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A Missing Point in Energy Debates: Northern Iraq Gas - Batuhan Özkan

As it is known, the Middle East is a region that is famous for its natural resources reserves and conflicts/disagreements, which emerge as consequences of them. Saudi Arabia, Qatar, Kuwait, United Arab Emirates, and Iran have authoritarian regimes and natural resource-based economies. In addition to all these, we have a case that differs from given countries with its fragmented society, critical geopolitical location, unstable domestic politics, and structure, which is extremely open to foreign intervention, Republic of Iraq. In this essay, the main focuses are natural gas, which becomes of secondary importance due to the oil and repercussion of Iraq’s fragmented type of society: Kurdistan Regional Government (KRG).

Northern Iraq is a region that attracts the attention of world public opinion and different regional/international actors because of its oil reserves in consideration of the critical role of oil in production processes. According to Deloitte’s report on oil and gas review in the KRG, the amount of piped export of crude oil is 160,306,283 bbls, and the gross value of crude oil sold is 8,349,749,733 USD. However, another natural resource necessary for heating, motor fuels, electricity production, and so forth is natural gas, and Northern Iraq is rich in natural gas reserves. KRG is able to produce 400 million cubic feet of gas per day in Khor Mor (gas field in Northern Iraq). CEO of the Dana Gas company, the operator of Khor Mor, said that doubling natural gas production may export surplus to either Iraq or Turkey. In this context, it can be said that natural gas reserves and production of the region are also worth considering besides oil production.

KRG is a political entity that is located in a geopolitically significant region. Since it has borders with both Turkey and Iran, the region plays the role of a transition point. The Russian energy company, Rosneft, invested in KRG to build a gas pipeline planned to transfer the region’s natural gas to Europe over Turkey (2018-2019). This project’s route and investor show the region’s natural gas potential concerns many players in the energy market, and they understood the importance of natural gas trade.

When we move from foreign trade relations to the internal dynamics of Northern Iraq and the central Iraq government, we can approach this issue from two different angles. Firstly, according to Harry Istepanian, an analyst from Iraq Energy Institute, presents an opinion that the existence of natural gas in the northern part of the country can be interpreted as a chance for alleviating Iraq’s energy dependency on neighboring countries Iran. Iran is a country that is influenced adversely by American sanctions, but Iraq is an exception due to its fragile economic structure. So they have a waiver for trade relations with Iran. As it is mentioned before, if natural gas production in KRG increases, then Iraq will have a priority for importing the gas. This means a decrease in Iraq’s import item from Iran. The second aspect of the issue is about KRG. Natural gas is a resource that can be used for electricity production. Prime minister Masrour Barzani says that they have improved themselves regarding energy production. At the same time, he clarifies that they cannot reach their full capacity (6,500-7,000 megawatts) due to the shortage of fuel to operate fields. They are able to operate 3,500. In this context, solidarity between Erbil and Baghdad can benefit both of the governments. Not only for their consumption but also it will have positive effects on electricity import from Iran, which is related to the first aspect.

In conclusion, the natural resources wealth of KRG cannot be reduced to oil. However, the region has facilities about natural gas. If Iraq takes the lead in improving activities about natural gas in Northern Iraq (extracting, operating, etc.), then international actors can support this move with foreign direct investments. In this context, focusing on natural gas resources can be a cure for some problems of KRG and Iraq Republic. At the same time, international players may benefit from Northern Iraq’s resources via trade relations.


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