- The Writer holds an MSc in Eurasian Political Economy & Energy from King’s College London and also an MA in European Studies from Sabancı University.
In 2010, the Kurdish Regional Government (KRG)’s influential energy minister Ashti Hawrami announced that the KRG and Turkey agreed on supplying the Turkish gas market with up to 60 billion cubic meters (bcm) of natural gas starting from 2015 pending a final agreement on the deal’s details. On condition that ongoing long-running regional conflicts are resolved and investment conditions improve in the region, it is likely that by the year 2020, the KRG will supply Turkey with up to 10 bcm of gas and it is also estimated that this volume will increase up to 27 to 30 bcm until 2035.
With an estimation of between 2.8 to 5.7 trillion cubic meters of natural gas reserves - way above Norway’s overall gas reserves - the KRG insists on “market-based commercialization” of its oil and gas. Since the enactment of oil and gas laws of the Kurdish region of Iraq in 2007, and despite the ongoing argument of whether the law is constitutional or not, along with increasingly intensifying antagonism between the KRG and the central government in Baghdad, as Friedberg Pfluger, director of the European Centre of Energy and Resource Security, asserts, “energy almost always makes its way to where it is needed. National and ideological borders hardly play a role when it comes to international energy trade.”
From Turkey’s policy orientation, recently it has consistently been that, “if there is no interference, Turkey won’t turn down its neighbor’s inexpensive oil,” notes Pfluger.
Given the KRG’s potential for gas supplies to Turkey, one third of Turkey’s currently consumed gas would be supplied by the KRG in the years ahead as long as the required investment in infrastructure is delivered, its obsolete facilities are renewed and bitterness between the KRG’s seat of power in Erbil and the central government in Baghdad are settled with the help of Ankara’s further strategic planning.
According to the World Energy Outlook report for 2012, which gave wide coverage to Iraq’s energy future with an in-depth analysis, by 2020 it projected that total production of gas could reach up to 12 bcm, and is highly probable to reach a level of 32 bcm by 2030.
The KRG has planned to export gas from 2020 at the latest, starting with 10 bcm and projects to reach 20 bcm within a decade. The KRG’s gas would be a relatively cost-competitive source of gas supply for the EU market, particularly given the fact that the importance of natural gas in the overall energy mix has increased from a marginal role to central stage in recent years, especially for electricity generation.
Therefore, it is likely that gas will be replacing oil for power generation, freeing up oil resources for export. This trend would be a win-win solution for Iraq’s oil and gas sector problems through providing greater funds to the state budget which could be used in investment for the renovation of its crippling infrastructure.
Due to the struggle between Erbil and Baghdad, the Iraqi government has cut off the KRG’s budget, and the KRG has been constantly looking for ways to increase its revenue by exporting its petroleum products to the world’s oil market. That being the case, “Turkey holds all the leverage over Kurdistan [Iraq’s Kurdish region]; whereas it can import oil from global markets, Kurdistan’s economic survival relies upon accessing consumers via Turkey,” Washington D.C-based independent analyst, Nicholas Borroz pointed out in reference to the topic of the vitality of Turkey for the future prospects of the KRG’s economy.
Natural gas consumption in the overall energy mix is set to increase in Turkey. The Turkish Ministry of Energy estimates that by 2023 Turkey would need approximately 70 bcm of gas, which clearly reveals the reason why Turkey has been proactive both commercially and diplomatically with the KRG. With the cooperation of the KRG, Turkey would obtain spare capacity of 10 bcm in the short term once technical problems are resolved, with the prospect of increasing capacity to 20 bcm in the long term.
- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.