad fight for
control and the Iraq Constitution—which both sides rely on for an end to
this ongoing struggle.
Understanding Kirkuk's oil industry
The birth of the oil industry in Kirkuk dates back to 1927 when an oil stream
was discovered at the Baba Gurgur field. It was originally considered the
largest oil field in the world until the Ghawar field of Al- Ahsa, Saudi Arabia
was discovered in the 1950s.
Baba Gurgur is famously home to the Eternal Flame, the name given to the oil
field's flames. The oil field was brought online by the stateowned Iraq
Petroleum Company (IPC) in 1934, and today continues to make up the basis of
northern Iraq's oil production.
Research indicates that the KRG/Baghdad power struggle over Kirkuk has been
ongoing since the 2003 United States-led invasion of Iraq. Since this time, many
Kurdish people have sought to return to the region, and as a result many claim
that the Kurds are now the majority population there.
On January 31st 2009, the provincial elections for new local councils throughout
the Iraq nation took place, however, these were deferred in four places: The
three Kurdish provinces of Iraq, and Kirkuk. Uproar ensued and much of the
Kurdish population cited Arab and Turkmen opposition to the majority Kurdish
population which would likely be mirrored in their dominance within the
provincial council.
Today it is estimated that despite over 70 years of production, Kirkuk still has
over eight billion barrels in proven oil reserves. The region continues to
produce up to one million barrels per day (bpd) which makes up almost half of
all Iraqi oil exports (approximately 2.4 million bpd). The Kirkuk oil field is
one of the three "super fields" (as dubbed by the press in reference to the
recent international Iraq oilfield service contract auctions) which provides the
bulk of Iraqi oil production. The other super fields are the North and South
Rumailia oilfields near Basra in Southern Iraq.
Kurdistan exports oil
Kurdistan is a 40,643 square metre region which sits between Syria to its West,
Iran to its East and Turkey to its North borders. It has an estimated population
of 3,757,058 (according to the KRG website figures based on the Oil-for-Food
Distribution Plan, approved by the UN, December 2002).
The first unified KRG Cabinet was formed in May, 2006. The democratic election
of this new Cabinet took place on July 25th 2009.
‘It has been more than 17 years since the first glimmers of democracy
began to shine in Iraqi Kurdistan. The first democratic elections in the
Kurdistan Region were held in 1992, thanks in large part to the no-fly-zone
protection offered  by our nation, Britain and others after the 1991 Gulf war.
The Kurds have used those years wisely in planting the roots of free enterprise
and democratic principles within their society,' the KRG press release states.
‘Both the federal government of Iraq and the KRG must find common ground,
respect their nation's constitution and seek to resolve the outstanding issues
of oil revenue sharing and the potentially explosive issue of disputed
territories.'
Just one month before the elections, on June 1st, Kurdistan began exporting
crude oil to Turkey for the first time.
Oil from the Taq Taq oilfield, operated by DNO International of Norway, and
Tawke oilfields, operated under a joint venture by Addax Petroleum of London and
Toronto and Genel Enerji, of Turkey, was exported using the Kirkuk- Yumurtalik
pipeline to the port of Ceyhan, Turkey, in the Mediterranean. This was done at a
starting rate of 100,000 barrels per day.
Kurdish oil industry officials told press that these were Kurdistan's first
newly developed oilfields in 20 years and said that exports could climb to as
much as one million barrels per day by the end of 2012.
According to the terms of the Taq Taq agreement, Baghdad receives approximately
88 per cent of revenue generated and Kurdistan gets around 17 per cent back from
this. The pipelines exporting this oil are Baghdad government-owned which offers
them a stronghold on these new deals.
This was certainly a day of celebration. Iraqi President Jalal Talabani (a
Kurdish Iraqi), and President Barzani appeared onstage at the grand opening of
the exportations where they turned on a symbolic oil valve.
"Today we are the successful example for the rest of Iraq. Today we show that
the market driven policies and competition can lay a foundation for Iraq," Ashti
Hawrami, then Kurdish Minister for Natural Resources, told the crowd.
Earlier in June, Kurd officials announced an eight billion dollar plan to
develop Kurdish gas fields. This is planned in conjunction with four European
and two United Arab Emirates partners with the potential to supply the Nambucco
pipeline; the 7.9 billion project set to feed natural gas from the Caspian Sea
into Europe at a rate of 31 billion cubic meters per year, set for completion in
2014.
Hussein al-Shahristani, Baghdad's Minister of Oil, has said that these Kurdish
deals with foreign operators are illegal.
