Saudi Press

Saudi Arabia and the world
Monday, Oct 02, 2023

Oil firms seek U.S. mediation to defuse Iraq-Kurdistan tensions

Oil firms seek U.S. mediation to defuse Iraq-Kurdistan tensions

Oil firms operating in Kurdistan have asked the United States to help defuse an upsurge in tension between Iraq's central government and the semi-autonomous region, according to a letter seen by Reuters and three sources.

They say intervention is needed to ensure oil continues to flow from the north of Iraq to Turkey to prevent Turkey having to increase oil shipments from Iran and Russia.

They also say the economy of the Kurdistan region (KRI) could be at risk of collapse if it loses oil revenues.

Relations soured in February when Iraq's federal court deemed an oil and gas law regulating the oil industry in Iraqi Kurdistan was unconstitutional.

Following the ruling, Iraq’s federal government, which has long opposed allowing the Kurdistan regional government (KRG) to independently export oil, has increased its efforts to control export revenues from Erbil, the capital of the KRI.

Before the ruling, Dallas-based HKN Energy wrote to U.S. ambassadors in Baghdad and Ankara in January seeking mediation in a separate case dating back to 2014 concerning the Iraq-Turkey pipeline (ITP), a copy of the letter seen by Reuters shows.

Baghdad claims that Turkey violated the ITP agreement by allowing KRG exports - it deems illegal – through the pipeline to the Turkish port of Ceyhan.

Turkey's energy ministry did not respond to a request for comment.

The final hearing from the case took place in Paris in July, and the International Chamber of Commerce will issue a final decision in the coming months, Iraq's oil ministry said.

Turkey's next steps remain unclear should the court rule in Iraq’s favour, an outcome considered likely, according to three sources directly involved.

At least one other oil firm has engaged at senior levels with four direct and indirect stakeholder governments to encourage engagement, a representative from the company told Reuters, on condition of anonymity.

Other operators in the KRI, Genel Energy (GENL.L) and Chevron , declined to comment on the arbitration case, while DNO and Gulf Keystone did not immediately respond to a request for comment.


BARRELS AT RISK


Apart from requiring Turkey to get more crude from Iran and Russia, a cessation of oil flows through the ITP, would cause the KRI's economy to collapse, HKN's letter to U.S. representatives said.

Neither the KRG's ministry of natural resources nor the oil ministry in Baghdad responded to a request for comment.

Already Iraq is getting less than the full benefit of high oil prices , which leapt to 14-year-highs after major oil exporter Russia invaded Ukraine in February and they remain close to $100 a barrel.

The ITP has the capacity to pump up to 900,000 barrels per day (bpd) of crude, roughly 1% of daily world oil demand, from state-owned oil marketer SOMO as well as the KRG.

For now it is pumping 500,000 bpd from northern Iraqi fields, which will struggle to boost production further without new investment.

Analysts have said companies will withdraw from the Kurdistan region unless the environment improves.

Already many foreign companies have lost interest.

They first came to Kurdistan in the era of former Iraqi President Saddam Hussein, when the region was considered more stable and secure than the rest of Iraq.

As security has deteriorated, the handful of mostly small and medium-sized firms left has also sought U.S. engagement to help deter attacks against energy infrastructure and improve security generally.

The firms gave their backing to letters written from U.S. congress members to Secretary of State Antony Blinken sent in August, according to sources directly involved in the matter. They asked not to be named because of the sensitivity of the issue.

The letters urged high-level engagement with Erbil and Baghdad to safeguard the stability of the KRI’s economy and to ensure Iraq is free from Iranian interference.


TEPID U.S. INTEREST


State Department spokesperson Ned Price said on Aug. 16 that disputes between Baghdad and Erbil were between the two sides, but the United States could encourage dialogue.

The State Department summoned U.S. law firm Vinson & Elkins, which is representing Iraq’s oil ministry in Baghdad, for a briefing in Washington on the ITP dispute in July.

A further two briefings are likely to take place in Baghdad and Washington, according to a source familiar with the matter.

"Baghdad would certainly welcome U.S. statements to the KRG leadership that it should follow the Iraqi constitutional arrangements for the oil industry in Iraq," partner at Vinson & Elkins James Loftis said.

The U.S. state department declined to comment but industry experts believe U.S. intervention is unlikely and in any case might not help.

"The U.S. has become disengaged from Iraq over the past decade. No pressure from Washington or other governments will resolve the issues between Baghdad and the Kurds," Raad Alkadiri, managing director for energy, climate, and sustainability at Eurasia Group.

A Kurdish official told Reuters in August the KRG had asked the United States to increase their defence capabilities, but said it was not hopeful as the United States' higher priority is reviving the 2015 nuclear deal with Iran.

Newsletter

Related Articles

Saudi Press
Close
0:00
0:00
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Swedish Embassy in Baghdad Engulfed in Flames Amidst a Firestorm of Protests
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Today, we're unveiling the splendor of one of Saudi Arabia's most exclusive and stunning retreats – the Jeddah Yacht Club
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Muslim Tycoon Asif Aziz Receives Approval for the Transformation of the iconic London Trocadero Landmark into Mosque
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
Israeli Prime Minister Netanyahu Hospitalized Due to Dehydration Amidst Summer Heatwave
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Saudi Arabia Joins the Treaty of Amity and Cooperation in Southeast Asia
The Renowned Crown Prince Camel Festival Set to Return to Taif on Aug. 1
Why Do Tech Executives Support Kennedy Jr.?
×