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Kurdistan plans second oil export pipeline to Turkey

  • Iraqi Kurdistan plans to build a second new oil export pipeline to Turkey within the next two years as it ramps up output independently of Baghdad, its natural resources minister says.
  • Kurdistan will track the volumes of its rising crude exports on the pipeline independently of the central government, Minister Ashti Hawrami says, adding that "nowhere in the world can 1M barrels per day remain stranded forever, so the oil export is a reality."
  • The central government's anger hasn’t stopped Kurdistan from signing deals with producers including giants such as Exxon (XOM) and Chevron (CVX), as well as wildcatters like Genel Energy, the Turkish firm run by former BP chief Tony Hayward (GEGYF).
Comments (1)
  • Kurdistan can "plan" to build 10 pipelines to Turkey (or elsewhere); and the oil majors can "contract" with Kurdistan all they want; but the fundamental problem is that Kurdistan is part of the sovereign nation of Iraq. XOM and CVX signed deals with Kurdistan and then, "after further review," they looked to divest part of their investment by brining in other partners. If memory serves XOM (maybe its CVX) brought in a Chinese oil company (can't remember who) to buy into part of their Kurdistan investment. It would be interesting if someone did thorough research about the Iraq Constitution, how it relates to Kurdistan, and what type of "veto" power Bagdad has, if any, over Kurdistan's contracts (licenses) with major oil companies. I know that there is some level of autonomy given to Kurdistan but how much autonomy they have and what they can do independent of Bagdad is not well known (at least by me).

     

    There is also the question of what type of international arbitration provisions govern the major oil companies' deals with Kurdistan and Iraq (if any). The oil companies must have the ability to seek binding judicial or legal relief from some type of alternative dispute mechanism by which they can obtain damages in the event Kurdistan and/or Bagdad breach the licenses or contracts. Ask CVX how important it is to have the ability to force a sovereign nation into binding international arbitration. See the Lago Agrio arbitration proceeding initiated by CVX to stop the Eduador Court from ripping it off to the tune of 19 billion dollars. Alternatively, ask XOM and COP about the importance of binding international arbitration as it relates to Venezuela's nationalization of their oil investments in that country.

     

    I would also really like to know what Kurdistan, Iraq and/or the major oil companies do about providing security for the oil production facilities and pipelines in countries like Iraq, or their subdivisions such as Kurdistan. Does Kurdistan or Iraq provide military or police protection? What type of surveillance exists for the oil companies' facilities and pipelines? What type of armed respose is available to intevene and protect facilities and assets in the event of terrorism or piracy? Do the oil companies hire private security, like Blackwater, to provide mercenary services to protect facilities and pipelines? There's nothing wrong with mercenaries. Countries have hired mercenary services since manlike first got organized and it could be a great way to protect important assets in areas where there is little or no government control.

     

    By way of background, I am a trial lawyer and it never ceases to amaze me how people blog about various companies without knowing all of the legal issues involved in their businesses and how major lawsuits can adversely affect a company's business operation. There is usually a lot of detailed information in companies' annual reports about litiation and lawsuits they are involved in and hardly ever do I ever see anyone comment about this information.

     

    I don't have the time to do the research needed on the Iraq - Kurdistan investment deals, so I probably shouldn't complain about the situation. That being said, I would really like to read a detailed, informative analysis of the above described issues.
    3 Nov 2013, 03:04 PM Reply Like
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