Iraq Oil Report

Iraq’s Kurdistan Regional Government announced another five production sharing contracts Tuesday, moving forward on its own oil sector while the national government doesn’t.

Interesting notes:

Four exploration blocks under one PSC were awarded to Norbest Limited, an affiliate of TNK-BP, the Russian arm of international giant BP. The question, then, is will Baghdad view this as sidestepping the national government and make good on the threat to blacklist any company that signs with the KRG prior to a national oil law?

South Korea is finally in Iraq. The Korean National Oil Corp., via its company KNOC Basian Limited, led a consortium of SK Energy Co Ltd, Daesung Industrial Co, Ltd, Samchully Co Ltd, Bum-Ah Resource Development Corp, UI Energy Corporation, GS Holdings Corp, and Majuko Corporation for an exploration block.

UK-listed Sterling Energy LLC subsidiary Sterling Energy International Limited was awarded one block.

The new round of signing by the KRG brings in more western and U.S. companies.

Ross Perot Jr.’s Hillwood International Energy, via its subsidiary HKN Energy Ltd., was awarded one block.

Denver-based Aspect Energy LLC was awarded a block via its subsidiary General Exploration Partners Inc.

More on the deals:

S. Korea Secures 1st Oilfield in Iraq — The Korea Times.

Reuters has more, along with the response of the Iraq Oil Minister Hussain al-Shahristani.

Baghdad vs. Irbil

Last week, the KRG announced seven new deals with international oil companies as well as contracts to two new KRG-owned companies. One, the Kurdistan National Oil Company, was awarded a service contract for the Khurmala oil field, as well as build a refinery to process the fields’ production.

There are rumblings, however, that the Khurmala field is in a disputed area, where the KRG and national government claim it is inside and outside of, respectively the KRG area. It is likely to be disputed also, as there is not agreement as to which government entity has the authority for discovered but not developed fields, such as Khurmala.

The Oil Law

The national law that would end, in theory, the dispute over the rights to sign oil deals, is far from being approved. It will take major concessions from all the sides, and all sides feel they’ve made enough concessions.

Reuters has an update, which I just summed up.

More Iraq Oil

The top energy adviser to the Iraqi prime minister, former Oil Minister Thamir Ghadhban says exploration and investment over the coming years will see a tripling of oil production.

The man tasked by the United Nations to find Iraq’s weapons of mass destruction says U.S. long term plans in Iraq mean troops on the ground securing the oil.

“One fear I would have is that the US has a hidden thought to remain in Iraq,” Blix told Australian national radio and reported by AFP.

“One reason why they wanted in was that they felt they must leave Saudi Arabia. After the Gulf War in 1991, they left their troops in Saudi Arabia to protect pipelines,” he explained.

Still waiting to cash in on Iraq’s oil, Steve Hargreaves reports for CNNMoney.com, oil production in Iraq isn’t paying for reconstruction like the Bush administration originally said.

“The spike in oil prices … is somewhat of a self-inflicting wound,” writes Jim Landers in the Dallas Morning News.

Turkey and the Kurds

“Is the latest crisis in Turkey really only about the PKK, a friend recently asked ironically. A reasonable answer would be both yes and no,” writes Khaled Salih, spokesman for the KRG.

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Violence is steady, and deadly, in Kirkuk and Basra, where combined more than 90 percent of Iraq’s reserves are located.
The violence is less related to fighting terrorists than it is to finding a solution to the power struggle in Iraq.

A pipeline from Iraq to Iran is being built, according to press reports. The Ministry of Oil plans to increase exports and production through this and other pipelines, but this is the first groundbreaking we’re hearing. Also to watch: a proposed but separate, Oil Minister Shahristani told me, pipeline sending products refined from Iraqi oil, in Iranian refineries, back to Iraq.

From the ‘How are you going to operate an oil sector if…’ desk

14 percent of Iraqis – equivalent of 42 million Americans – are not able to live in their homes, McClatchy Newspapers reports.

As Juan Cole, Middle East expert at the University of Michigan puts it on his website, Informed Comment: “I mean, it is a Stephen King-style futuristic apocalypse for Iraq. Only it has just happened, during the past 4 1/2 years. And the American government is responsible for kicking it off. Every time I hear in the US media about how “well” Iraq is going now, I want to spit.”

