Instead of trumpeting their agreement, the two sides chose to discretely leak the news about the deal which will allow the semi-autonomous region in northern Iraq to ship oil and gas to international markets via a state-owned pipeline through Turkey.
Yet, the historic significance of the deal, which was signed by Kurdish Regional Government Prime Minister Nechirvan Barzani and Turkish Prime Minister Recep Tayyip Erdogan without Baghdad’s consent, can hardly be hidden under the shroud of the diplomatic secrecy.
The pipeline, which could begin pumping oil exports from Iraqi Kurdistan this month, will make Kurdistan a major world exporter of oil and may even help bring the Kurds’ dream of independence from Iraq closer.
Under the agreement, Turkey will allow crude oil from Kurdistan to flow through an uplink to the 40-inch line of the existing Kirkuk-Ceyhan pipeline to be exported to world markets. The deal also includes the building of a new gas pipeline. The gas flow is likely to start by early 2017.
The oil pipeline project to Turkey is projected to carry up to 300,000 barrels per day (bpd) at the start and could be expanded to one million bpd. Revenues from the exports will not go to the Iraqi state’s coffers and will be collected instead in an escrow account at a Turkish state bank.
As part of its standard policy to reject oil deals that are not sanctioned by the government, Baghdad has voiced strong opposition to any energy deal between Ankara and the Kurdistan Government and has warned Turkey that the opening of a new oil export pipeline would seriously harm relations.
It has argued that under Article 109 of the Iraqi constitution “the management” of oil and gas should be undertaken by the federal government which “formulates” policies to develop hydrocarbon resources in conjunction with local governments.
However, Baghdad’s opposition remains toothless because of the government’s paralysis and infighting.
On Sunday, Iraq’s Deputy Prime Minister Hussein Al-Shahristani, who is the government’s chief negotiator on energy, said Baghdad and Ankara had agreed that “oil exports from anywhere in Iraq need the central government’s approval.”
The United States, which is believed to have stakes in Kurdistan that form a crucial part of its geopolitical strategy in the Middle East and its oil, has also reiterated that it “doesn’t support oil exports from any part of Iraq without the approval of the Iraqi federal government”.
The Kurds, however, have their own interpretation of the constitution and insist that the document declares Iraq a federal state, giving them the right to run their own resources. They insist they will press ahead with exporting oil whether or not Baghdad agrees to the payment plan.
On Monday, Barzani announced at a conference in Erbil, the Kurdish provincial capital, that the deal was “irreversible”. He lashed out at Baghdad for what he described as its “exercising centralism and control”.
The Kurdistan-Iraq Oil and Gas Conference, which was attended by the Turkish Energy and Natural Resources Minister Taner Yildiz along with representatives from 300 international firms, was meant to be a showcase for the region’s growing energy industry.
To increase the pressure on the Baghdad government Kurdistan has threatened that it will use revenues from the exports to compensate Kurds who had suffered under the policies of former Iraqi governments.
Kurdistan estimates that a total of $387 billion should be paid to the families of more than 200,000 Kurds whom it alleges were killed, with thousands of homes also being destroyed and Kurdish infrastructure devastated, during decades of fighting.
The 970km-long pipeline transports oil produced in fields under the control of the Baghdad government to Ceyhan in Turkey on the Mediterranean. The pipeline project was commissioned in 1976, with a second parallel pipeline built in 1987 to bring daily transport capacity to 1.6 million barrels.
While Turkey hopes that the new pipeline will make it an oil-and-gas transit regional hub and contribute to Europe’s energy security, one of Turkey’s objectives is to diversify its energy supply routes and source countries.
With a rapidly growing economy, Turkey has become one of the fastest-growing energy markets in the world. Ankara has been experiencing rapid demand growth in all segments of it energy sector for decades.
In the light of its limited domestic energy sources, this growing energy demand has resulted in dependency on energy imports, primarily of oil and gas. Turkey hopes that its imports from Iraqi Kurdistan’s oil and gas resources will help reduce its $60 billion energy bill.
Seen through the complex Iraqi ethno-sectarian conflicts and the regional power struggle, the Kurdish-Turkish energy deal looks to be an important source for Kurdistan’s economic prosperity and political progress.
The Kurdish region has flourished in recent years due to the better management of Kurdistan’s allocation of 17 per cent of Iraq’s annual budget. But with estimates of oil reserves of 43.7 billion barrels and up to six trillion cubic metres of gas, Kurdistan plans to make energy the fulcrum of its flourishing economy.
If Kurdistan can increase output to one million barrels a day, as planned by the end of 2015, and two million barrels by 2020, and if it has independent oil infrastructure and an oil pipeline, it can certainly afford to do without its allotments from Iraq’s resources.
Hydrocarbons could also be Kurdistan’s catalyst to call it quits with the rest of Iraq.
Kurdistan has long been looking forward to realising the dream of independence, and there have been numerous signs that Iraqi Kurds are already turning their autonomous region into a semi-independent entity.
Kurdistan has its own president, prime minister and parliament. It also has its own army, security forces, intelligence services, and it operates its airports and the region’s border points.
The Kurds also have their own foreign affairs department, a military ministry, interior ministry and investment authority. They raise their own flag and speak their own language. Iraqi Arabs visiting the region have to go through special security checks and receive entry and residency permits.
Regardless of the statements about the non-constitutionality of the Kurdish oil deals and its sovereignty over resources, the Baghdad Shia-led government is powerless to stop the pipeline deal.
Only hours after he left Baghdad following his talks with Al-Sharistani on Sunday, the Turkish energy minister said Ankara stood by the bilateral oil deal with the Kurdistan Region that bypassed the central government.
In fact, the Shia-led government seems to be discretely acquiescing to the Kurdish move because it does not seem really to care much about the Kurds opting out of Iraq.
The Shia-led government knows Kurdish independence is already taking shape, but no one in it wants to acknowledge this in order to avoid the blame of being held responsible for letting the great Arab country that they inherited after the fall of former Iraqi president Saddam Hussein effectively shrink to a “little Iraq”.
The more one looks into the Shia leaders’ behaviour towards the Kurdish wish to escape what is increasingly becoming a loveless marriage, the more one realises that their only remaining goal, however shocking it might be, is to confine themselves to a “little Shiastan.”
As for Turkey, the shift in its policy from opposing a Kurdish autonomous region on its southern borders to becoming a key factor in achieving the Kurdish dream is dramatic but not surprising.
In addition to the economic benefits it will reap from the oil deals with the Kurdish Region, Ankara, with its Justice and Development Party government’s new priorities and concerns, no longer considers federal, or even independent Kurdistan as a threat, thinking that deeper bilateral relations are more likely to make Turkey feel safe and its strategic interests on its southern border be protected.
The Kurdish-Turkish oil deal could be a major step to Kurdistan’s independence, but in order for Iraqi Kurds to step out on their own onto the world stage they might need more than exports of oil and gas.
Both Ankara and Erbil realise that there are geopolitical impediments, and this is why they are seeking to appease the Baghdad government and draw it into the arrangement.
“There is no single Kurd who doesn’t dream of independence and a state, but this is not so easy,” the secretary-general of Barzani’s Kurdistan Democratic Party Fadhil Mirani told the pan-Arab newspaper Asharq Al-Awsat on Saturday.