By Padraig O’Hannelly.
Tensions between Iraqi Kurdistan and the central government in Baghdad have increased significantly in recent times, both politically and commercially.
On the political front, the “difference of opinion” about the sending of Iraqi troops to the border between Iraqi Kurdistan and Syria was eclipsed by reports that the Kurdistan Regional Government has been secretly buying weapons.
Commercially, we’ve seen two more major oil companies declare their hands, with both Chevron and Total taking stakes in Kurdistan in defiance of warnings from Baghdad. The Oil Ministry used some strong language in its condemnation of the Chevron deal, and is reportedly in the process of removing Total from the Halfaya field.
Attempts to put political pressure on ExxonMobil, the first of the majors to enter Kurdistan, also appear to have failed.
Taken together with the disappointing response to the fourth energy bidding round, these deals challenge any assumption that Baghdad can simply pull rank on Erbil when it comes to securing the involvement of top-tier oil companies; given a choice between poorly-paying service contracts in the South and potentially lucrative production sharing contracts in the North, it’s increasingly clear which they prefer.