Iraqi Kurdistan’s crude oil is plentiful and easy to get at. The man managing it, a former North Sea engineer and consultant turned politician, knows how to attract investment. But the companies working there under contracts with the semi-autonomous Kurdistan Regional Government (KRG) are not getting much out, and they are not getting paid, all because of a dispute with the national government in Baghdad. Despite the row, ever bigger oil companies are moving into the northern region, angering Baghdad.
Output in this region bordering Turkey, Syria and Iran is an on-off trickle for now in global terms but, given the right investment and an export route, it could reach 1 million barrels per day (mbpd) by 2014, and 2 million five years later, according to Ashti Hawrami, the KRG natural resources minister. In 2007 Hawrami came within a whisker of making Royal Dutch Shell his first really big signing, but the board ruled it too risky. Shell later became, and remains, the biggest oil investor in southern Iraq.
In November last year, ExxonMobil signed a deal for six exploration blocks. Last month, Chevron moved in too, buying 80 per cent of two blocks, Sarta and Rovi, from India’s Reliance. And now, Total of France piled in, buying 35 per cent of the Harir and Safen blocks from Marathon Oil, along with Gazprom of Russia, which farmed in to the Garmian block operated by Western Zagros.
Suddenly, four of the world’s top 10 international oil companies by market value have set up shop in Arbil. Baghdad is furious, and has made it clear that both Exxon and Total are risking their involvement in multi-billion dollar projects.