Can you tell us about the new law that was passed recently and what it could mean for both the KRG and the companies operating in the Region?
This is law Number 5 of 2013, “The Law of Identifying and Obtaining Financial Dues to the Kurdistan Region of Iraq from Federal Revenue.” This is an important piece of legislation which, in light of Prime Minister Barzani’s recent visit to Baghdad, will form the legal basis for the settlement of outstanding revenue issues between the KRG and Baghdad. Essentially, the law outlines a mechanism for defining and then obtaining the outstanding revenues owed to the Kurdistan Region by the federal government since 2004. It says that if the federal government defaults on the payments then the KRG is authorized to sell oil produced in the Region to recover unpaid dues. It will also include items such as the KRG’s share of sovereign expenditure revenues owed to the Region’s security forces (the peshmerga) and payments to the Region as compensation for damage done by the former regime. The new law sets out a pathway to implement Iraq’s Constitution, and by implementing the Constitutional requirements for power and wealth sharing, everyone in Iraq will benefit, citizens and investors alike.
The new law sets out a pathway to implement Iraq’s Constitution, and by implementing the Constitutional requirements for power and wealth sharing, everyone in Iraq will benefit, citizens and investors alike.
How important is it for the KRG to have the US’s and/or the EU’s support for any Turkey-KRG energy agreements?
The Kurdistan Region of Iraq has long borders with Turkey and deep historical and cultural ties. Turkey has set its sights on becoming one of the World top ten economies by the time the modern Turkish republic marks its 100th anniversary in 2023. But it is not blessed with the natural resources necessary to underpin such growth and so it spends up to $60 billion per year on energy imports, which often reach Turkey from distant lands. So it is obvious that the Turkish domestic needs provide a natural market for oil and gas from the Kurdistan Region. Turkey can also provide a transit hub for international markets including Europe, where securing diversity of energy supplies is fast rising up the political agenda. So at a time of significant international tension, raising production and securing cooperation in energy between Iraq and Turkey will have mutual and broad economic and geopolitical benefits, and I think that both the US and the EU see the logic of this, if they don’t always focus on the practicalities of how this can happen. That is what we focus on: the practicalities.
The refining industry here in the Region still produces some products that contain lead. What steps have been taken to phase out the substandard products?
The MNR is implementing a comprehensive health and environment policy. Neither of the two main refineries in the Region, Bazyan and Kalak, use lead additives in the products. Both refineries use isomerization units and catalytic reformers to raise the octane without the use of lead. There were some suspicions that some of the smaller basic refining units known as topping plants may be illegally adding lead to naphtha to increase the octane to market it as gasoline. However, the MNR is monitoring the situation closely and is already phasing out the use of such small units. The rest of Iraq definitely still uses lead, so gasoline allocations to the Kurdistan Region from Baghdad are leaded. However, the Region plans to be self-sufficient in oil products in a short period of time, which will ensure that the fuel consumed here is much more friendly to the people and the environment.
What are the measures taken by the KRG to protect the Kurdish energy market from the potential impacts of the Syrian crisis?
What happens in the neighboring countries can have a profound impact on the Kurdistan Region. Our policy has always been to have good relations with our neighbors and non-interference in their internal affairs. Today, we are dealing with the war’s massive refugee crisis. More than 140,000 Kurds and others from Syria have fled to our Region. Early on, we established Domiz refugee camp in Duhok governorate, which is now home to some 40,000. So far the KRG has funded all assistance to the refugees, unfortunately we have received no financial help from other countries or the Iraqi federal government. KRG leaders have called on the international community to help us shoulder the burden of the humanitarian crisis. We are concerned for the future of the Kurds and others in Syria. For decades Kurds were denied basic rights, even the right to Syrian citizenship, and their Kurdish identity was suppressed. While it is for the Syrian people to decide their future, I believe the rights of the Kurds in Syria must be respected in any post conflict settlement.