• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 1 min Ethanol is the SAVIOR of the Oil Industry, Convenience Store Industry, Automotive Supply Chain Industry and Much More!
  • 16 hours Saudi State-of-Art Defense System looking the wrong way. MBS must fire Defense Minister. Oh, MBS is Defense Minister. Forget about it.
  • 11 hours Let's shut down dissent like The Conversation in Australia
  • 6 hours One of the fire satellite pictures showed what look like the fire hit outside the main oil complex. Like it hit storage or pipeline facility. Not big deal.
  • 2 hours Instagram Now Banning Photos Of People At Gun Ranges, Claiming They Promote "Violence"
  • 3 hours Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 1 day Saudis Buying Oil From Iraq
  • 6 hours Trump Accidentally Discusses Technology Used In The Border Wall
  • 16 hours Hong Kong protesters appeal to Trump for support.
  • 4 hours Famous Manufacturer of Anti-Ethanol Additives Proves Ethanol's Safety and Benefits
  • 10 hours Collateral Damage: Saudi Disruption Leaves Canada's Biggest Refinery Vulnerable
  • 1 day Donald Trump Proposes Harnessing Liberal Tears To Provide Clean Energy
  • 1 day Saudis Confirm a Cruise Missile from Iranian Origin
Alt Text

War In The Middle East Is China’s Worst Nightmare

Reliant on crude imports from…

Alt Text

Is A Full-Blown War In The Persian Gulf Inevitable?

Following Saturday’s crippling attacks on…

Jen Alic

Jen Alic

 

More Info

Premium Content

Investing in Iraqi Oil and Gas: Too Risky?

Risk, like everything else, is relative. So, relatively speaking, Iraq is open for business and certainly a more attractive investment than, say, Libya—in part because it’s easier to see what’s coming in Iraq, while what’s coming in Libya for now is just chaos (and it’s already arrived).

First, let’s try to paint a picture of the overall security situation, which is also an exercise in relativity.

In the north, we have the territory controlled by the Kurdish Regional Government (KRG), where business is flourishing (along with corruption) and where one needn’t even engage a controversial Western private security companies to move around.

But also in the north, we have a belt of disputed territories, which lies between the KRG and the Iraqi central government, both geographically and politically. The clincher is that the KRG’s grand plans for two new pipelines that would bypass the central government and pump oil and gas directly to Turkey are to be undertaken in this disputed territory, specifically in Kirkuk.

Baghdad won’t stand for it. Already sectarian tensions are being fomented more intensely as Baghdad installs a new military operations center in Kirkuk and Iraqi and Kurdish forces begin a new showdown over security.

Business is pretty good in central Baghdad, where the security situation is fairly stable (again, relativity is necessary here), but where one doesn’t walk around without physical security. Mathematically speaking, of Baghdad’s 88 zones or neighborhoods, there are about 10 that should be considered highly dangerous. The rest are “safe”. “Safe” means that you have a 50-70% chance of coming out alive.

Related Article: Clinton Thinks Azeri Gas is Important and so Should You

Then we have everything south of Baghdad, places like Anbar province and the Basra governate. Anbar is where al-Qaeda is regrouping for another round and preparing its forces to join the confrontation in Syria. Basra is Iranian territory—Iraq’s oil-rich golden egg where it is only Iranian influence that is keeping tensions on the low burn.

Throughout Iraq’s provinces, we have an increasing urge for autonomy, which would essentially render Iraq a failed state. So far, only Kurdistan has autonomy, but others are eyeing it: including DIyala, Anbar, Salahuddin, and Basra.

In terms of oil, Basra is the most important of these, and much of Basra’s population is angry with Baghdad because the provincial government does not have as much control as it would like over its natural resources and that the revenues aren’t trickling down to the locals.

Related Article: Energy Market Roundup: The Showdown in Iraq

ExxonMobil (XOM), for one, appears to have had enough, announcing recently that it may pull up stakes in Iraq’s south and stick to the Kurdish north, where the business arrangements are more flexible and the security situation more manageable, at least outside of Kirkuk.

So is Iraq too risky an investment? It depends how far ahead you want to look.

For the next two years, we will probably see more of the political status quo, largely thanks to Iranian intervention, which is the only thing keeping things from falling apart at the seams right now.

Further down the road, in the absence of a major increase in foreign investment and socio-economic improvement, we are likely to see the start of a failed state, a renewed civil war as more and more provinces jump on the autonomy bandwagon creating tensions among Sunnis and Shi’ites, and a bloody conflict over Kurdish independence.

By. Jen Alic of Oilprice.com




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play