Iraq's Kirkuk oil deal with BP must include Kurdistan, says Barzani

Iraqs Kirkuk oil deal with BP must include Kurdistan, says Masrour Barzani — Masrour Barzani, caretaker prime minister of Iraqi Kurdistan region, December 9, 2024. Photo: K24

DAVOS,— Negotiations between Baghdad and British energy giant BP over a major deal to redevelop Kirkuk’s oil and gas fields must involve Iraq’s semi-autonomous Kurdistan region, Kurdish caretaker Prime Minister Masrour Barzani told Reuters.

Barzani’s comments underscore a potential flashpoint in the long-standing dispute between Iraq’s federal government and the Kurdistan Regional Government (KRG) over control of the country’s oil and gas resources.

Kirkuk, a region rich in hydrocarbons, has long been at the center of tensions between Baghdad and Erbil, the capital of the Kurdish region. Kurdish forces briefly controlled Kirkuk from 2014 until 2017, when federal troops retook the area following a failed Kurdish independence referendum.

“The area that Baghdad is discussing with BP is disputed territory,” Barzani said during an interview at the World Economic Forum in Davos. “According to the constitution, decisions regarding disputed territories cannot be made unilaterally by either Baghdad or Erbil.”

Barzani emphasized that the KRG is not opposed to redevelopment efforts in principle but criticized the lack of coordination. “We need a trilateral mechanism for discussions,” he said, calling for meetings between the federal government, the KRG, and BP to resolve the matter.

According to a source familiar with the negotiations, Kurdish officials may seek separate discussions with BP in a bid to influence the outcome. The KRG reportedly plans to leverage its ties with the U.S. government to pressure both Baghdad and BP to include the Kurdish region in the talks.

Iraq and BP are expected to finalize a multi-billion-dollar agreement covering four Kirkuk oil and gas fields by early February. However, Barzani expressed skepticism about the deal’s legality, describing it as “unconstitutional” but admitting that the KRG lacks the leverage to halt the agreement.

BP and Iraq’s Oil Ministry did not immediately respond to requests for comment. Last week, Iraqi Oil Minister Hayan Abdel-Ghani told Reuters that the deal with BP would surpass the scope of a 2023 agreement with TotalEnergies in Basra, which was valued at approximately $27 billion.

BP has a long history in Iraq, having been part of the consortium that discovered oil in Kirkuk in the 1920s. The company estimates the region holds around 9 billion barrels of recoverable oil. BP also operates the Rumaila oilfield in southern Iraq, where it holds a 50% stake in a joint venture.

The BP deal adds another layer of complexity to strained relations between Baghdad and the Kurdish region, which have already been marred by a dispute that halted oil exports from the KRG in 2023.

In March 2023, Turkey suspended oil flows through the KRG’s pipeline after the International Chamber of Commerce ordered Ankara to pay Baghdad $1.5 billion in damages for unauthorized Kurdish oil exports between 2014 and 2018.

Negotiations to resume pipeline operations have stalled amid conflicting demands from the federal government, the KRG, and foreign oil companies. Barzani stated that the Kurdish region has suffered economic losses exceeding $20 billion due to the suspension and criticized Baghdad for failing to compensate the KRG.

“Iraq has yet to compensate Kurdistan for these losses, and no resolution has been put forward to address the issue,” Barzani stated.

Barzani also criticized a recent move by Iraqi Prime Minister Mohammed Shia al-Sudani, who inserted an article into a draft bill under parliamentary consideration. According to Barzani, the last-minute addition rendered the bill “totally unacceptable” to Kurdish officials.

Barzani accused Baghdad of scapegoating the Kurdish region over Iraq’s overproduction of oil beyond its quota under agreements with the Organization of the Petroleum Exporting Countries (OPEC).

“With Kurdistan producing merely 280,000 barrels per day (bpd), it’s difficult to understand how the region could be accused of overproduction.” he said. “These are unfortunate moves by Baghdad to mislead public opinion and the international community.”

The dispute over Kirkuk’s oil fields comes against the backdrop of longstanding allegations of corruption within the KRG. Critics, including Kurdish politicians and watchdog organizations, accuse the region’s ruling Barzani family of mismanaging oil revenues and using the proceeds to enrich themselves rather than benefiting the Kurdish population.

Observers have described Iraqi Kurdistan as one of the most corrupt regions in Iraq, citing leaked documents and reports from watchdog groups that suggest billions of dollars in oil revenues are unaccounted for. The Barzani family, often referred to as “Kurdish oligarchs,” has faced repeated accusations of nepotism and financial misconduct.

Massoud Barzani, the former president of the KRG and patriarch of the Barzani clan, is widely regarded as the most powerful figure in Kurdish politics, even in his unofficial capacity. His son Masrour Barzani serves as the region’s prime minister, while his nephew Nechirvan Barzani holds the presidency.

Critics have also called out the lack of transparency in the KRG’s oil sector. Many politicians and ordinary citizens believe that oil contracts and revenues are shrouded in secrecy, with limited oversight from the Kurdish parliament or public scrutiny.

(With files from Reuters | Agencies)