Now controlled by Kurds, Kirkuk oil fields are up for grabs

Plentiful oil reserves provide another reason for Kurdish forces protecting Kirkuk to hold on to territory long sought as a part of their autonomous region.

A member of the Iraqi Kurdish forces, known as the Pershmerga, stands guard near Tuz Khurmatu, 70 kilometres south of Kirkuk. Marwan Ibrahim / AFP / June 24, 2014
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DIBIS, KIRKUK PROVINCE // Vast oil reserves in northern Iraq could be swallowed into the autonomous Kurdish region if the country’s security situation continues to deteriorate.

Kurdish forces now call the shots at the labyrinth of oil installations in the disputed Kirkuk province that they stepped in to protect when the Iraqi military disintegrated after the Islamic State of Iraq and Levant (ISIL) captured Mosul city on June 10.

With ISIL continuing to take more territory in Iraq’s predominantly Sunni areas, the government in Baghdad appears increasingly unable to reassert authority over Kirkuk and its petroleum facilities.

Even if it could, the Kurds running the area appear unlikely to allow such a return, raising the prospect that the current conflict may lead to wider squabbles over who reaps Iraq’s vast oil riches.

Kirkuk’s Kurdish governor, Najmaldin Karim, said the area, which is claimed by the majority Kurds as well as Arabs and Turkmen, could become part of the Kurdistan Regional Government (KRG) if the extremists’ onslaught pushes the country closer to sectarian war.

“I think the priority for the Iraqi army, if it reforms itself, is really not in this area. This area is safe,” Mr Karim told The National in his Kirkuk office.

“We still have a lot of contacts with Baghdad, but they have a lot of other issues to worry about. We’re doing fine here.”

The Iraqi oil ministry’s North Oil Company operated the five main oilfields in Kirkuk, which produced more than 500,000 barrels of oil a day before the ISIL attack, a former official in the company said.

The revenues went to the central government, led by prime minister Nouri Al Maliki, and were then divided up as part of the budget dispersals for provinces such as Kirkuk and the KRG.

But North Oil’s production has almost halted because of the fighting. “There’s really nothing coming out right now,” the company official said.

Militant attacks over the past year had halted the daily flow of 350,000 barrels through the 970-kilometre Kirkuk-Ceyhan pipeline, which runs north to the Turkish port.

The supply of another 150,000 barrels daily through a pipeline to the Baiji refinery, about 90km west of Kirkuk, also halted last week because of ISIL attacks on the facility.

Baiji is Iraq’s largest refinery and supplied about seven million litres of petrol a day for the local market. Since it stopped operating there have been major petrol shortages in northern areas such as Kirkuk.

The former North Oil official, who retired recently after decades with the company, expressed doubts about Baghdad’s continued control over Kirkuk’s oil.

“It’s unclear at the moment who will run things when the situation calms,” the official said.

Kurdish authorities have been careful not to make overt attempts to take over management of Kirkuk’s oil, including the Kirkuk Field that holds nearly 10 billion barrels of proven reserves. That would enrage Baghdad and raise the risk of legal repercussions because of contracts in Kirkuk between the central government and local and foreign companies, including BP.

“While anything is possible in the current uncertain environment in Iraq, such a move will have major legal and political consequences,” said Carole Nakhle, an energy economist and non-resident scholar at the Beirut-based Carnegie Middle East Center.

Analysts say the ISIL campaign will affect Iraqi oil production and, in turn, global supplies.

Iraq is the world’s seventh-largest oil producer and holds the world’s fifth-largest proven reserves, which range between 141 billion and 150 billion barrels, according to Columbia University’s Center for Global Energy Policy.

The country has increased output substantially in recent years – accounting for 4 per cent of global production – after decades of neglect, international sanctions against former dictator Saddam Hussein and two wars with the United States.

But the Kurdish region’s attempts to sell oil from its territory independently of Baghdad have led to tensions with the central government. The KRG completed its own pipeline to export oil through Turkey this year and this week Baghdad condemned the Kurdish government for selling a shipment to Israel.

Back in Kirkuk, workers at oilfields now in Kurdish control described how easily the central government forces had given them up as the ISIL offensive began.

One engineer at the Bai Hasan field near the village of Dibis said the residents had formed patrols to guard dozens of oil wells after the Iraqi military presence in the area collapsed on June 10. The Kurdish Peshmerga forces have deployed away from the field, to the west, where they defend against ISIL incursions, he said.

“I go to these wells and there’s hardly anyone there to protect them,” the engineer said.

He also expressed a lack of confidence in the Iraqi oil police, a special force deployed by Baghdad to protect oil infrastructure across the country. “There are 12 of them [oil policemen] at the field, but this is a huge field. There’s no way they can defend it,” said the engineer.

Gerald Butt, a London-based Iraq analyst, also doubted the ability of the oil police to protect the country’s oil fields, let alone withstand one of ISIL’s carefully planned and brutal assaults.

“The oil police are in theory a cohesive force, but they are underfunded and are no match for ISIL,” he said. “So when the chips are down, those protecting the oil sector can do very little.”

Kenneth Pollack, a senior fellow and Iraq expert at the Washington, DC-based Brookings Institution, described the oil police as “rent-a-cops” who, lacking “capacity or commitment” to fight, may be even less prepared to fend off militant attacks than the military.

“The Iraq army is basically a cut above the petroleum security forces,” he said.

The head of intelligence for the oil police in northern Iraq, Colonel Kaka Ramadan, disagreed. Based in Kirkuk’s North Oil Company compound, his force of 2,800 officers conduct non-stop patrols of the area’s oil installations, he said.

“We won’t flee,” he said, referring to soldiers and police who have fled ISIL attacks in other parts of the country.

That may be because half of his oil police are Kurds from the area, some of whom, including himself, have served in the Kurdish paramilitary force, called the Peshmerga.

“I am Peshmerga – it’s in my spirit,” said the 43-year-old, who was in close contact with the Peshmerga forces deployed beyond the perimeter of the facility.

In 1996, he said, he was detained and tortured by Saddam Hussein’s forces for his involvement in Kurdish politics. They sewed his lips together as punishment.

That incident may explain why he wants Kirkuk, as well as Kurdish areas in other countries, to become united under the security of an independent Kurdistan. Presumably that would include the area’s oil, too.

“That’s my dream,” he said.