Friday, October 20, 2017

Russia's Roseneft To Take Majority Share in Kurdish Oil Pipeline

Keep it under your hat! 
How does this development affect the regional situation? 
If it does at all?
Might this be a factor in all the demonization of Barzani? In the push to get the Barzani clan out of power? So many questions...........

While tensions between Iraq’s federal government and the Kurdistan region continue to escalate, Russia’s state-controlled oil giant Rosneft said on Thursday that it had agreed with the Kurdistan Regional Government to take majority control in the operation of the oil pipeline in the Kurdish region, in an apparent push by Russia and Rosneft to achieve greater political and economic influence in the Middle East.
Rosneft’s share in the project may be as high as 60 percent, while the other project participant with a 40-percent stake will be KAR Group—the current pipeline operator, the Russian company said.
“The entry into the infrastructure project will contribute to achievement of Rosneft’s strategic objectives and will enable Rosneft to enhance the efficiency of oil transportation to the end customers including supplies to the Company’s refineries in Germany,” said Rosneft’s CEO Igor Sechin, who is a close ally of Vladimir Putin.
According to sources familiar with the deal who spoke to Reuters, Rosneft’s investment in the project would be around US$1.8 billion.
The Rosneft deal comes just days after Iraqi government forces seized control of all oil fields that Iraqi state-held North Oil Company operates in the oil-rich Kirkuk region from Kurdish forces.
Last week, Iraq’s Oil Minister Jabbar Al-Luiebi ordered state-held oil and pipeline companies to begin restoring oil flows from Kirkuk to Ceyhan via a pipeline that bypasses Kurdistan, increasing pressure on the breakaway region that voted for independence last month in a referendum strongly opposed and deemed illegal and invalid by the federal government.
On Thursday, Iraq’s Oil Ministry issued a statement saying that it “warns seriously all the countries and oil companies from contracting or dealing with any authority inside Iraq without taking the approval from the federal government and the ministry of oil.”
Oil Minister Al-Luiebi said that “the irresponsible statements from some of the officials inside & outside Iraq or the foreign companies about their intention to sign oil contracts with any authority inside the geographic borders of Iraq without telling the federal government or the ministry of oil, is considered as a Blatant interference in the internal affairs and a derogation from national sovereignty, and an outright violation of international norms.”

Although the statement doesn’t specifically name any foreign company, it came on the day after Rosneft signed another deal with Kurdistan--Production Sharing Agreements (PSA) for five production blocks, for a total investment of up to US$400 million. 
This week’s deals between Rosneft and Kurdistan are not the first agreements between the Russian oil giant and the region that overwhelmingly voted for independence from Iraq at the end of September. Even before the referendum, Rosneft had already become the biggest source of oil funds for Kurdistan.

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  1. Hi Pen,
    It would seem that the Rosneft deal with the Kurds was done without the agreement of the Iraqi govt. if so, it doesn't make sense to me as it goes against Raussia's long term goal of including Iraq in its economic and geopolitical plans against the US.

    The Russians could not pick more unreliable business and political partners than the Kurds. The whole thing does not make sense to me.

    1. hey james!

      Truly james i've been tossing some scenarios around..
      why this deal?
      why now?
      and yes it does read as if they circumvented the central government...
      it's a head scratcher.

    2. james thinking about this deal with roseneft and all that occurred in Kirkuk- this nonsense about Kurdistan's imminent demise while completely ignoning the inter kurdish conflict- the hallmark of this extremely diverse and somewhat convoluted pack of persons, who, appear to have no real relativity/way to relate to on another- other then the fact that most of the are unified by their sunni muslim status.. but still they have differences and disagreements that are epic- which is why they are horrendous business partners

      but, I digress

      Came across this interesting article today, I can't say I agree entirely with it- nor do I disagree entirely with it

      Let's say someone really recognized the divisions inherent among those we've labelled as "the Kurds"- and has another idea of how and why things happened as they did in Kirkuk- It's worth reading IMO

      Don’t Believe Anything You Read About Kirkuk – OpEd

      It does not take a huge leap of the imagination to appreciate that this entire narrative is fallacious. The unopposed invasion of Kirkuk by troops ostensibly loyal to Baghdad of uncertain provenance and without anything other than token Peshmerga resistance to occupation of so strategically important an asset, the petrochemical capital of Iraq, is a back-room deal. The terms of that deal are not hard to divine.

