Kurdish Oil Pipeline Could Split Iraq

Nearly 10 years of oversight from the U.S. military in Iraq has done little to erase simmering sectarian issues in Iraq. A trilateral democratic government composed of Shiite, Sunni and Kurdish leaders was expected to keep Iraq self-contained and out of trouble. Many of the initial sectarian issues left over from the early stages of the U.S.-led conflict are still on the table, however. Though oil production is gaining ground, the country still lacks a comprehensive hydrocarbon law. Now, Kurdish leaders in the semi-autonomous north aim to defy Baghdad by exporting oil to Turkey through a new pipeline by 2013. Given simmering acrimony between the Kurdish government and Baghdad, that pipeline may be the tether that formally pulls Iraq in two.

A delegation from the International Energy Agency met with Iraqi delegates in Istanbul early this month for an informal session on policy-making in the Iraqi energy sector.  The IEA is in the process of preparing a special report on Iraq, which is due out in October. In December, the IEA said crude oil production in Iraq could reach an average of 4.36 million barrels per day by 2016. That same month, Shiite Prime Minister Nouri al-Maliki accused his Sunni Vice President Tariq al-Hashemi of operating a death squad. Hashemi, the subject of a Red Notice issued by Interpol, is now sitting comfortably in the Turkish capital, where he enjoys widespread support.

Kurdish President Massoud Barzani, in April, said he felt the charges against Hashemi were part of a ploy by Maliki to consolidate his power in Baghdad. When Maliki visited the northern city of Kirkuk early this month, Kurdish leaders said they were frustrated that the Shiite prime minister's government "failed to even make any mention" of the territorial issues that have stoked internal rivalries. Now, Kurdish leaders said they could start exporting oil through a new oil pipeline through Turkey by next August. The Kurdish government already stopped exporting crude oil because of payment disputes with Iraq and, if the pipeline does move forward, the Kurdish government make be making its pledge of allegiance to Ankara rather than to Baghdad.

Barzani hinted in April that secession wasn't out of the question, though not much is new there. Without the buffer of the U.S. military, however, there doesn't seem to be a whole lot of overt pressure to keep the country united. Ankara, since U.S. forces left the country in December, has moved closer to the Kurdish north. Though Kurdish officials, in their discussions of pipeline developments, referred to the oil as "Iraq's oil," it may be the start of a de facto separation. Rightfully so, the IEA, in its December report, warned that a fractured political system in Iraq could get in the way of significant developments in the energy sector. Though Iraqi political developments are exceedingly slow, to find hints at secession in the IEA report later this year won't be too much of a surprise. And, given the simmering tensions in the waters to Iraq's south and growing concerns of global energy security, secession, when it comes to oil, might not be the worst outcome for a post-Saddam Iraq.

By. Daniel J. Graeber of Oilprice.com