Turkey may have secretly signed a border-altering oil deal with Kurdistan

April 17, 2013
Obsession
Energy Shocks
April 17, 2013

Turkey may have pushed ahead with a far-reaching oil deal with the Iraqi region of Kurdistan, an accord that could shake up the political and economic boundaries of the Middle East.

Bloomberg is reporting that the agreement was signed during a visit last month between Turkish Prime Minister Recep Tayyip Erdogan and Iraqi Kurdish Prime Minister Nechirvan Barzani. Quartz has been unable to immediately confirm the report, but the news agency said it is quoting two sources.

Under the agreement last month, Bloomberg said, Kurdistan would supply Turkey directly with oil, defying Baghdad, which has said that any such deal absent its express approval violates Iraqi sovereignty. As part of the deal, Turkey could take over the Kurdish government’s share of a big oil concession run by ExxonMobil.

By creating an independent financial channel for Kurdistan, Erdogan would be broadening out a political initiative under way with his own Kurdish population. Under that domestic initiative, Turkey would grant far greater political rights to the Kurds. The two moves combined—in Turkey and Iraq—have stirred the Kurdish population of Syria as well, and could lead to a grand political awakening that has been fiercely opposed in all three countries because Kurdish activists have sought independence. The political transformation could also cascade into Iran, which has its own Kurdish population.

Erdogan may have a selfish political dimension to his activities—analysts say he is campaigning for the Kurdish vote in his own country, where he would like to amend the constitution to create a strong presidential system, and then run for president.

ExxonMobil declined to comment. But it has rights to six oil-exploration blocks, including in areas disputed between Kurdistan and Baghdad. Baghdad officials have threatened military action if any drilling takes place in such areas. Analysts say that is a bluff.

Kurdistan is poised to raise its oil exports to 250,000 barrels a day this year, and to two million barrels a day before the end of the decade. Turkey, which in 2011 spent $59 billion on oil and gas imports, seeks to reduce its energy import bill.

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