      Firstly, Kurdish politics are split between the Kurdistan Democratic Party (KDP), loyal to the Kurdish government in Erbil (that enjoys close relations with Turkey); and the Patriotic Union of Kurdistan (PUK), a Kurdish political movement supported by Iran and associated with Kurdish insurgents in southeastern Turkey including the PKK. The PUK’s headquarters are in Iraqi Kurdistan’s second capital, Sulaymaniyah. The narrative emerging from both Erbil and Ankara was that the PUK / PKK were to blame for everything in Kirkuk, even though they were not present. This should give rise to suspicion.

      Secondly, although Erbil announced that the Peshmerga, in Kirkuk under the control of the KDP, were prepared to defend Kirkuk to the death; and although the Peshmerga have repeatedly shown extraordinary ferocity and fearlessness in battles throughout Iraq and Syria, in this case it seems likely that the KDP instructed the Peshmerga under their control guarding Kirkuk to melt away and to provide whatever Iraqi forces that decided to enter the city free passage. Otherwise it would be impossible that those forces would have been able to project footage of their sitting comfortably, undisturbed and uninjured, in the Kirkuk governor’s office within a matter of just a few hours.

      Thirdly, the Iraqi forces participating in the presumptive invasion of Kirkuk must have known that they would enter the city unopposed. Otherwise they would never have proceeded to advance upon a heavily-defended large city within a mere 24 hours of arriving there and therefore without the necessary pre-onslaught preparations. Moreover they would not have been videoed riding into town smiling and cheering. These events are obviously staged. One does not normally invade an armed Iraqi city smiling and sitting atop one’s tank.

    3. and a little more:
      Fourthly, if the Iraqi invaders knew they would not substantially be opposed then the unopposed occupation of Kirkuk must be the result of a hidden political agreement between Baghdad and Erbil. What could the terms of that agreement be? One possibility is that Baghdad and the KDP, with Ankara’s support, have agreed to share custody of Kirkuk (and hence its oil revenues): that is suggested by Prime Minister Abadi’s talk of a “joint administration”. The question then arises as to why Baghdad and the Kurds have never been able to agree upon a “joint administration” of Kirkuk before. An inability to agree how to share revenues from the Kirkuk oil fields has been a source of frustration between Baghdad and Kurdistan for a decade. What changed?

      From this it may follow that the key to the apparent new era of peaceful coexistence between Kurdistan and Baghdad may be elimination of the PUK and Sulaymaniyah. If, as it appears, the events surrounding the apparent occupation of Kirkuk by Iraqi forces are directed at common blame of the PUK, then it may be that removal of the PUK from the revenue-sharing equation is the goal of the “joint administration” that now apparently forms the basis of Baghdad-Erbil cooperation in the Kirkuk area. The KDP is happy to share Kirkuk oil revenues with Baghdad, as long as no part of those revenues go to their political rivals the PUK. Ankara is delighted to participate in this vision, and because the only pipeline from Kirkuk goes through Turkey Ankara may be able to enforce a deal that excludes the PUK. Thereby Ankara may undermine the PKK that plagues Turkey as a domestic insurgency movement, and also the Syrian Democratic Forces (SDF), a PUK-run administration in northern Syria that Ankara regards as a threat right upon its border.

      If this analysis is correct, then many dangers lay ahead. Firstly, elimination of Sulaymaniyah / the PUK / the SDF / Rojava (the name given by the SDF to Kurdish-controlled northern Syria) from a process of political dialogue and compromise is surely likely to backfire. If the PUK consider that they are being cut out from a fair share of Kirkuk oil revenues – the principal source of funds across Iraq and Syria – then they may turn to violence or propagation of instability to obtain what they consider as rightfully theirs. Rojava is a bulwark against both the Islamic State and Damascus, and is supported by the United States. It is not desirable that Rojava or the PUK falter. Moreover the PUK is not going anywhere. It remains an important force in Iraqi Kurdish politics. The idea that the KDP will overcome the PUK and Sulaymaniyah to impose political hegemony upon Iraqi Kurdistan is not realistic given the tribal nature of Kurdish politics. Iran may intervene to support its PUK ally.

