[Marxism] Kurdish Oil Deal Shocks Iraq's Political Leaders

[Jon Flanders <jonathan.flanders@xxxxxxxxxxx>]

http://www.latimes.com/news/nationworld/world/la-fg- 
oildeal1dec01,1,95714.story?coll=la-headlines-world

December 1, 2005        
        
Kurdish Oil Deal Shocks Iraq's Political Leaders
# A Norwegian company begins drilling in the north without approval  
from Baghdad.

By Borzou Daragahi, Times Staff Writer

BAGHDAD — A controversial oil exploration deal between Iraq's  
autonomy-minded Kurds and a Norwegian company got underway this week  
without the approval of the central government here, raising a  
potentially explosive issue at a time of heightened ethnic and  
sectarian tensions.

The Kurdistan Democratic Party, which controls a portion of the  
semiautonomous Kurdish enclave in northern Iraq, last year quietly  
signed a deal with Norway's DNO to drill for oil near the border city  
of Zakho. Iraqi and company officials describe the agreement as the  
first involving new exploration in Iraq since the U.S.-led invasion in  
2003.

Drilling began after a ceremony Tuesday, during which Nechirvan  
Barzani, prime minister of the Kurdish northern region, vowed "there is  
no way Kurdistan would accept that the central government will control  
our resources," according to news agency reports.

In Baghdad, political leaders on Wednesday reacted to the deal with  
astonishment.

"We need to figure out if this is allowed in the constitution," said  
Adnan Ali Kadhimi, an advisor to Prime Minister Ibrahim Jafari. "Nobody  
has mentioned it. It has not come up among the government ministers'  
council. It has not been on their agenda."

The start of drilling, called "spudding" in the oil business, is sure  
to be worrisome to Iraq's Sunni Arab minority. They fear a  
disintegration of Iraq into separate ethnic and religious cantons if  
regions begin to cut energy deals with foreign companies and  
governments. Sunnis are concentrated in Iraq's most oil-poor region.

Iraq's neighbors also fear the possibility of Iraqi Kurds using revenue  
generated by oil wells to fund an independent state that might lead the  
roughly 20 million Kurds living in Turkey, Iran and Syria to revolt.

Iraqi legal experts and international oil industry analysts have  
questioned the deal. Oil industry trade journals had expressed doubts  
that it would come to fruition.

Iraq's draft constitution, approved in an Oct. 15 national referendum,  
stipulates that "the federal government with the producing regional and  
governorate governments shall together formulate" energy policy.  
However, it also makes ambiguous reference to providing compensation  
for "damaged regions that were unjustly deprived by the former regime."

Iraq's Kurds have argued that the country's existing oil fields and  
infrastructure, such as those in the largely Kurdish cities of Kirkuk  
and Khanaqin, should be divvied up by the central government but that  
future oil discoveries should be controlled by each oil-producing  
region.

In his speech Tuesday, Barzani, the nephew of Kurdish politician and  
former guerrilla leader Massoud Barzani, eschewed the language of the  
law and couched the deal in political terms. He invoked the Kurds'  
years of deprivation at the hands of the Sunni Arab-dominated  
government of Saddam Hussein.

"The time has come that instead of suffering, the people of Kurdistan  
will benefit from the fortunes and resources of their country," he said  
during the ceremony in the western portion of Kurdish-controlled  
territory.

The Kurds, who during the last several years of Hussein's rule  
maintained sovereignty in northern Iraq under the protection of U.S.  
warplanes, made millions in transit and customs fees as the Baghdad  
government smuggled oil to Turkey in violation of United Nations  
sanctions. Since the end of the sanctions, the Kurds have sought ways  
to make up for that lost income.

The eastern administrative half of the Kurdish region also is rushing  
to sign energy deals with foreign companies without Baghdad's approval.  
The government of the Patriotic Union of Kurdistan, based in the city  
of Sulaymaniya, has signed an electricity agreement with a Turkish  
company and explored a possible oil deal with a foreign partnership  
near the city of Chamchamal, the site of several dormant oil wells.

During months of painstaking constitutional negotiations, Kurds  
insisted on the authority to cut energy deals without Baghdad's  
approval. Under the draft charter, the task of determining how oil  
resources will be allocated is left to the National Assembly that will  
be elected Dec. 15.

The language in the constitution regarding the power of regions to pen  
such contracts was a major reason that the vast majority of Sunnis  
voted against the charter in October.

The announcement of the DNO drilling took many Iraqis by surprise  
Wednesday.

"This is unprecedented," said Alaa Makki, a leader of the Iraqi Islamic  
Party, a Sunni Arab group. "It's like they are an independent country.  
This is Iraqi oil and should be shared with all the Iraqi partners."

Makki said Kurds were trying to have it both ways, controlling the  
Iraqi presidency and several powerful ministries in the national  
government while also trying to lay claim to extra-constitutional  
powers in the north. Jalal Talabani, a Kurd, is the Iraqi president.

However, Helge Eide, managing director of Oslo-based DNO, said he  
believed Iraq's new constitution gave the Kurdish north jurisdiction  
over certain drilling and oil exploration activities.

"That was clearly pointed out by Mr. [Nechirvan] Barzani," said Eide,  
who attended the Zakho ceremony.

Oil companies have become used to operating in hostile and unstable  
territories. DNO, founded 25 years ago, is considered an upstart in the  
oil business, with projects in Yemen, Mozambique and Equatorial Guinea,  
the site of a coup attempt last year, as well as northern Europe.

Eide said his company was more than willing to work with the government  
in Baghdad, though it had not yet signed a deal with the capital for  
oil exploration. In April, the company signed a deal to provide the  
Iraqi Oil Ministry with training and technology as "the first steps" to  
being invited by Baghdad, as well as the Irbil-based Kurdish  
government, for future oil and exploration work.

Iraq, a member of the Organization of the Petroleum Exporting  
Countries, holds an estimated 115 billion barrels of proven oil  
reserves, mainly in the south, according to Oil & Gas Journal, an  
industry publication.

That places Iraq among the top five nations in oil reserves. Iraq could  
contain significantly more undiscovered oil where energy exploration  
hasn't occurred, an area that stretches across about 90% of the  
country, the U.S. Energy Department said.

Iraq exports about 2 million barrels of oil a day, according to the  
International Energy Agency in Paris.

Times staff writers Jeffrey Fleishman in Berlin and Nancy Rivera Brooks  
in Los Angeles contributed to this report.





________________________________________________
YOU MUST clip all extraneous text before replying to a message.
Send list submissions to: Marxism@xxxxxxxxxxxxxxxxxxx
Set your options at: http://lists.econ.utah.edu/mailman/listinfo/marxism