By Shahriar Sheikhlar*

One week after Putin’s troops launches an invasion of Ukraine, the west is cautiously whispering the sanctions against Russia, as the European countries, even they believe the necessity of those sanctions, couldn’t suspend importing the energy fossil resources from Russia. Selecting the coldest days of winter for attacking Ukraine, shows not only the deep dependence of Europe’s energy security on Russia’s natural gas but proved the west leaders’ fault in diversifying EU’s energy suppliers. Russia’s Natural Gas share in the EU market, raised to 40% in 2021, against only 27% in 2011, which could be hiked to 50%, if U.S concerns didn’t ban gas flow in the Nord Stream II pipeline. Despite EU countries are avoiding removing all of the Russian banks from SWIFT, mainly to avoid the risk of even a short shutoff in Russia’s gas flow, which could shake their energy market, but now, U.S and European countries, more loudly think about new more reliable gas sources، but the choices are not abundant, or need a long time for developing their infrastructures to reach Europe.

While, expanding current suppliers’ capacity, mainly Iran and Azerbayjan, could be technically complicated, developing the recent growing Mediterranean natural gas reservoirs, such as North Africa, Israel and Cyprus-Greece, is facing reserve ownership challenges, bilaterally and with Turkey. Another reliable option, is Kurdistan’s natural gas, rich semi-autonomous region in northern Iraq. Developing of the Kurdistan’s gas reserves, which is estimated to about 3 TCM (2% of world total), kicked off at 2007, but advanced after 2019. Kurdistan’s main gas field, has been developed by PEARL Petroleum, an international consortium, mainly directed by U.A.E gas companies, Crescent Petroleum and Dana Gas. The field’s production is reached to more than 450 MMSCUFPD and planned to more than 700 MMSCUFTPD by 2023 and double of current amount, by 2025. The consortium, recently secured $250 million in financing from the U.S. International Development Finance Corp (DFC) for its development plan. This boosting plans, enabled the KRG to evaluate different scenarios, including supply internal demands (mainly for Power Generation, Industrial and Residential consumers), or feed Iraq’s Power Plants, which now are mainly receive natural gas from Iran, or eventually think the foreign markets, including Turkey and Europe.  Kurdistan’s geopolitical advantages, is a key factor in easy reach to Turkey and European markets. Also, the KRG’s natural gas reservoirs’ characteristics, which enabled its fast development, enhanced chance of this region in joining European strategic plan for diversifying their gas sources.

While, Iraqi federal government has failed during last 18 years in developing its natural gas fields, and even gathering and treating its huge associated gas capacities, which are second world flared amount (about 1.7 billion Cubic feet per day), supplying fuels for the power plants becomes a crisis. Iraq’s current demand for electricity is estimated above 40,000 MW/hr, while the current potential capacity is less than 30,000 MW/hr, but about one-third of this amount is missed, mainly for lack of fuel. That’s why Iraq’s acting electricity minister visited Qatar, on February 7, 2022, to talk about importing natural gas from Qatar. This plan, not only could satisfy Iraq’s increasing demand for natural gas, from one of the biggest producers, in parallel with their current pipeline from Iran but could make Qatar – Turkey’s pipeline dream come true, which has been archived by the Syrian internal war. Kurdistan’s geopolitical location, connecting Iraq to Turkey, could expedite the development of Kurdistan’s natural gas infrastructure and production plan if could be connected to the Qatar pipeline. In the future, Kurdistan’s natural gas network could join Iran’s gas pipeline in the role of the regional gas hub to the EU and Turkey. 

Despite Kurdistan Gas having significant advantages, but should pass through a rocky road. The main challenge is the Iraqi federal government’s view on Kurdistan’s oil and gas. The obese government, heavy public payroll, undeveloped private sectors, and endemic corruption are the main encourages for the Iraqi federal government to be greedy for Kurdistan’s oil and gas. While, about one trillion dollars of Iraqi federal government incomes from oil revenue, during the last 18 years, are without significant improvement in public welfare or economic growth have been achieved, the Iraqi parties continuously attacking Kurdistan’s oil and gas but with no plan for more effective directing of the federal oil sector, which is producing more than 4,000,000 barrels of oil per a day.

