Who is reaping the oil wealth in the south of Kurdistan?

By Mufid Abdulla:

One result of the recent explorations by oil companies operating in the south of Kurdistan is that their share prices have soared and the value of their companies has increased by seven or eight fold.

Two years ago the price of Gulf Keystone shares was 20 pence; at close of business on Friday it was £1.56. It is a similar story for other companies such as Heritage Oil and Afren. Tony Hayward, the ex-chairman of BP, has instigated a deal costing £1.3 billion (1) to buy Genel  Energy, which already has an exploration operation in the south of Kurdistan. Tony Hayward’s investment vehicle will be a new company called Vallares which is not yet listed on the Stock Exchange. Under the terms of the deal, Vallares will buy 100% of Genel’s shares.

As stated in the Financial Times: “Kurdistan has long been coveted by international oil companies for its relatively untapped resources of onshore hydrocarbons, but political and regulatory uncertainty has dogged the industry”. (2)

Considering all the wealth created from what these chairmen call a “risk-prone emerging market”, where is the benefit for the KRG and for our people in the south of Kurdistan?

Historically , the vast majority of third world countries  which have huge amounts of reserved oil have not benefited from this natural resource. On the contrary, it has often led to civil war and military dictatorship, even though oil should a key factor enabling growth and an increased standard of living. Juan Pablo Pérez Alfonso, the former Venezuelan oil minister and co-founder of OPEC, said in 1970: “Ten years from now, twenty years from now, you will see: oil will bring us ruin”. (3)

The ‘committee for transparency’ – called Nazaha – in Arbil, the capital of Kurdistan, doesn’t have a clue about the extent of oil revenues in the south of Kurdistan. The agreement on oil and gas between the Iraqi state and the KRG is still the centre of a dispute, and this is going to be stumbling block. Under the landmark deal negotiated in February, the KRG will now receive half of all revenue from the oil it exports, allowing the producing companies to recoup their investment costs.

Meanwhile we don’t have enough schools for our kids: yesterday was the first day of the new school year and some schools in Sulaymani can only provide pupils three hours of classes a day. Our hospitals and healthcare are inadequate and people still have to seek overseas treatment for serious problems. I have to be brutally honest: the main beneficiaries of our oil wealth are corrupt politicians and leaders and not the nation.

The KRG needs to be transparent about oil revenues, ensuring that  the Nazaha committee has full access to all the data and that these resources are channelled for the public good, building new hospitals and new schools to educate future generations.

References:

(1), (2) Financial Times,Thursday 8 September 2011 p.19

(3) Greenspan A, (2007) “The Age of Turbulence, Adventure in a New World”, Alleen Lane, Penguin Books USA, p. 257-259