RUSSIA MONITOR
Date: 31 October 2017
Oil, Iraq and the Kurds
Russia signs next oil contracts with Kurdish autonomy in northern Iraq, at the same time maintaining excellent relations with Baghdad. Just after the beginning of Iraqi military operation against the Kurds, Rosneft signed a major contract with the authorities in Erbil. Despite the fact that the decision was criticized in Baghdad, it did not prevent the head of Iraqi diplomacy from arriving in Moscow a few days later. Russia takes advantage of the fact that neither the Kurds nor the Iraqis wish to ruin their relationships with Moscow. A significant increase of Iranian influence in this region can only mean one thing for Russia – the strengthening of its position.
Russia has already benefited financially from the Kurdish-Iraqi conflict, as global oil prices went up. After the occupation of Kirkuk by the Iraqi forces, production from this region has decreased by about 210 thousand barrels per day. Oil transport to Ceyhan has dropped by more than half, that is, from 600 thousand barrels per day to about 250 thousand barrels per day.
From 23 to 25 October, Ibrahim al-Jaafari, the head of the Iraqi diplomacy, was visiting Moscow. He talked with Sergey Lavrov about economic cooperation and the joint fight against terrorism, though the main topic was of course the Baghdad-Kurdish conflict and the military operation in northern Iraq. By saying that they themselves should deal with their own internal affairs, the Kremlin plays the part of a friend of both sides of the conflict, who wants to cooperate with both the Kurdistan Regional Government (the KRG) and Iraq as best as it can. But not all Russian moves are well-received in Baghdad. The Iraqi Oil Ministry criticised the Rosneft-Kurdish contract signed on October 18 for interfering in Iraq’s internal affairs, violation of sovereignty and international norms. Three days later, Jabbar al-Luaibi, the Iraqi Oil Minister, said that Rosneft assured him that “the contracts with the KRG were preliminary” and “not ready to be introduced”. However, when commenting on the Iraqi claims, Igor Sechin said that the conflict between Baghdad and Erbil is none of his concern, implying that he just wants to do business. Sechin also stated that he has got nothing to reproach himself for, because Russia recognises the territorial integrity of Iraq, including Kurdish autonomy. Sergey Lavrov added that Moscow’s economic cooperation with the KRG is no secret for Baghdad.
The Russians have reasons to believe that Iraq does not want to ruin their relationship. Moscow is too important for Iraq from economic, political and also military point of view. In 2014, Baghdad signed a $4 billion contract for the purchase of weapons with Moscow. The Russians train Iraqi officers. Besides, Russia is the ally of Iran, which plays the part of protector of the Shiite government in Baghdad. In August, Russia’s Zarubezhneft, Turkey’s private energy company Unit International and Iran’s private company Ghadir Investment Holding signed a $7 billion (£ 1.5 billion) contract for oil and gas exploration in Iran. Not much is known about this contract, except that 75 billion cubic metres of gas are to be extracted yearly and 100 thousand barrels of oil per day. The conflict in northern Iraq, which strikes not only at production in Kirkuk deposits, but also threatens the transport of raw materials to Turkish ports, is a chance for Iran (Baghdad wants to reactivate the transport via the Kirkuk-Ceyhan oil pipeline bypassing Kurdistan, which was shut down in 2014 after the jihadists arrived; nowadays, oil from Kirkuk is transported via an oil pipeline controlled by the Kurds). This was also one of the motives behind Tehran’s involvement in the Kurdish-Iraqi conflict. The Iranians supported Baghdad in a military operation against Kurdish autonomy and ensured the neutrality of at least some of the Peshmerga (a secret agreement with Talabani).
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