How Kurdish Oil Is Shaping Regional Politics

The big international oil companies are placing their bets (and investments) with an independent Kurdistan. What are the implications for the region? Here is an interesting analysis from Lawrence Solomon at the Financial Post. An excerpt:

Iraq’s Kurdistan region in the country’s north may not be recognized as an independent state by the United Nations, let alone by Iraq’s central government, but Kurdistan has all the recognition it needs from those who count — the U.S.’s ExxonMobil, France’s Total, Russia’s Gazprom, European trading houses Trafigura and Vitol, and other players in the world’s energy markets.

Last year, ExxonMobil signed an independent exploration deal with Kurdistan despite threats from a livid Iraq, which threatened to bar ExxonMobil from Iraq if it did. Chevron and others, also ignoring Iraq’s threats, soon joined ExxonMobil. This week, Kurdistan sent its first independent oil exports into international markets, in a deal with Gemel, a British-Turkish company headed by former BP chief Tony Hayward, and backed by international financiers Nathaniel Rothschild and Paulson & Co.

Iraq’s threats against these companies, and its demands that its sovereignty over Kurdistan be recognized, have come to naught because the magnitude of Iraqi Kurdistan’s oil and gas trumps diplomatic niceties…

The oil majors’ willingness to rebuff Iraq in their play for Kurdish oil is, as much as anything, a bet that Iraq will not be able to regain control over Kurdistan…

The West would back Kurdistan’s survival in the event of war — a pro-Western Kurdish state would deny Iran energy resources that would help it finance mischief. Moreover, a Kurdistan would create a potent ally of the West in the Middle East, blunting the Muslim Brotherhood’s advance throughout the region and joining Israel as the West’s only reliable partner…

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