Oil Dispute: Agreeing to Disagree, for now

One must also take into account that there are thorny issues pending between the two parties, such as the disputed areas which inevitably deepen mutual suspicions. The reality on the ground suggests that since 2003 Baghdad has not offered enough evidence of its willingness to learn from the experience of the region.

Beyond the political factor of the crisis, there is an institutional factor, since the administrative, investment and economic experience of the region currently looks like it has made great progress in overcoming bureaucratic obstacles that still shackle Baghdad. Still, the Iraqi government wants to hinge the outcome of this crisis on political considerations alone.

Economic rhetoric is taking place between the two parties in two completely different ways. The style that led the Kurdistan region to the point of oil export today initially went through early decisions a few years ago, independently taken to conclude contracts with international oil companies. These have been concluded through mechanisms that are different from those concluded by the Iraqi government within its different licensing rounds. These contracts still have not been approved by Baghdad to this day, as evidenced by the non-inclusion of the dues of the companies within the Iraqi budget.

The Minister of Energy and Natural Resources in the Kurdish region implicitly referred to this problem. During the energy conference held Dec. 2, he said the region was currently capable of exporting 300,000 barrels per day through the newly established pipeline with Turkey. He added that the region would be able to export 1 million barrels in 2015.

According to high-ranking Kurdish politicians, these ambitious figures would not have been achieved had it not been for the early steps taken by the region in its previous oil contracts. It should be noted that the region — which, back in 2003, was not expected to be among the areas where large oil quantities would be found, since it did not have confirmed large oil fields — managed to achieve a production level that will reach as many as 1 million barrels [per day] in 2015. This comes at a time when the production of the Iraqi Oil Ministry is still below 2.5 million barrels per day and is expected to reach 3.5 million barrels in the same period in previously explored fields comprising huge oil stocks.

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