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Can Kurdistan Address European Energy Needs?

As Turkey launched a new military operation in the Kurdistan Region of Iraq (KRI) in April, KRI prime minister Masrour Barzani was nowhere near the conflict-impacted areas. Instead, he was in London, where British Prime Minister Boris Johnson received him in an official state visit. While Kurdish activists protested Turkish escalation and the Kurdistan Regional Government’s policies towards Turkey, Barzani and Johnson discussed two other topics: refugees and natural gas.

The former concern has been on the agenda for some time, as Iraqi Kurds continue to flee to Europe in increasing numbers. The latter is a more recent addition to the KRI’s policy portfolio.

The KRI is already economically reliant on oil, which it primarily exports through Turkey. Natural gas, however, has not been a major priority so far, despite the existence of reserves in the east of the region. This, however, is beginning to change. In February, Iraqi Kurdish oil company KAR Group made a deal with the KRI administration to build a pipeline from Khor Mor, a gas field near Kirkuk, to Duhok and ultimately to Turkey.

At the Atlantic Council’s Global Energy Forum in late March, the Prime Minister laid out his plans to make the KRI a major exporter of natural gas—and, as such, a solution to the massive energy crisis Europe is facing due to the war in Ukraine.

Practical Roadblocks

What was not mentioned was the fact that there are at least four major obstacles to this project that make it unfeasible and, in the long term, dangerous for regional stability and security.

The first obstacle is poor infrastructure. The large-scale export of gas needs a more sophisticated setup than that which exists in a region where even the basic maintenance of highways is neglected. Pipeline construction alone is not enough to make large-scale exports feasible, as natural gas must be processed to be transportable.

It is unclear how the KRI will be able to afford the necessary transport and processing infrastructure in light of existing budgetary and debt-related issues. Many residents fear that, unable to finance the project on their own, the region’s leaders will make more opaque and unfair deals, increasing corruption and inequality.

The second is local energy availability. Companies like Dana Gas, which operates in Khor Mor and Chamchamal, have processed the region’s natural gas since the 2000s. This has primarily been used for domestic purposes in the KRI, particularly for the generation of electricity.

The region has not seen a single year without electricity shortages since its establishment, and demand is constantly increasing. Prioritizing gas exports while neglecting domestic demand is likely to exacerbate shortages— a dangerous move at a time when many Kurds already pay exorbitant fees to private electricity generators to fill the gaps.

The third impediment to the Prime Minister’s endeavor is a recent Iraqi Supreme Court ruling that found the Kurdistan Oil and Gas Law (No. 22/2007) to be unconstitutional. This law had previously managed and legitimized the KRI’s autonomous energy exports.

The discussion on the constitutionality of how energy exports are handled between Erbil and Baghdad is complex. The basic problem lies in the fact that the Iraqi Constitution of 2005 only mentioned “present fields.” The status of newly developed fields should have been subject to common legislation between Erbil and Baghdad that was never successfully negotiated. Instead, the KRI developed its own sources, while Iraq implemented the Iraqi National Oil Company Law (No. 4/2018) and denied the KRI its 17% share of the national oil income.

Iraq is currently taking Turkey to court for its central role in the KRI’s oil exports. The Supreme Court ruling is expected to strengthen their already favorable case. Iraqi authorities are also working to implement the ruling on the ground, and Western companies appear willing to comply.

The fourth issue is the role of Iran. Iranian-backed Iraqi militias—and in some cases, Iranian forces themselves—have attacked areas and actors central to this energy-export entanglement. In March, a missile attack targeted the KAR group CEO’s Erbil villa, and in June, a rocket attack hit the Khor Mor gas field.

While many analysts interpret these strikes as symbolic acts of resistance against an alleged threat, in reality, Iran is merely defending its economic interests. Iran is a key exporter of gas to Iraq. If the KRI were to change the balance of economic power in this regard by becoming a major gas exporter, Iran’s influence over the politics and economy of Iraq would be diminished.

Long-Term Risks

For all the reasons described above, importing natural gas from the KRI is not a pragmatic short-term fix for the European energy crisis. Yet to get a full picture of the unfeasibility of such an arrangement, policymakers in the West must look beyond short-term concerns towards systemic issues.

The issue of oil and gas exports is more than a domestic political dispute between rival governing authorities in Iraq. It involves two major regional powers willing to use force to defend their interests in the country: Turkey and Iran. Even if Baghdad and Erbil were able to find common ground and avoid further legal disputes, any possible agreement would likely marginalize either Ankara or Tehran. Neither state would be likely to accept such marginalization. This could deepen foreign intervention and instability in in both the KRI and the rest of Iraq.

It also raises questions about governance and economic fairness in the country. Like the KRI, other parts of Iraq are also plagued by corruption, clientelism, and back-door dealings in the economic sector. This will pose obstacles to any political reform: for example, while some experts have suggested further decentralization to address issues like the disputed status of Sinjar, the Yezidi homeland, this would inevitably raise serious questions about how a new autonomous region would fund itself.

Potential gas importers cannot ignore the political and social repercussions of backing an illegitimate energy market that spurs local and international conflict and that primarily serves elites while leaving the Iraqi and Kurdish public facing unemployment, poverty, and a lack of basic services. Importing gas from regions where the local economy is built on oil and gas revenues that are systematically hidden and challenged through sectarian and partisan channels will likely exacerbate the conditions already causing mass protests, increased migration, and other dangerous instability.

Whether their primary concern is addressing European energy needs sustainably or promoting a democratic, stable, and equitably prosperous Iraq and Kurdistan Region, policymakers must look elsewhere.

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About the Author

Dastan Jasim

Non-Resident Fellow

Dastan Jasim is a Research Fellow at the German Institute for Global and Area Studies in Hamburg and a PhD Candidate in Political Sciences at the Friedrich Alexander University Erlangen-Nuremberg. Since 2017 she is also a conflict researcher …

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