Attacks on educators continue in Iraq, Doug Smith of the Los Angeles Times reports.

Plus…

The Iraq Press Roundup, by UPI’s Hiba Dawood.

From the Marine Corps Warfighting Laboratory:

Counterinsurgency in Iraq: Theory and Practice, 2007

And the presentation given by Dr. David Kilcullen at the Counterinsurgency Seminar ’07 Marine Corps Base Quantico, Virginia.

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The Kurdistan Regional Government once again makes good on its pledge to develop its own oil sector with or without Baghdad.

It announced seven more deals with international oil firms Tuesday, with companies based in Austria, India and the United States, among others.

“There has been great interest in Kurdistan’s exploration acreage,” KRG Minister of Natural Resources Ashti Hawrami said Tuesday in announcing the new contracts. “We are pleased to be able to meet that demand.”

The KRG has also awarded four exploration blocks to the Kurdistan Exploration and Production Company. The Kurdistan National Oil Company will develop the Khurmala oil field, which has already been discovered, and build a refinery to supply the KRG Electricity Ministry.

More on this deal Wednesday.

The Turkish Invasion

The protest sign was plain enough, black ink on white poster board. But the message Jamel Numan was carrying amidst 200 of America’s Iraqi Kurds rallying outside the White House Monday was both simply blunt and highlighted the overlooked complexity of Turkey’s beef with the Kurdistan Workers’ Party guerrillas: “Is this really about PKK? Or is this about Kirkuk?”

Numan, a 53-year-old now living in Nashville, a hub of American Kurds, echoed the fears of Kurds — that Turkey is amassing troops on their border “so they can take over the Kurdish region of Iraq.”

Inside the White House Turkish Prime Minister Recep Tayyip Erdogan and President Bush discussed Turkey’s threats to take military action against the Turkish Kurd separatist strongholds in Iraqi mountains on the other side of the Turkish border.

An estimated 3,000 PKK guerrillas are based in the Qandil Mountains, where Turkey alleges the most recent of the PKK’s decades-old campaign has been planned. Eight kidnapped Turkish troops were released Sunday in a brief slowdown of bluster between the sides. But the PKK, which the United States and Turkey recognize as a terrorist group, has killed dozens of troops and citizens in attacks in recent months. …

“Clearly the Turks got themselves into a pickle by pressing for change when clearly the Americans weren’t going to give them the green light to go into Iraq,” said Joost Hiltermann, director of the International Crisis Group’s Middle East Project. Now the United States must “help Turkey down without alienating the Kurds in Iraq.”

Jim Muir of the BBC reports on The Political Dance of the Turkish Troops’ Release.

Society, Security and Politics

The U.S. will free Iranians it captured in Iraq, the BBC reports.

An oil deal signed between Russian oil giant Lukoil and Saddam Hussein has long been relegated as null and void by Iraq’s Oil Ministry. It’s for a major oil field, with 11 billion barrels, but Iraq says Saddam cancelled it and would not uphold or renegotiated any deals that weren’t active at the time of the regime’s overthrow.

Lukoil claims otherwise and is contemplating international courts to challenge it.
Andrew E. Kramer and James Glantz report in The New York Times Russia may also renege on a 2004 debt forgiveness deal.

Iraq’s Oil Minister reiterated its terms for the $4 billion deal: there is none, it will be bidded on when the national oil law is passed, Paul Tait reports for Reuters.

Smuggling Iraq’s Fortunes

15,000 barrels of oil go unaccounted for each day in Iraq, the head of the Iraq Board of Supreme Audit said, diverted to Iran and other Gulf countries, reports Hassan Hafidh of Dow Jones Newswires.

Two former Iraq Oil Ministers say the fuel smuggling operations, which are perhaps more widespread than raw crude, are being done under the arms of political and religious factions and their militias, Nidhal al-Laithi reports for Azzaman.

The Turkish Invasion

Turkey’s Prime Minister was in Washington, meeting with President Bush while American Kurds protested outside, as the decision on whether to invade Iraq draws near.

Prime Minister Erdogan said he’d wait until after the meeting to make the call on going after the Kurdistan Workers’ Party (PKK), Turkish Kurdish guerillas who want more rights for Turkish Kurds. An estimated 3,000 are holed up in the mountains lining the Iraq-Turkish border. Iraq’s Kurdistan Regional Government is blamed by Turkey for turning a cheek, if not aiding the PKK.