      Even more concerningly, whatever Iraqi forces now occupy Kirkuk may renege upon their promise of “joint administration”. In accordance with the spirit of Iraq’s uncompromising factional politics, they may just decide to keep Kirkuk for themselves. Should they do that; or should the KDP decide that the presence of forces in Kirkuk loyal to Iraq’s central government is no longer convenient to them, then Iraqi forces may suddenly be faced with a genuine battle with the Peshmerga seeking to reoccupy Kirkuk, that they may well lose. The Peshmerga are effective fighters.

      It is almost inconceivable that the Kurds gave up occupation of such valuable a prize as Kirkuk without a fight. Whatever inchoate arrangement was reached which led to these events, it would seem likely unstable and with the potential to damage an important Kurdish interest group whose assent is necessary for Iraq’s future stability. Through the lens of divided Kurdish interests, a new perspective might be obtained upon Kurdistan’s independence referendum on 25 September 2017.

      Of course I disagree with Rojova and it's use as a bulward against both Ankara and Damascus- He doesn't. However, I'm no fan of terror states where ever they exist- under what ever label they are given

    4. Interesting article, Pen. I think if we assume that the Rosneft deal with the KRG had Baghdad's approval and that the withdrawal of the Kurds from Kirkuk was part of it, it starts to all make sense. Try this on for size -

      The big losers are the PUK/SDF. They're going down anyway but this seals their fate.

      Barzani is going to
      - take PUK oil bidness with Turkey,
      - help financially cripple its rival Kurdish faction
      - get Russian money for infrastructure upgrades
      - technical support for more exploration, and
      - an economic future with stable income and markets without the US involvement.

      In return, Barzani (KRG)
      - hands Kirkuk back to Baghdad
      - makes long term oil revenue agreement with Baghdad
      - drops independence demands and remains within Iraq.
      - And (maybe) stops dealing with israel and US (oil for armaments)

      This suits -
      Russia - more control over middle east oil sales (to Europe) and infrastructure and pushes the US out

      Turkey - financially cripples and isolates the PUK/PKK/SDF. Secures Turkish territory from Kurds. It is a blow against the US. Revenge is sweet!

      Iraq - it keeps the state together and helps guarantee future stable income. Lessens internal fighting

      KRG - Kurdistan is not going anywhere now and the US (and israel) is being pushed out anyway. Time to change horses, again!

      Iran - takes the most established actor in the push for Kurdistan out of the picture. Easier to deal now with their own Kurds. Will help with the fighting in Syria

      Syria - this forces SDF/PUK to talk seriously with Damascus and removes the push to carve up Syrian territory.

      This decidedly does not suit israel/US hence the pillorying of Barzani in the world media (as you noted).

    5. james: we'll have to keep an eye on the situation for sure--- thanks for the input- much appreciated

    6. Rosneft is majority owned by the Russian govt and I had to remind myself that the Russians do not betray their allies. So the Iraqi govt would have to be part of the deal and likely Iran, Turkey and Syria, too.

      My guess is that this deal came out of Astana. Sure worth watching, though, as you say

  2. Hey Penny! Seen this? As they say - WOW! Note "compel"

    1. hi anonymous:

      I had not seen it- but thanks for leaving
      Yes, the use of the word compel- indicating force.
      but how exactly is China forcing Saudi Arabia to use the Yuan?

      It's not so much brute force as a requirement for doing business with a nation that may soon be your biggest, most profitable customer- very compelling

      " China is poised to clearly dominate the global landscape in terms of oil demand since surpassing the U.S. as the “biggest oil importer on the planet,” adding that Saudi Arabia will “pay attention to this because even as much as one or two years from now, Chinese demand will dwarf U.S. demand.”