On June 29th and 30th the Iraq Oil Ministry put six oilfields and two gas fields
up for tender for service contracts. This auction was quickly condemned by the
KRG.
"This auction is a violation of Iraq's federal constitution," Nechirvan Barzani,
then Prime Minister of the KRG wrote on the government's website.
"Any decision related to contracting for Kirkuk and Bai Hassan fields requires
the direct involvement of the KRG as a party to the dispute. Regrettably, the
KRG has not been involved."
This reaction was not surprising. Prior to agreeing on the deal for Kurdish oil
to be pumped through Baghdad government-owned pipelines in May, Baghdad had
threatened to exclude foreign operators taking part in Kurdish oil contracts
from bidding in this auction round. After the pipeline deal was struck this
threat did not materialize. On October 1st however, this fight reemerged when
Baghdad followed through and banned Sinopec Corporation (formerly known as the
China Petroleum & Chemical Corporation) from bidding in its next round of
tenders because the company refused to relinquish its dealings with Kurdistan.
"Sinopec is blacklisted unless it changes its position and withdraws from these
contracts," Abdul al Ameedi, the deputy head of the Iraqi oil ministry's
petroleum contracts and licensing directorate, told Dow Jones Newswires.
"We have cancelled Sinopec's pre-qualification."
Despite prior threats to do so, this was the first time that the Iraq Government
had gone on to exclude a company on the basis of their contracts with Kurdistan.
Shahristani then continually refused to accept any of the 30 deals struck
between Kurdistan and foreign operators, barring those companies from bidding on
any contracts offered from Baghdad. On October 9th a letter from Hawrami
appeared on the KRG website. The letter stated that the KRG, along with
operators DNO and Addax, had decided to cease oil exportation until Baghdad paid
foreign operators in the region for their work as originally agreed.
"We have jointly agreed that no free oil will be pumped for export, and payments
have to be made," Hawrami writes. "We will only resume exports with guaranteed
payments."
Again the KRG and Baghdad government appeared to be in deadlock. A large problem
in this is the Kurdish' and state of Iraq's interpretations of the Iraqi
Constitution.
The Constitution stands
The Constitution was dealt a severe blow on October 15th 2009. Peter Galbraith,
formerly the second highest-ranking member of the United Nations (UN) before
being sacked, admitted that he had personal financial interests in Kurdish oil
dealings during the time he was helping to write the Iraq Constitution.
Galbraith took part in dealings with DNO which date back to 2004 and center on
their efforts to develop oilfields in Kurdistan. Although the KRG temporarily
suspended DNO from the region last month following disputes between the company
and the Oslo Stock Exchange, Galbraith's long-term involvement throughout and
after the process of developing the Constitution poses serious problems facing
the January parliamentary ballot.
On October 17th Hawrami was asked for questioning before the KRG, after
accusations surfaced which suggest he had anonymously purchased DNO shares to
the tune of $35 million dollars.
On November 4th, Baghdad policymakers scheduled to come to a final decision on
the voting process for Kirkuk failed to do so. Under the Constitution, laws must
be made 90 days prior to voting. The Constitution also states that the elections
must take place by the end of January. The Kirkuk population now fears that they
will once again be left out of the national election as a result.
Back in his October 28th speech on the agenda of "renewal and reconstruction,"
Salih made reference to the way in which the Kurdish people rely upon the
Constitution.
"The people of Kurdistan have chosen the constitutional framework for solving
their issues. In the permanent Iraqi Constitution and Article 140, there is a
constitutional solution and legal framework for resolving the issue of Kirkuk
and the other disputed areas," he says. "It is the duty of those who desire
democracy in Iraq to cooperate in eliminating the traces of ethnic cleansing,
and implementing Article 140. Let us all work together to compensate for the
previous deprivation in those areas, through reconstruction and through
supporting their administrative and security institutions and to ensure
political stability and security for the people."
Kirkuk exemplifies the seemingly insurmountable problems faced by both the KRG
and Baghdad Government. It appears that one must always triumph over the other,
be it in governmental control, policymaking or in that either/or approach which
sees both parties grappling for power whilst needing the other to cooperate. In
touching on the recent success of KRG's democratically-elected cabinet, Salih's
committment to "those who desire democracy," and both KRG and Baghdad's mutual
reliance upon the Constitution, it is clear that the right moves are being made
and the same eventual goal is desired.
It is vital that the right decisions be made swiftly, but it is also important
to understand that where there is no clear right or wrong choice (but each
carries such huge repercussions), progress on the various issues which come into
play—from the autonomous-status of Kurdistan and its true entitlements in
Kirkuk, to Constitutional amendment to best benefit all parties—will take
time.