Western energy chiefs hope for Iraqi profits as Kurdish troops take oil city of Kirkuk
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
DEPUTY business editor
Friday 13 June 2014
The battles raging across northern Iraq could end up benefiting the Western oil companies operating in the Kurdistan region, industry executives claimed last night.
In the short term, the current instability is making day-to-day work on the oilfields difficult for those closer to the fighting. But senior Western executives in the autonomous region said the decisive action of the Iraqi Kurdish army to take control of the northern oil city of Kirkuk would strengthen its hand in critical negotiations with Baghdad over its large oil reserves.
Kurdistan wants to be allowed to sell its oil directly abroad, bypassing the Iraqi system. The Iraqi president Nouri al-Maliki has decreed this illegal. The two-year spat escalated last month when Kurdistan started exporting oil directly from its newly built pipeline to Turkey.
However, now the Kurdish "peshmerga" army have shown themselves such an able fighting force – compared with the fleeing Iraqi troops – oil executives hope Mr al-Maliki will realise that he needs to keep the autonomous region onside.
"It seems awful talking about positives when there are hundreds of thousands of refugees, and nobody is enjoying anything that's happening here, but at the moment we're pretty comfortable with the situation," said one executive. "The Kurds have shown they would and can defend Kurdistan. They're an able force – which is a far cry from the Iraqis. Al-Maliki will see clearly that the Kurds have protected Kirkuk where his government could not."
Another oil executive close to the Kurdistan government added: "If al-Maliki wants to get the Kurdish army on his side, he knows he has to relent on allowing them oil exports. So people out here are seeing this could draw al-Maliki into the deal they wanted."
He suggested the Kurds could offer to help retake Mosul, Iraq's second city, which was overrun by the jihadist forces of the Islamic State in Iraq and the Levant (Isis), if Mr al-Maliki proved accommodating.
A liberation from the Iraqi oil system would result in greater profits for the region, which is keen to push its independent ambitions. That could also spur more activity for London Stock Exchange companies such as Genel, Gulf Keystone and Oryx, as well as giants like Exxon, Chevron and Total that are operating in the region.
However, not all executives are optimistic. One major player in the region with operations near the fighting said: "Perhaps this can create some sort of a bridge in the negotiations with Baghdad [over the Kurdish oil exports], but there are deep-seated personal animosities between the leaders. Al-Maliki is weakened but he's hardly a unifying figure." Some had already begun to question Mr al-Maliki's ability to keep a grip on Kurdistan's oil after it emerged recently that the Russian energy giant Rosneft had been buying its crude, circumventing the Baghdad ban.
Mr al-Maliki's administration has already blacklisted the Austrian trading firm OMV but neither it, nor Rosneft, works in Iraq.
Meanwhile two oil tankers, the United Leadership and United Emblem, are in a holding pattern in the Mediterranean with a million barrels each of Kurdish crude that Baghdad has managed to prevent from being unloaded.
Another executive said that Kurdistan's beefed-up security, including troop movements and roadblocks, was making it difficult to move people and machinery along the Erbil-to-Mosul road, which runs through some oilfields.
- 1 Man on naked bike ride gets ejected after becoming aroused
- 2 Charles Kennedy dead: Former Lib Dem leader dies at home aged 55 - latest news
- 3 Ayyan Ali: Pakistan's top model now appears in the courtroom rather than on the catwalk
- 4 Fifa corruption: Europe plots to stage an 'alternative World Cup' in place of Russia 2018
- 5 Jaden Smith wears gender fluid dress to high school prom with Hunger Games actress
Photographer who performed naked shoot in China's Forbidden City sparks outrage
Ed Miliband returns to the backbenches but it's all a bit awkward as he tries to avoid eye-contact with fellow Labour MPs
Man on naked bike ride gets ejected after becoming aroused
Charles Kennedy dead: Former Lib Dem leader dies at home aged 55 - latest news
Isis tortures 14-year-old Syrian boy and films it in graphic video for 'propaganda purposes'
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Why this year's general election was the most unfair in Britain's history
iJobs Money & Business
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...
£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...