Turkey to invest in Kurdistan production

Turkey invests in Kurdistan's hydrocarbon production with ExxonMobil

Turkey and ExxonMobil have agreed to develop Kurdistan's hydrocarbon resources.
Turkey and ExxonMobil have agreed to develop Kurdistan's hydrocarbon resources.

Turkey's Prime Minister Recep Tayyip Erdogan announced on 14 May that a Turkish state-owned oil company has struck a deal with the US supermajor ExxonMobil to develop hydrocarbons in Iraqi Kurdistan, according to a report published by IHS country analyst Jamie Ingram and energy analyst Siddik Bakir. 

Erdogan said that "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 is 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", in quotes carried by the Wall Street Journal, reported Ingram and Bakir.  

"The regional government in northern Iraq has a constitutional right to 17% of [hydrocarbons] revenues. Since it has the ability to readily spend that share, it's in its right to use that in exchanges with Turkey. It is possible for us to have mutual agreements, there's nothing to prevent that", the Prime Minister is reported to have said. Ingram and Bakir also noted that, according to various sources, the Turkish Petroleum International Company (TPIC), an arm of state-run Turkish Petroleum (TPAO) will enter a partnership with the KRG and ExxonMobil to explore and develop hydrocarbons in ExxonMobil's six untapped blocks in Iraqi Kurdistan (see table below).

Erdogan reportedly also added that "our oil company already has an agreement with Exxon Mobil in place ... This is a step with the KRG on exploration work", in quotes carried by Reuters. Given the Iraqi central government's opposition over independently-signed oil deals in Kurdistan, it was no surprise that Baghdad complained that "the deal is illegal and is not in line with the Iraqi constitution… and any agreement signed without the approval of the central government is illegal", according to Faisal Abdullah, spokesman for Hussein al-Shahristani, Iraq's deputy prime minister for energy, carried by the IHS' same source.

Ingram and Bakir have said that this deal is arguably the culmination of the budding energy-fuelled relationship between Turkey's AKP-government in Ankara and the KRG in Erbil, which has evolved since 2007 but especially since 2009 in spite of Baghdad's opposition. For the first time, a Turkish national oil company (NOC) would become a key oil explorer in its border neighbourhood and become part of the burgeoning hydrocarbons sector in Iraqi Kurdistan. Given Turkey's high demand for energy and its dependence on oil and gas imports, Turkey has developed a strategic alliance with the KRG over the past years hoping to benefit one day from the potential oil and gas exports coming from Kurdish fields in northern Iraq. Turkey's move also signifies that it has positioned itself clearly on the KRG side of the ongoing feud with the regional administration and the central government in Baghdad, which claims that it alone has the authority to sign oil deals and control exports from Iraq.


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