The untapped oilfields of the semi-autonomous region of Iraqi Kurdistan are beginning to attract international oil companies (IOCs), which are becoming disillusioned with prospects in the rest of Iraq.
Several sources working in Iraq have said different strategies to access Kurdistan’s oil are being pursued by the IOCs and talks are already starting to take place. However, none will be ratified or made public until a formal deal is signed between the central government in Baghdad and the Kurdistan Regional Government (KRG) regarding any new oil discoveries.
“The Kurdistan region has a lot of untapped oil and every IOC would sign deals if they got a green light to do so by Baghdad,” says an oil source based in Irbil. “But whoever is doing business in the south of Iraq is not going to jeopardise that by signing deal with the KRG yet.”
The exploration contracts awarded by the KRG in the past five years have gone to smaller operators that would not usually be able to compete with IOCs. The UK’s Gulf Keystone, Norway’s DNO International and Turkey’s Genel Enerji are among the firms carrying out exploration work in the region. All have made significant discoveries.
“If Baghdad agrees a deal with Irbil, then you will likely see all of the smaller oil companies with exploration licences get swallowed up by the IOCs,” says the source.
Estimates vary on the amount of oil held in Kurdistan, but many experts have said the area contains between 30-35 per cent of Iraq’s total reserves of 137 billion barrels. No deal has yet been agreed between Baghdad and the KRG on oil sales.