Oil reserves in Northern Iraq have big potential

By Baris Saglam

ANKARA

Crude oil reserves in Northern Iraq is enough to satisfy Turkey's oil need for almost two hundred years and the whole world's for one and a half years, according to data obtained from international sources.

The Kurdish Regional Government's (KRG) ministry of natural resources states that the oil reserves in the Kurdish controlled regions of Iraq amounts to 45 billion barrels. This is an amount that may fulfil Turkey's annual consumption of oil, which in 2013 was 685 thousand barrels a day (bbl/d), according to BP's Statistical Review of World Energy. It is also more than enough to satisfy the world consumption of 89,774  thousand bbl/d for around one and a half years.

The Kurdish government produces about 400 thousand bbl/d, according to Middle East Economic Survey and FACTS Global Energy, from 17 production sites such as TaqTaq, Tawke, Khurmala and Shaikan. The Kurdish Regional Government (KRG) exported an average of 250,000 bbl/d crude oil in 2013, and plans to increase the exports to 1 million bbl/d by 2015 and to 2 million bbl/d by 2019, Nechirvan Barzani, KRG Prime Minister suggests.

Energy-hungry Turkey wants to increase its energy sources for its ever-growing economy. Ankara also aspires to become an energy hub with its strategic position located at the crossroads between the oil-rich Eastern countries and energy-demanding European markets. Iraqi and Kurdish oil is a key component for its aspirations.

KRG holds at least 17 per cent of Iraq's proved reserves of 141 billion barrels, according to the U.S.'s Energy Information Administration. However, just a fraction of Iraq's known fields are in development due to a lack of infrastructure and political instability, and Iraq may be one of the few places left where much of its known hydrocarbon resources have not been fully exploited.

Iraq is the largest oil producer within OPEC, Organization of Petroleum Exporting Countries - an intergovernmental oil cartel while it has the world's fifth largest proven petroleum reserves after Saudi Arabia, Venezuela, Canada, and Iran.

Global oil giants in Iraq

International oil companies like BP, Shell, Statoil, CNPC and Gazprom takes the lion's share of Iraqi's daily oil production of three million barrels. TPAO, Turkey's state-owned oil company, have energy activities in the Badra region with its international partners.

In Northern Iraq, ExxonMobil, Chevron, Total and Gazprom have major investments in exploration and production activities, while Turkish companies, TPIC and Genel Enerji, operate some fields and provide services.

Oil exports

Iraq exported 2.4 million bbl/d of crude oil in 2012, according to tanker data from Lloyd's List Intelligence. 

The majority of Iraqi oil exports go to the United States - 19 per cent - and to refineries in Asia, especially India, China and South Korea.  About 2.1 million bbl/d of these exports come from Iraq's Persian Gulf ports, with the rest exported via the Iraq-Turkey pipeline in the north.

However, the main route for Kurdish oil is through Turkey, via the Iraq-Turkey pipeline that streches for almost one thousand kilometers from the northern Iraqi city of Kirkuk to Turkey's southeastern port of Ceyhan in the Mediterranean Sea.

The pipeline, operated by the federal Iraqi government but also used by KRG for exports, has two parallel steel pipelines with a nameplate capacity of 1,65 million bbl/d. However, the actual flow has only reached 100 thousand bbl/d on average in recent years due to armed attacks and technical breakdowns.

Kurdish oil has sparked a commercial debate between Turkey and Iraq. Baghdad filed a lawsuit against Ankara to Paris-based International Chamber of Commerce's arbitration court after the Kurdish government gave permission for the 1.4 million barrels of Kurdish oil deposited in Turkey to be sold. Iraq accuses Turkey of acting against the 2010 Iraq - Turkey pipeline agreement by mediating the sale of Kurdish oil without Iraqi central government consent, and demands an immediate halt to the sales.

KRG has plans to increase the volume of exports to the projected level of 2 million bbl/d by building pipelines in Kurdish controlled regions, which will eventually reach Ceyhan. KRG has already started exporting 15 thousand bbl/d of oil by trucks to Turkey.

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