A Well-Oiled Warzone

ISIS_control_june_12


Plumer takes a look at a slippery dimension of the Iraq conflict:


Some basics: Iraq has the world’s fifth-largest proven oil reserves. But the country has only very recently begun churning out significant amounts of crude oil again (production dropped sharply during the 2003 US invasion and its bloody aftermath). By April 2014, Iraq was producing an estimated 3.3 million barrels per day — equal to about 4 percent of global supply. And the country was expected to keep ramping up production, with plans to produce at least 5 million barrels per day in the years to come.


Or at least that was the idea. The recent takeover of northwestern Iraq by the Islamic State of Iraq and the Levant (ISIS) has complicated those plans considerably.



True, as the map above shows, ISIS isn’t close to any of the massive oil fields in the southern regions of Iraq, which produce 75 percent of the country’s oil. And ISIS has yet to enter the Kurdish regions in the north, another major oil-producing area. But the fighting has threatened some of Iraq’s other oil infrastructure, including a pipeline that can deliver 600,000 barrels of oil per day from Kirkuk to the Turkish port city of Ceyhan. (That pipeline had been damaged by a 2013 attack and was offline receiving repairs — that work has now been halted.)


In terms of oil as well as land, Iraq’s Kurds stand to benefit from the crisis:


The Kurds have an estimated 45 billion barrels of oil and have a long planned to be exporting 400,000 barrels a day this year, but until now dividends have been limited. Kurdistan and foreign oil companies have managed to export some of the crude, transported first by truck and then tanker, despite the Baghdad government’s declaration that all their activities are illegal. But, although a big export pipeline is now complete and millions of barrels of oil have been shipped through it to the Mediterranean port of Ceyhan, none of these volumes has been actually sold.


Tankers containing 2 million barrels of Kurdish oil are at sea awaiting buyers, who are apprehensive while Baghdad threatens to sue anyone who purchases it. The current offensive by an al-Qaeda affiliate may be the tipping point. Disciplined Kurdish forces now control not only Kurdistan but the disputed, oil-rich region of Kirkuk, which lies just to its west. The region has been autonomous since the first Gulf War in 1991, and its army has steeled itself to defend Kurdistan against Baghdad’s forces.



Previous Dish on the economic angle of the conflict here.



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Published on June 13, 2014 15:12
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