DUBAI and LONDON // Through war and peace, northern Iraq's Kirkuk oilfield - endowed with 10 billion barrels of reserves, equal to half of America's total - has effectively lain fallow.
Proposals have been floated to revive today's anaemic production of 280,000 barrels per day (bpd) but progress has been blocked by a disagreement over whether the federal government or the Kurdistan regional government has rights to the land.
"Years passed and still we are in limbo," says Ali Salhi, the chairman of the oil and economic development council of the Kirkuk governorate. Today, his hopes are buoyed by the success of Kurdistan, which has partnered the world's biggest oil companies in the face of opposition from Baghdad.
"With this new era and new Kirkuk and new Kurdistan - with these huge resources - the local people should become a beneficiary," Mr Salhi said at a conference in Dubai.
Kirkuk is the next battleground in the spat between Baghdad and Erbil, the Kurdish capital.
This year, the Iraqi oil ministry hosted BP executives in Kirkuk to evaluate the possibility of doubling production to 600,000 bpd.
The Kurdish oil ministry said such a deal would require its approval. It is planning to award a contract to a major to treble output at the Khurmala dome, one of three geological formations in the Kirkuk field. Such moves exacerbate long-running tensions over the fate of Kirkuk. In Tamim, the province that is home to the field, a referendum over whether to join Kurdistan or remain federally governed has been delayed since 2007. For Mr Salhi, Kurdistan has already won.
"I am very optimistic [for] all the companies working in the north - all the rights and the contracts they have will be [ made legitimate]," he said.
In the past year, ExxonMobil, Chevron and Total have all signed agreements to explore acreage in Kurdistan, in spite of the central government policy of excluding companies operating there from future licensing rounds in the south. Oil majors complain the onerous terms imposed on them by Baghdad leave little room for profitability.
This week, Iraq's central government ratified an agreement that releases payments to international oil companies in Kurdistan.
Oil exports, which were suspended last month over the payment dispute, will now resume at previous levels of 140,000 bpd, said Ashti Hawrami, the Kurdish minister for natural resources. Exports will rise to 200,000 bpd next month, and increase to at least 250,000 bpd next year. Kurdistan is also forcing the central government's hand with a planned 1 million bpd export pipeline to Turkey next year, which will allow it to export crude without using infrastructure controlled by Baghdad. A limited amount of oil product is already flowing into Turkey from Kurdistan in exchange for petrol, signalling that Ankara is supportive of the Kurdistan regional government's efforts.
The Kurds believe their ambitious production targets give them additional leverage against the central government.
"When you have a volume increase, everybody is forced to make the right decision," Mr Hawrami said at a conference in London.
A national oil law enshrining the legitimacy of the profitable contracts signed by the Kurdish regional government and oil companies, including those owned by the UAE, could be signed by the end of the year. A committee including Mr Hawrami and his Baghdad counterpart is being set up to revive efforts to revive the long-stalled law, said the minister.
"I believe this export initiative and companies being paid according to their contracts is a big breakthrough to pave the way to get the draft oil and gas law working," said Mr Hawrami.
