MESOP : PKK/PYD STRATEGIC TARGET – FIGHTING FOR A PIPELINE CORRIDOR TO THE SEA VIA SYRIA

Oil sale remains a hurdle to Kurdish independence

14 July 2015 – MESOP – Three recent developments across the Kurdish territories move the Kurds closer to political independence and economic autonomy. But despite these victories, the financial viability required by a Kurdish state or states is still in question, political analyst, Robin Mills writes in the National Business.

In last month’s Turkish elections, the Kurdish party secured a potentially king-making bloc in parliament. In Syria, Kurdish forces, the YPG, made dramatic gains at the expense of IS and linked two self-declared cantons and the Kurdish region of Iraq appears to have abandoned its revenue-sharing deal with Baghdad and is again attempting to sell oil independently. The Syrian Kurds are currently producing small amounts of oil for local use, from fields formerly operated by China’s Sinopec. The Sinopec fields yielded about 13,000 barrels per day in 2010, the last pre-war year but with the pipeline running through IS territory and on to the government-held Homs, the Syrian Kurds cannot export their oil. Meanwhile the Iraqi Kurds are tightening their grip on oil around Kirkuk. Their agreement to export “federal” Iraqi oil through their territory to Turkey, in return for a share of central government revenue, appears to have broken down, perhaps this time irretrievably.

The Kurds could export about 300,000 bpd from their own fields and another 300,000 bpd or more from the Kirkuk area claimed by Baghdad.

At current prices, this would generate some US$900 million per month, close to the $1 billion the Iraqi Kurdish region requires for its monthly budget. But Baghdad is likely to resume legal opposition, making buyers wary, while the Turks will not give the Iraqi Kurds a blank cheque, particularly while the situation of the Turkish Kurds remains uncertain. The YPG’s advances open the tantalizing possibility of oil shipments from the Kurdish regions of Syria and Iraq to the Mediterranean. Syrian Kurdish oil is heavy and poor quality, yielding little value unless processed in a sophisticated refinery. Even if the Syrian Kurds and allied opposition secured contiguous territory to the Mediterranean, there is obviously no chance of building a pipeline under the current situation. Oil that does reach external markets would still be tainted by doubts over its legitimacy.