While Baghdad fights Kurds, Iran wins: Exploiting oil potential

By Delshad Anwar – Diyala, Niqash  – DIYALA,— Conflicts between the Kurdistan Region and Baghdad over oil fields in Diyala has led to slow oil production in these fields. Meanwhile, critics say, Iran is sucking the reservoirs dry and emerging as the big winner in this dispute.

When it comes to the oil fields in Diyala, the only winner in the ongoing dispute between Iraq’s federal government in Baghdad and the authorities in the Iraq’s semi-autonomous Kurdistan region, is Iran.The Naft Khana oil fields in Diyala province – the first oil fields to be discovered in Iraq, in the early 20th century – are not producing as much as they could and according to some experts, Iraq’s neighbours over the border are pumping them dry instead.

This is because the nearby Naft Shahri oil fields also draw their oil from the same reservoir. And while Naft Khana stands idle, the Iranians are allegedly getting more than their fair share worth of oil out of Naft Shahri, some observers suggest.

While some of the facilities at the Naft Khana oil field were destroyed during the Iraq-Iran war in the 1980s, the hold up in oil production here has more to do with politics. Naft Khana is located inside one of Iraq’s so-called disputed territories. That is, where there is land that Iraqi Kurdistan says belongs to Iraqi Kurdistan but which Baghdad says belongs to Iraq. Article 140, formulated in 2003 to resolve issues with these disputed territories, sets out to remedy the expulsions, the ethnic cleansing and Arabisation undertaken by former Iraqi ruler Saddam Hussein.

These are, firstly, normalization – a return of Kurds and other residents displaced by Arabisation – followed by a census taken to determine the demographic makeup of the province’s population and then finally, a referendum to determine the status of disputed territories. Obviously whether a territory is home to mainly Kurds or mainly Arabs will have an effect on who can lay claim to the area. But so far, the measures outlined in Article 140 have not been implemented and the disagreement between Baghdad and Iraqi Kurdistan as to who is allowed to do what with local oil fields has only worsened.

The conflict between the two parties was in the spotlight in late 2011 when Baghdad decided to change the oil field’s name from Naft Khana – which means source of oil in Kurdish – to something more “Arab”. The new names include Directorate of Diyala Oilfields and the Central Oil Company. Kurdish activists lobbied to have the names changed back, likening the renaming to previous “Arabisation” policies under Saddam Hussein.

“And Iran has emerged as the main beneficiary of these [Naft Khana] oil fields because of Iraq’s failure to resume production,” local governor, Ibrahim Hassan Al-Bajillan, told Niqash.

Current figures indicate that only around 5,000 barrels are being produced per day in the Naft Khana area. Engineers believe this could go up to 16,000 barrels per day; in fact, when Naft Khana was first discovered around 20,000 barrels were being produced per day. Previously oil was being refined at the nearby Al Wand facilities but these were damaged in the Iraq-Iran war and now oil is trucked to Baghdad and refined there. Bashtiwan Ahmed, a Kurdish member of Diyala’s state government, said that there had been many attempts to convince the central government to resume oil production and oil refining in the area but that every time the topic was raised, politics had put paid to any developments.

Ahmed said that Iraq’s Deputy Minister for Energy, Hussein al-Shahristani, had actually agreed that building a refinery at the Naft Khana fields was a good idea. However the Ministry of Natural Resources for Iraqi Kurdistan had been opposed to any such project, saying that the central government had no right to lay claim to oil in the disputed areas.

Some critics of Baghdad have also implied that the federal government is complicit in the Iranian draining of Iraqi wells because the government is currently led by Shiite Muslim politicians and therefore allied with the Iranian government, a Shiite Muslim-dominated theocracy.

“If oil production was resumed here, Diyala’s needs would be covered,” Ahmed said hopefully.

While Iraqi Kurdistan’s Ministry of Natural Resources did not respond to Niqash’s enquiries on this issue, politician Daler Mahmoud who sits on the Iraqi Kurdish government’s natural resources committee, said: “regardless of any of that and of the conflict between the two governments, Iran is the one benefiting from this conflict.” Mahmoud suggested that the central government and the Iraqi Kurdish authorities do their best to reach some sort of agreement regarding the Naft Khana fields in order to prevent the Iranians from ongoing exploitation of Iraq’s sovereign natural resources.