“I am expecting that this trip will result with the United States taking solid steps,” Erdogan said, Deborah Haynes and Tom Baldwin report in The Times Online. The report also includes a brief time line on the PKK.

The PKK is considered a terrorist organization by the United States, Turkey and Iraq. It has conducted a number of attacks in Turkey, which killed dozens recently. The PKK and Turkey have been fighting for decades, with an estimated 30,000 to have died. Turkey has attempted to route the PKK from northern Iraq in the past, with no success.

The threat, however, has had an effect already. The PKK is moving from Iraq to Iran (which, along with Syria, also has a sizeable Kurdish population), Patrick Cockburn reports in The Independent.

KRG Prime Minister Nechirvan Barzani, calls for dialogue in op-ed in the Washington Post.

The Turkey-Kurd beef is decades in the making and won’t be ended with a quick fix, writes Dennis Ross of the Washington Institute for Near East Policy in The New Republic.

The PKK has support within the Iraqi Kurdish community, writes Bobby Caina Calvan for McClatchy Newspapers.

As each smuggler passes, the sentry stretches out his hand and the smuggler pays, sometimes a dollar’s worth of Iranian tumans, sometimes $5 worth.

The sentry identifies himself as a member of the Kurdistan Workers’ Party, the PKK, the rebel group that has inflamed Turkish anger with attacks that have killed 30 Turkish soldiers in the last month. The U.S. State Department has included the group on its terrorist list for years.

The sentry, however, is hardly in hiding. He’s in plain view of a checkpoint atop a nearby bluff, manned by a member of the peshmerga, the regional militia of the Kurdish Regional Government, the U.S.-allied rulers of northern Iraq.

Andrew Lee Butters has the perspective of Massoud Barzani, co-leader of Iraqi Kurds along with Jalal Talabani, as a “friend of the Turkish people,” but ready to meet Turkish troops with Kurdish troops if the incursion takes place.

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Plus:

Issam Chalabi, one-on-one

Baghdad’s uneven power distribution

U.S. OK’s Saddam-era oil law deals

Tackling unemployment

The most underrated powder keg in Iraq is located in the south — away from Baghdad’s political beef and the Turkish invasion of Iraq’s northern front — where 80 percent of Iraq’s proven oil reserves are located.

Political factions, their militias and other gangs entrenched in a power struggle over the oil resources and the crude and fuel black market, are angling for Basra. The oil capital is where nearly all of Iraq’s exports flow through.

The British are pulling back and Prime Minister Nouri al-Maliki says Iraqi security forces can take over by December, though a top official in Basra says otherwise.

Iraqi police busted 267 people who entered Basra illegally, Azzaman reports.

But on the Gulf coast, at the oil terminals, armed Iraqis, under Australian and British training, say they’re ready to protect the lifeline of Iraq, Mohammed Abbas reports for Reuters.

Iraqi soldiers aboard the patrol boat scan the waters around them before they give permission to U.S. sailors to approach the Gulf oil terminal.

For the first time since U.S.-led forces toppled Saddam Hussein more than four years ago, Iraqi soldiers are taking charge of protecting the country’s greatest assets against insurgents under a plan to hand over control to Iraqis.

“The Iraqis are doing the job,” said Australian Captain Philip Spedding, who manages coalition Northern Gulf operations. “They’re the ones manning the gun positions and the radar, talking on the radio. It’s close to transition point on the terminals.”

Iraq’s southern oil fields and export facilities have largely escaped the kind of insurgent attacks that had regularly hit pipelines and oil installations in other parts of Iraq.

But Iraqis guarding the two terminals point to neighbouring states and saboteurs as potential threats. An armed Iranian lookout post is visible from one of the terminals.

Rival Shi’ite militias are vying for control of oil exports in southern Iraq, which contains the otherwise landlocked country’s only access to the sea, as British troop gradually hand over control to Iraqis. Sailors from U.S.-allied countries have been training Iraqis since soon after the 2003 invasion, in an effort to rebuild a navy devastated by sanctions and wars.

They said training was beginning to pay off.

Iraq’s Oil

Former Iraq Oil Minister Issam Chalabi sits down with CNN’s John Defterios in London.

