Wednesday, January 27, 2010

What's Happening to Oil in Iraq?

Oil Company Near Settling Over Contract in Kurdistan

I came across this article as I was scanning the NYT this afternoon, and I thought I'd blog a bit about what's happening to hydrocarbons in Iraq (at least so far as my limited knowledge will allow me!)

Thus far a federal hydrocarbons agreement has not been reached. Yet weekly, we're seeing notices of oil companies staking out contracts in Kurdistan -- why? How?

Essentially, the way I see this, the northern Iraqi regional government (aka Kurdistan regional government aka KRG) is settling contracts as part of a stability move. By getting major companies from major companies (In this case Norway, but they've got companies from as diverse a mix as Korea, Turkey, UK, Australia, US...), the KRG is insuring that important and rich people have a stake in their continuity and stability. It seems like a pretty good strategy, except ...there's no federal hydrocarbons agreement! This article is just talking about oil in Dohuk, which is an "undisputed" KRG territory - but if the KRG starts trying to doll out contracts for say, will be chaos for everyone.

Until a federal hydrocarbons SHARING agreement can be reached - should the KRG be contracting with international companies, further mixing up the mixed up mess in Iraq oil interests? I'm skeptical.

On the other hand, investment needs to start ASAP because the country needs the revenue to start rebuilding. The KRG is, well, leading the way.

A last thought on something else that comes up in the article -- PETER GALBRAITH is getting quite a cut of the revenue.  This is a little bit interesting! Galbraith has a long history with the Kurds - often being the only American diplomat advocating for them (in the gap years between Operation Provide Comfort and the Iraq War - as things were "touch and go" between the Kurds and the US)...Galbraith has been a strong advocate for Kurdish autonomy (sometimes, I stress, the only American advocate for Kurdish autonomy who spent long periods of time IN Kurdistan before 2003) and now, he's cutting a profit for it. Just some food for thought.