A View on the Ankara-Erbil Energy Partnership
Why Washington and Baghdad Did Not Have Any Reaction to Ankara-Erbil Energy Partnership
A few hours before leaving Ankara for a historic meeting to declare a Washington-Ankara partnership against the Assad regime, Turkey’s prime minister, Recep Tayyip Erdogan, made a last minute announcement that Turkey will pursue separate oil arrangements with the Kurdistan Regional Government (KRG), in partnership with Exxon Mobil. Surprisingly, neither the US and nor Iraq condemned this partnership, despite it defying the central government in Baghdad.
On May 14, 2013, before his flight to Washington, Erdogan made an announcement that shook regional dynamics. “Turkey’s state-owned oil firm will work with US giant Exxon Mobil to develop oil in the Kurdish-run area," he said. “We will develop our agreement with the regional government after our visit in Washington.”
The US president and the Turkish prime minister had a historical meeting for the prospects of a region covering Turkey, Iran, Iraq, and Syria. The meeting agenda’s main item was creating a unified strategy for Syria’s future. By making a direct agreement with the KRG just before this meeting, Erdogan has, in a way, imposed on Obama a pre-condition for their alliance and partnership. “Countries from various parts of the world are taking steps to explore and produce oil in different parts of Iraq, and then deliver it to world oil markets. There's nothing more normal, more natural than Turkey, which provides all kinds of support and aid to its next-door neighbor, to take a step that is based on mutual benefit,” Erdogan said to journalists asking about the reactions of Baghdad and Washington-based parties.
Turkey’s oil imports from Northern Iraq seem to have entered the Erdogan-Obama meeting's agenda at the last minute. Indeed, Turkey’s minister of energy and natural resources, Taner Yıldız, (who was not on the initial delegation list) abruptly joined the other ministers accompanying Erdogan.
With this last minute resolution, Turkey has defied both Washington and Baghdad. US authorities have warned several occasions that they do not support any independent energy deal with Erbil, as Baghdad and Erbil have not yet resolved a long-standing oil and gas revenue sharing legislation feud.
Besides Washington and Baghdad, Erdogan's announcement also seems to have broken a tacit agreement with the KRG, which had been considering the deal, too sensitive to be announced publically before Erdogan visited Washington.
However, no reaction came from Turkey’s announcement. No American authority criticized Turkey for not following their advice, nor did any Baghdad authority warn of the unconstitutionality of the agreement, nor did any Kurdish authorities make a remark on the timing being proactive.
Baghdad and Washington’s espousal becomes even more unexpected when one remembers that earlier this year, when the Turkish-British joint venture Genel Energy delivered via truck the first shipment of crude oil from the KRG's Taq Taq oil field to Turkey’s Ceyhan port on the Mediterranean Sea (where it was shipped to the international market), John Kerry, the US secretary of state, warned Masoud Barzani, the KRG’s president, against concluding an agreement with Turkey or any other state in the face of Baghdad’s opposition. Baghdad, on its side, called the KRG’s agreement unconstitutional and threatened to sue companies exporting crude from the KRG, warning them that they must choose between investing in the country's southern fields or in its KRG-controlled northern ones.
Erbil’s silence can be analyzed in the context of its demand to the Obama administration for Washington to remain neutral in this dispute with the Iraqi central government.
Baghdad’s silence, meanwhile, makes sense in the context of the breakthrough achieved over the last several weeks. Early in May Kurdish lawmakers returned to Baghdad, opened a new process for an agreement amending Iraq’s 2013 budget and formend a committee to study the oil and gas law. Iraq’s oil and gas law has been stuck in parliament for years due to a lack of consensus. Last Sunday, a delegation from the Iraqi central government, headed by Falih al-Fayadh, the country's national security advisor, visited Erbil. Both sides emphasized the need to continue holding negotiations to settle all pending issues between Baghdad and Erbil.
Considering the meeting between Obama and Erdogan, the US seems to remains close to Turkey because the Syrian situation may have a priority over Iraq’s economic and politic unity for the US agenda.
During his statement, Erdogan did not give the name of the state-owned firm which will spearhead efforts in the KRG, but various sources suggest the Turkish Petroleum International Company (TPIC), an arm of state-run Turkish Petroleum (TPAO), will enter a partnership with the KRG and Exxon Mobil to explore and develop hydrocarbons in Exxon Mobil's six untapped blocks in Iraqi Kurdistan.
While penetration of the TPIC is a state affair, the Turkish-British joint venture Genel Energy remains today the largest producer for the KRG. Last month, Genel also announced making a significant oil discovery in the KRG’s First Chia Surkh field. Despite this success, Genel is still unable to easily export--it averages about 45,000 barrels per day in oil production due to disagreements between the central and regional governments.
As the largest producer in the KRG, Genel Energy has already stated its interest in investing in a separate pipeline to connect KRG oil fields with Turkey, independent of any control from Baghdad. In this context, the Turkish government's cooperation with Exxon Mobil (which arrived in the region only in two years ago) over Turkey-based Genel brings a new dimension to the relation of private companies to the state in the region's energy diplomacy.
Olgu Okumuş is an affiliated lecturer in energy diplomacy at Sciences Po, Paris and director of strategy development at LEO Advisors. She is also PhD candidate at Sciences Po, Paris, where her research focuses on Turkey’s energy transit policy. She can be reached at olgu.okumus@leoadvisors.com