In case you missed it: my report for UPI that the U.S. State Department says signing national oil deals using the Saddam-era law is OK.

The new position is a shift for the U.S. government, or at least a nuance in its stance, which has pressed hard for a new hydrocarbons legal regime and condemned deals signed between a regional government and private firms — especially when it’s an American company.

“We would prefer these laws to be passed before any deals are signed,” Deputy Assistant Secretary for Near Eastern Affairs Lawrence Butler told United Press International. “However, in the absence of passage of the hydrocarbon law, Iraq as a sovereign state can continue to use the Saddam-era laws to manage the sector in the meantime.”

It’s not clear what effect the U.S. stance will have on the international oil industry, salivating at the prospect of entering the third-largest oil reserves in the world, as Iraq’s Oil Ministry says it will not wait forever for a new law before signing deals.

Iraq’s Power

Some Baghdad neighborhoods get twice the daily average, Iraq Slogger reports in the Baghdad Electricity Watch.

The Turkey-Kurdish Dilemma

For Kurds In N. Iraq, A Familiar Foreboding as Shelling by Turkey Leads Many to Flee, writes Sudarsan Raghavan in the Washington Post.

The last three women left this tiny hamlet on Monday, carrying no more than their clothes and prayers. They joined 250 villagers who fled in the past two weeks, locking their homes and their yellow church and driving away on a desolate road scarred by war. Only 11 men remain, their lands separated from Turkey by a thin, emerald river winding through a fertile valley.

Iraq is asking Iran for help in solving the dispute with Turkey, writes Alissa J. Rubin in The New York Times.

And as U.S. Secretary of State Condoleezza Rice heads to Ankara to calm the situation, Yigal Schliefer explains in The Christian Science Monitor Why Turks No Longer Love The U.S.

A Turkish attack on Iraq could backfire, David L. Phillips, project director of the National Committee on American Foreign Policy and a visiting scholar at Columbia University’s Center for Human Rights, writes in The Boston Globe on Turkey’s Iraq Problem.

The Center for Strategic and International Studies has an impressive Turkey Project, with new reports that can be found here.

Iraqonomics

Where was the Iraq economic expert?, asks John B. Taylor in the Washington Post, when Gen. Petraeus and Amb. Crocker gave their report to Congress in September.

In his op-ed, The Empty Chair at the Iraq Hearings, the Treasury Dept. undersecretary for international affairs from 2001-2005, now at Stanford and the Hoover Institution, writes in the voice of that missing expert:

My strong recommendation is: As soon as Gen. Petraeus and his coalition forces secure an area — a neighborhood or a town — we should immediately focus as best we can on the economic part of our mission. Help businesses reopen and hire people, especially young people who might otherwise join the enemy.

Establish organizations of entrepreneurs to tell us and the Iraqi government what they need. Build industrial enclaves if necessary. Work with Iraqis to provide security for shipments of products and key raw materials for manufacturing or agriculture.

You have heard much about the need to secure an area before significant political progress can be made; the same is true for economic progress. But economics is quicker than politics. We should move in economically even before our teams start helping on political reconciliation.

If the environment is secure, entrepreneurs — both Shiite and Sunni — can create jobs much more quickly than politicos can reach agreement, let alone pass legislation. Job creation, the economic integration of communities and the taste of prosperity will accelerate political reconciliation and the achievement of our ultimate objective in Iraq.

Iraq will send $30 million to each province to tackle unemployment, Ahmad al-Taie reports for Azzaman.

Increasing employment opportunities is key, but not a standalone fix. It should be considered within the larger framework of increasing the quality of life of Iraqis.

And aside from reducing the very real threat that one may be tortured and killed on any given day, it includes increasing access to food, fuel and electricity and running and clean water and creating an education and health care system, and ironically women’s rights which are better than, not worse, than under Saddam Hussein. Then you can create hope and reduce the size of the insurgency’s numbers.

The Elements of Victory in Iraq, the latest report by Anthony H. Cordesman at the Center for Strategic and International Studies.

U.S. Foreign Service officers posted in Iraq used to volunteer. Now the State Department can’t find enough staff, and are issuing forced assignments, and the foreign service corps is none too happy.

A more thorough explanation is offered by Juan Cole, Middle East expert at the University of Michigan, on his website Informed Comment.
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