IRBIL, Iraq (AP) — Kurdish officials are inviting foreign oil companies to explore untapped reserves in their northern region, angering Arab countrymen and raising concern about chaos in Iraq’s oil industry.
Kurds, their self-ruled federation firmly enshrined in Iraq’s Constitution, say they are reclaiming their right to control northern oil fields after successive Iraqi regimes purged Kurds from the industry to bring it under exclusive Arab control.
Despite the Iraqi industry’s many problems — falling production, crumbling infrastructure and relentless insurgent attacks — the prospect of drilling in the world’s second-largest proven reserves has led eight small foreign companies to invest in Kurdish-ruled territory.
One of them, Det Norske Oljeselskap, or DNO, of Norway, struck oil in December, less than a month after starting to drill in Zakho near the Turkish border.
Major oil companies have shied away from Kurdistan until the new Iraqi parliament elected in December clarifies articles in the constitution on the control of oil and until security improves.
The constitution stipulates that the federal and regional governments will share management of existing oil fields, as well as strategies for developing future areas and distributing the profits.
The document, however, also makes ambiguous references providing compensation for areas such as the Kurdish and Shi’ite regions that were “damaged” and “unjustly deprived” under Saddam Hussein.
The constitution, ratified in a referendum in October, defers a decision on the future of Kirkuk, the center of the northern oil fields, which Kurds want to be part of the Kurdish federation.
Because each region will control future oil discoveries in its own area, the Sunni minority, which lives in Iraq’s oil-poor center, may not benefit equally from the riches.
However, Western oil officials in northern Iraq say the entire country is floating on unexplored oil reserves, including the central regions.
Iraq is estimated to have 265 billion barrels of unproven reserves and 125 billion barrels of proven reserves.
Of those, an estimated 36 billion barrels are in northern Iraq. Less than 10 percent of the region has been explored, according to Heritage Oil, one of the eight foreign companies carrying out studies in Kurdistan.
Iraq is also estimated to have 100 trillion cubic feet of natural gas.
“Saddam regarded the oil in Kurdistan as his personal property,” said Delshad Abdul-Rahman Mohammed, head of the Oil Projects in the Kurdish regional government of Sulaimaniyah.
“Kurdistan’s share of the profits was the money Saddam received to buy chemical weapons to decimate the Kurdish people.”
Kurdish officials in Sulaimaniyah and Irbil insist that they will share the oil wealth with the rest of the country and that agreements made with foreign companies are made in coordination with the central government in Baghdad.
“This oil belongs to all Iraqis. Profits from the oil don’t only go into the pockets of Kurdistan,” said Mr. Mohammed.
He said oil companies signed memorandums of understanding with the Kurdish regional governments and the central government “so that the regional government will not have any problems in the future.”
In addition to DNO, oil companies exploring in Kurdistan include Petoil and General Energy Corp., both of Turkey; Woodside of Australia; and Canadian companies Western Oil Sands Inc. and Heritage Oil Corp., which has formed a joint venture with Eagle Group of Iraq, based in northern Iraq.
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