The cost of KRG oil – how long can we stay silent? / By Harem Karem (About the Kurdish Oligarches)

5-1-2014 – Kurdistan Tribune – When Kurds liberated the Kurdistan region in 1991, the previous regime left them two previously-discovered oil fields intact: Taq Taq in Koye and Tawqe in Zakho.  The former was situated in the ‘green’ zone and the latter in the ‘yellow’ zone. Since then, oil has been both a curse for the majority of local inhabitants and a blessing for the oligarchs. The oligarchs have demonstrated their zest to quest for more oil and auction it off without taking precautionary measures to ensure that public interests are protected.

A year before the fall of Saddam’s regime, the Kurdistan Regional Government (KRG) granted a concession to Genel Energy in July 2002. This was followed by other concessions to international oil companies such as DNO, Genel Enerjy, Petoil for oilfields such as Tawqe, Taq Taq, Shakal, Polkhane, and Erbil.

In 2005 Iraq’s permanent constitution was ratified, and hydrocarbons were covered by articles 111 and 112; the former outlines clearly that citizens are the owner of the natural resources, while the latter article indicates that the government has the right to manage the industry. By 2007, the KRG had rushed to grant seventeen concessions in total to international oil companies for multiple fields (Tawqe, Taq Taq, Shakal, Polkhane, and Erbil, Serta, Rovy, Kurdamir, Bina-bawe etc…) without an existing law – and according to the oligarchs’ best interests.

Based on articles 111 and 112, as well as article 115, which is equally as important, the oil and gas law 22 of 2007 was passed by the Kurdistan Parliament. This law not only outlined the terms of future concessions but, in point one of article 54, it required the re-evaluation of the concessions previously granted by the Kurdistan Oil and Gas Council, which was to be set up according to the law and would be responsible for the KR’s oil and gas plan and strategy. More than six years on, the KRG has made no attempt to implement this law.

The KRG has granted scores of concessions, most of which are Production Sharing Agreements (PSA) and not only contradict the existing law, but also lack necessary details; they can be interpreted according to the companies’ own interests. Oil companies are unleashed to create more problems than benefits for the region while corrupt local money-munching monsters accumulate large sums.

The concessions granted lack sufficient measures to protect the Kurdistan environment and the safety and security of the workers and people living near the fields – to prevent disease, birth defects and premature death. Furthermore, the majority of the oil companies’ social and environmental responsibilities that are defined in the concessions are neglected by the Natural Resources Minister (NRM) and left to the mercy of the profit-driven oil companies on the ground, as I argued in my previous piece. One recent example is of the Marathon Oil Company which has cut down around 7000 trees in the Shaqlawa area near Hawler, although it didn’t discover a drop of oil. Within the concessions, no shares are specified to compensate for environmental damage.

There are also more than 126 refineries operating in the Kurdistan Region; because of their affiliation with the oligarchs, otherwise known as KRG officials, 80 plus percent of them do not possess appropriate licences and do not meet international standards, and yet still they allowed to operate – poisoning the air with deadly gases such as hydrogen sulphide (H2S) and other oil waste. Additionally, their workforces operate in unsafe environments with minimal protection while producing low-quality oil products – without any questions being asked!

Point five of article 37 of the oil and gas law indicates that all concessions must retain at least 10% royalty and, unsurprisingly, the incompetent NRM has made no attempt to rise above this minimal requirement, instead of acting as though he is on the foreign companies’ side; all granted concessions have been designed to retain no more than 10% royalty.

Also, in most oil concessions an article exists under ‘Personal, training and technological assistance’ that states that foreign companies are required to hire locals and train them. This has not only been kept to a minimum, but people  are hired based on their loyalty to a particular political party and they are not necessarily local to the oil fields. Furthermore, they are not given contracts and operate in unsafe environments – often forced to do jobs at times and in locations with terrible conditions – and worse still, when they fall ill or get disabled, they are sacked without any compensation. It is also stated in the concessions that oil companies dedicate a sum of money for human capacity development and higher education; so far, they are thought to have spent nearly $500 million dollars, but there is no evidence of how this has been spent. Worst case scenario is that it has been added to corrupt politicians’ accounts through the backdoor or spent by the political parties’ propaganda machines.

There is currently 44% of the region affected by oil companies and more than 51 square kilometres of agricultural land has been invaded by foreign companies – supported by the government and without any compensation. Points two and three of article 29 are meant to ensure that those affected are appropriately compensated, and point one of article 29 of the oil and gas law actually forbids the use of private properties by the oil company.

While poisoning the air with deadly H2S gas and dumping toxic oil products waste in the countryside and rivers and contaminating underground water might be less visible to the public, there is another more obvious risk: the oil tankers transporting oil abroad via the road system – some of the foreign drivers use the roads carelessly without being questioned. 250,000 barrels are transported each day, each barrel contains 159 litters = approx 39750,000. Each tanker can transport 40,000 litters at a time: 39750,000 / 40,000 = 993 loaded oil tankers using the Kurdistan road system every 24 hours, while another 993 empty tankers are already on the road. Damaging the already knackered road system with their weight and with unquestioned leakages that turn the roads to slippery black-ice-sheets, it poses great danger to other road users and scores of fatal accidents are recorded each week as a result.

One of the most recent accidents happened on 18 December 2013 (image below), in which twenty people were badly burned, and seven died at the scene.

Road accident

Questions: how long will the public remain silent and tolerate their environment being contaminated? When will the KRG and oil companies realise their social responsibility? Fast forward five years: must we witness a rapid increase in previously unknown diseases and premature deaths? A decade on: at this rate, what will it take to clean up the region?

References: Masala Organisation for human development – KRG Ministry of Natural Resources Production Sharing Contracts