Middle East analyst, James Gavin, comments:
“In its long-running stand-off with Baghdad, Kurdistan urgently needs to secure a viable export channel for its crude. Turkey's willingness to load shipments of KRG-origin oil -- the second shipment dispatched from Ceyhan port on 9th June -- provides that outlet. The recent events in Iraq, with ISIS making sweeping gains, have left the Kurds in an even stronger position to dictate terms to prime minister Maliki.
"Yet the legality of the sales is still questioned, and a buyer has still not been found for the first tanker shipment. As yet, the Kurds have not found a long-term solution to their oil marketing problem -- even if in the crude calculus of Erbil-Baghdad relations, the Kurds are much better placed after Maliki's humiliation in Mosul”.
Pipeline exports to Turkey are being operated by Anglo-Turkish company Genel Energy and British Gulf Keystone Petroleum. Relations between the KRG and Ankara have steadily increased and the volume of trade between the two is approximately 8 billion USD, whilst three quarters of all Kurdish consumer goods come from Turkey.
The strengthening of business relations with Kurdistan has directly improved Turkey’s relationship with its own Kurdish population and assisted Turkey in its goal to reduce its reliance on energy imports from Iran and Russia. As the security situation worsens in Iraq, Ankara will undoubtedly become increasingly nervous as it considers how Turkey should support its ally.
James Gavin comments on Turkey's energy needs:
“Diversifying its energy imports is an important issue for Ankara, and it has long seen the KRG as a strategic source of energy supply to Turkey. But the sanctioning of the dispatch of Kurdish crude in storage at Ceyhan does not necessarily play into this agenda; it is, though, a means for the Turkish government to apply pressure on Baghdad, and to give its Kurdish allies material support”.
The security situation in Iraq is extremely grave. Coupled with the humanitarian crisis now facing Kurdistan as over 300,000 refugees have fled there from Mosul, an emboldened Kurdistan is now in a position to negotiate improved terms with Baghdad on the revenue-sharing agreement of its oil exports. Given the important role its peshmerga troops are playing in securing crucial strongholds in Iraq together with the relative security Iraq’s citizens can hope for within its borders, the possibility of Kurdistan acting increasingly unilaterally regarding its crude oil exports is highly likely.
Whether this independence lays the ground-work for Kurdistan to pursue its ambition of becoming a sovereign state in the coming months remains to be seen.
Strategic Analysis’s researcher Plamena Solakova contributed to this article.