On the other hand, though, the second part of article 112 of the Iraqi federal constitution, which was approved in 2005, clearly authorized the Iraqi semi-autonomous regions, still only including the Kurdistan Regional Government, to manage the non-producing and future fields of oil and gas, but Iraqi central government has continuously sought ways to undertake the Kurdistan’s oil and gas. Several claims in internal and international courts, threatening International Oil Companies s (IOCs) working in Kurdistan, and complaints against Turkey, are only some attempts in pushing KRG to hand over Kurdistan’s oil and gas dossier to the central government. The last step against the region’s oil and gas was taken recently by the federal court. The court’s decision, 15 years after the region’s oil and gas law approval and 10 years of registering the complaint in the court, found the law to be “unconstitutional,” and therefore struck down the legal basis for the independence of the Kurdistan Region’s oil and gas sector, Rudaw English reported. Moat of analysis on the main causes for this court’s approach, which named “unconstitutional” and “unjust” by KRG, addressing the momentous step in Kurdistan’s gas industry. The court’s decision comes some days after the visit of the KRG’s President, Mr. Nechirvan Barzani, from Turkey’s President, Erdogan, on February 2nd, 2022, where they discussed mutually the opportunities for Kurdistan’s natural gas in Turkey’s and European markets. The Erdogan’s interview after his visit from Ukraine, two days after his meeting with President Barzani, ignited objections against Kurdistan’s natural gas industry in Baghdad, especially when it followed by the KRG’s Prime Minister, Mr. Masrror Barzani’s visit to Qatar, where he met with Qatar’s Emir, Sheikh Tamim Bin Hamad, only some weeks after he met with Abu Dhabi’s crown prince, Sheikh Mohammed Bin Zayed.

While, Kurdistan’s natural gas requires rapid and radical improvements in administration, as well as fast expansion of infrastructures, to meet the export requirements, the recent confrontation of Baghdad, could slow down the Kurdistan gas’ development plan. Natural gas’s role in EU energy security and main suppliers’ stiff competition on the market share, which was interpreted as the main cause of Syria’s destiny, when were nominated as a potential gas route to Europe, could make Kurdish leaders more cautious on their gas expert project.

Abandoning of Kurdish people in the Erbil and Baghdad’s conflicts against controlling Kurdish region outside the KRG, mainly the rich oil city of Kirkuk, clearly could show the unfriendly relationship between the two capitals and lack of Kurds to west supports for geopolitical conflicts. Then, the potential confrontation against natural gas, not only could deepen the bilateral conflicts but could threaten the plans for supplying natural gas to the EU, from both Kurdistan and Qatar. Now, it’s time for the US and EU to bring the two governments closer and resolve main constitutional disputes, as they have done during the last two decades. Calming down the conflicts could accelerate the expansion of the oil and gas field in disputed areas, according to article 140 of the Iraqi federal constitution, releasing significant potential to supply the EU’s market.

Conducting this arrangement, of course, would be opposed by Russia, which has a critical position in Iraqi and KRG’s oil and gas sector. Russia’s Rosneft and Gasprom giant companies have a significant share in big oil and gas fields of both areas, which could be considered in any export or transit of gas from Iraq. Scaling down the US and EU involvement in Iraq’s oil and gas, sought as a strategic plan, opened the door for Russian and Chinese companies to Iraq’s oil and gas industry, what’s currently to be managed if the west looks Iraq to play a role in their European energy puzzle.

Kurdistan’s natural gas could be a reliable and stable source for Turkey and the EU, only if US and EU are serious in withstanding the challenges, internally or with the competitors. Next, months could be vital for the EU’s energy security, to be diversified or dependent on Russia.

* Shahriar Sheikhlar is independent energy security and strategic development analyst, in Erbil, Kurdistan Region of Iraq. Mr. Sheikhlar, holds a postgraduate in Management, Strategy. He is giving advice and services to some local and international think tanks and news agencies.