Nationalisation of Kurdish Oil & Gas – Kurdish Oil Report

By Shawan Dizayee:

The Oil & Gas industry is at an embryonic stage in the Kurdistan Region of Iraq, with several Production Sharing Contracts (PSCs) being given to major industry giants such as ExxonMobil and Shell, but this is not enough. Nationalisation of oil is paramount for social integrity and economic stability. Nationalisation of oil and gas means state-ownership of these commodities, from the E & P (exploration and production) stage through to the finance and decommissioning. You may think this is what we have in Kurdistan, but that is far from the case. Although the financial facet is currently dealt with by the Ministry of Natural Resources, we lack a National Company that can work to compete with the thriving private sector, providing a strong technical perspective, safeguarding the reserves, and focussing on reservoir integrity and environmental impacts. NOCs (National Oil Companies) currently control around 90% of the global reserves and it is of paramount importance that a Kurdish NOC is established.

The success of NOCs, such as British Petroleum (previously known as the Anglo-Iranian Oil Company) and Gazprom, is a testimony to their sheer importance in protecting national interests. There is no reason why their rich, successful history can’t be emulated and surpassed by Kurdistan which is undoubtedly at an advantage, with one of the richest oil reserves, and lucky in the sense that the Zagros Fold and Thrust Belt cuts through Iraq, where one of the world’s most compact oil areas, the Kirkuk Embayment, lies. Political malignancies aside, this must be exploited.

We need a National Kurdish Oil Company that will work in conjunction with the Ministry of Natural Resources and is in part government owned. Only then can Kurdish employees thrive and their expertise to excavate and process the crude oil be fully exploited. We should not rely on another nation to sell our locally-produced natural resources; we should attract the tenders from our own capacity. This would be evidence of a more stable, independent nation that speaks the languages of the world. It would also safeguard the rights of the Kurdish people, their rights to better living conditions and to National Ownership. This can be further propelled by a thriving Stock Market, with the Erbil Stock Exchange (ESX) due to open in the later part of this year; in the distant future a significant amount of the Company’s shares can be sold as Initial Public Offerings (IPOs) as well as allocating a certain percentage to all employees as part of a Shares Sharing Scheme.

Capitalism encourages privatisation which is all well and good, as British PM Margaret Thatcher successfully proved during the 70s and 80s, but this system only benefits a selected few in the short term, as the current economic degradation in the United Kingdom shows. The capitalists become richer whilst the poor labourers and working class grow poorer. If implemented successfully, nationalisation can remove exploitation of the minority, and reduce inequality, providing a system that distributes the wealth in a uniform way. It also negates unhealthy competition where big powerful companies try to oust smaller rivals, and checks corruption, which is of paramount importance in a region such as Kurdistan.

Social development and responsibility should be held with utmost regard since foreign companies will often overlook this with the notion, ‘We aren’t from here.’ Surrounding villages will benefit from a National Organisation in the form of land reparations and funding for local schools and charities, as the KAR Group has shown in the past few years, although it regards itself as a privately owned company. It can also be used as a bridging mechanism to build better ties with our disgruntled neighbours and political players such as Iraq, in rather the same way as British Petroleum did in the 1960s (in a post-colonial era) with the East and wealthy West. With the current spike in fuel prices due to the approaching peak oil stage, price regulation is another valuable tool that would be most effectively implemented by an NOC.

In conclusion, I believe a limited number of contracts should be dispersed amongst international companies, with the bulk of them reserved for the National Oil Corporation and other native subsidiaries. Nationalisation presents a system that aims to satisfy all the stakeholders involved. This will help with the transparency of sales, as well as keeping a tighter grip on our reserves. I believe natural resources have been placed on this Earth in abundance for a purpose, to be utilised and developed to their fullest potential at a sustainable rate.

Shwan Dizayee is a student in his penultimate year of Chemical Engineering. His interests lie within the Oil & Gas industry, and more specifically it’s socio-political effects in the Kurdistan Region. Being a young Kurd in the diaspora, he like many others strives towards a more cemented Kurdish establishment and hopes to return to his home country one day in the near future. Twitter: @ShwanKamiran

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