Turkey defies US with Kurd Oil Deal

Turkey has announced an oil exploration deal with the Kurdistan Regional Government and Exxon Mobil. This appears to be a follow up to the recent willingness of Mr Erdogan to engage in talks with the PKK and remove some of the harsher laws against Kurdish culture and political rights.

This unexpected news has surprised many as it goes against Turkish policy in not challenging the authority of the Iraqi central government.

The Iraqi government has declared the deal illegal because it does not have the approval of the central government. The KRG, which has headquarters in the Kurdish city of Erbil, is equally adamant it has the right under the post-2003 federal constitution to conduct its own exploration and sell its oil and natural gas to whomever it wants

Turkish Prime Minister Erdogan, will be meeting US President Obama later this week and will no doubt be reminded that US policy does not approve of oil exports from Iraq without government approval. The US is trying to minimise the risk of accelerating the disintegration of Mr Maliki’s government in Baghdad though this process has gained considerable momentum on its own.

In his announcement, Mr. Erdogan emphasized that Turkey backs the Kurds’ position and that Turkey can pursue deals directly with the Erbil-based Kurdistan Regional Government, in this case through Turkiye Petrolleri AO (TPAO).

The logic for both parties to the deal, Turkey and the Iraqui Kurds, is overwhelming.
Turkey’s huge current account deficit largely matches its energy imports. By tapping more of the Iraqi oil and gas in KRG territory, Turkey will gain in both price and security – it currently relies on Russia and Iran for gas.

Striking an agreement with Ankara offers Iraq’s Kurds a gateway to export its huge reserves of crude oil directly to world markets via Turkey through a new pipeline it hopes to build. Most of the region’s oil is normally sold domestically.

Once Ankara completes the promised oil and gas pipelines from Iraqi Kurdistan to export terminals on Turkey’s Mediterranean coast, the KRG will be totally free of the only outlets available right now, which Baghdad controls.

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