Erbil, Baghdad, Ankara and Washington: The Complex Politics Of Kurdish Oil Evaluation Note / Seda Kırdar

"Oil in the Kurdish region of Iraq is attracting the interest of major oil companies and complicating the politics of the region by exacerbating existing sectarian and ethnic tensions.  Iraq’s vast oil reserves gives its long-suffering citizens the opportunity to recover from the effects of the American invasion and ensuing civil war, but it could also be the catalyst for further internal quarrels and strife as well as external tensions.

At 143 billion barrels, Iraq’s proven oil reserves are the third largest in the world. It also has probable reserves in the order of 214 billion barrels. In addition it has huge gas reserves. It is seeking to more than double its oil output by 2015, thus overtaking Iran as OPEC’s second largest producer by the end of the year as sanctions continue to hobble crude production in its Persian Gulf neighbor.

About 70 percent of Iraq’s oil reserves are concentrated in the southern Iraqi oil fields with 20-25 percent in the north (ANNEX C). While it has fewer resources than the south, the northern region of Iraq, mostly under the control of the Kurdistan Regional Government (KRG) with Erbil as its capital, is hydrocarbon-rich with estimated reserves of 45 billion barrels of oil. The level of daily oil exports from the region in 2011 was 100,000 barrels but the KRG has set an ambitious daily oil production goal of one million barrels for 2015.

The world’s biggest oil companies are always eager for new sources and, led by ExxonMobil and Chevron, a number of them have signed exploration and production contracts with the KRG. This has angered the Iraqi central government, which claims that the KRG has no right to make such deals according to the Iraqi constitution. The dispute between Erbil and Baghdad on this important issue seems set to continue and has the potential to escalate into a major dispute with serious implications for Ankara and Washington..."