My monthly article for the Middle East Policy Council is now available. Titled “Iraq, Turkey, and the New Kurdistan Pipeline Deal,” the article details the state of Iraq’s political crisis, flagging relations between Ankara and Baghdad, and the newest oil deal reached between the Kurdistan Regional Government and Turkish officials. All of these issues overlap. Read the entire article if you get the chance. I’d like to focus on one issue in particular on this blog.
Much of the reporting on the new pipeline deal has missed the mark. As far as I can tell, the Kurds and Turks did not agree to build a new pipeline last week, although you would have assumed so based on wire reports and other accounts. Instead, the parties now plan to renovate a pipeline which has been inactive since 1990. This is not a bold new ambitious project even though its political implications could be great. As a matter of Turkish policy, Ankara wants these pipelines operating at capacity because, as I understand it, the pipelines are state owned on the Turkish side of the border, and upkeep is expensive. Here it is, spelled out a bit more clearly:
According to Hawrami [Kurdistan’s minister of natural resources], total KRG production capacity is now close to 300,000 b/d, while domestic consumption in Kurdish territories is about 100,000 b/d. The KRG can theoretically exceed the 175,000 b/d average that Iraq’s 2011 export agreement planned for if these estimates are correct. Also in May, officials confirmed plans to renovate and return to service a 46” pipeline connecting Kirkuk to Ceyhan on the Turkish coast.
A 40” pipeline connecting Kirkuk to Ceyhan is already active but the 46” pipeline, which the Kurds want to restore, has been shut down since 1990, when Iraqi crude exports were temporarily halted following Saddam’s invasion of Kuwait. Hawrami insists the KRG still wants to export under SOMO’s direction if revenue-sharing is restarted. The deal was reached without Baghdad’s consent.
The Turkish pipeline deal will allow the Kurds to export up to one million b/d through the renovated pipeline. But it might also make reconciliation between Erbil and Baghdad harder to achieve. A spokesman for Prime Minister Nouri al-Maliki insisted on May 22 that any deal would require Baghdad’s approval. It is unclear how the central government would prevent the pipeline from being renovated or oil from being transported once complete.
Why the confusion about the pipeline deal? The only genuinely “new” pipelines that I know of were announced recently by the KRG or international oil companies like Genel last year. Both are internal pipelines limited to Kurdistan. One will connect Kurdistan’s Taq Taq field to the Kiruk-Ceyhan pipeline; and another pipeline will connect the Tawke field to a pumping station near the Turkish border. The “new” million barrel-a-day pipeline that everyone is talking about, however, is the existing 46″ pipeline that’s actually about 30 years old and has been offline for 20.
Again, the reporting has been so muddled that I’m happy to hear what others think. Please comment.