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Weekly UpdatesThe Kurdistan Regional Government (KRG) enjoys the support of the US, particularly that of Vice-President Joseph Biden's faction which includes the powerful Secretary of State Hillary Clinton and other key members of the Obama administration. At the height of Iraq's 2006 sectarian war, then Senator Biden proposed splitting this country into three entities: Kurdistan in the north, a Sunni Arab state in the centre and west, and a Shi'ite Arab one from the centre to the south - all in a confederal system at best.
For its part, the KRG presently is concentrating its efforts on getting the hotly disputed oil region of Kirkuk and other parts of the north to be annexed to its territory, while both the Shi'ite and Sunni Arabs are strongly opposed to this. On July 14, KRG President Mas'oud Barzani reiterated that Kirkuk would be annexed by Kurdistan, a statement which has since caused verbal attacks by Shi'ite and Sunni Arabs as well as the region's Turkoman community. There is also a hot dispute between Erbil and Baghdad over the proposed supply of natural gas to EU's Nabucco pipeline, a project strongly backed by the US and opposed by Russia.
Maleki and Iraq's fellow Arabs could not hide their suspicions of the new US VP during Biden's July 3-4 visit to Baghdad. Although a severe sand-storm then prevented Biden from flying to Kurdistan for scheduled talks with KRG leaders, the VP did meet with Iraq's Kurdish President Jalal Talabani and other Kurdish leaders such as Foreign Minister Hoshyar Zebari who is a close relative of Barzani.
Maleki on July 13 was in Ankara where he attended a ceremony during which heads of EU governments involved in the Nabucco consortium signed an agreement giving the pipeline project the go-ahead. On that occasion, Maleki pledged that Iraq will supply the EU with as much as 15 BCM/year of natural gas through Nabucco, which is to be completed by 2014/15.
On July 15, however, Reuters quoted an un-named "Iraqi government spokesman" as saying the country did not have any surplus gas to sell via Nabucco as it focused on its domestic needs, though it may one day supply the pipeline. In May, Baghdad rejected a KRG plan to supply gas from Kurdistan to the Nabucco project. But the KRG keeps pursuing the Nabucco option with tacit support from Ankara and more active backing from the US, Austria, Hungary and the Saudi-led Sunni front.
Sharjah-based Crescent Petroleum controlled by a prominent Iraqi of the powerful Ja'far clan, producing gas in Kurdistan, and Turkish energy company Turkerler in August 2008 formed a JV to export gas to Europe via Turkey and Nabucco. The JV, Inci Gaz, plans to obtain 3,500 MCM/y from Kurdistan from 2011, increasing that gradually to more than 10,000 MCM/y. A statement then said: "The Inci Gaz companies plan to make the necessaryinvestments to transport and supply the natural gas to the Turkish market and potential foreign consumers" (see gmt20IraqGasExpMay18-09). More recently, OMV of Austria and MOL of Hungary joined this venture - being key partners in the Nabucco consortium (see sbme6IrqPetExptJun15-09).
At stake for the powers behind Nabucco is a larger geo-strategic issue of Europe and Turkey diversifying their gas supply and thus lessening their dependence on Russia. And the EU is embarked on a massive energy efficiency plan to cut Europe's use of gas and power by 20% by 2020. In an analysis published on April 24, the Cambridge Energy Research Associates (CERA) said it was unlikely the EU will meet its target. But Doug Howe of CERA said the EU could cut its demand for gas and stop electricity consumption growing, based only on technology in use today. Which means by 2030 EU gas needs could be cut to the level of the early 1990s - 125 BCM/y, equivalent to the consumption of Germany, France and Spain combined.
The Kremlin-controlled gas monopoly Gazprom has been campaigning for the EU to back its two new gas pipeline projects to supply Europe directly: a 55 BCM/y Nord Stream to supply this market from a marine line under the Baltic Sea and a 30-to-60 BCM/y South Stream to obviate EU's need for the Nabucco project.
To undermine the Nabucco venture, Gazprom has secured a preliminary deal with Baku to buy all the gas Azerbaijan will be able to sell in future. And to back this further, Moscow is offering Baku the prospect of strong political support to counter-balance a US-brokered detente reached recently between Turkey and Armenia.
In parallel, however, the US/EU, Turkey and the Saudi-led Sunni front in the Muslim world are promoting a trans-Caucasian free trade area to include Russia's south-east, Armenia and Georgia which are part of the GME. This is in line with the strategy behind Nabucco. Yerevan is thus being encouraged by the US and the Saudi-led front to have a trading partnership with Ankara, which will offer Armenia many geo-political and economic dividends, including major Turkish, GCC and Western investments in this land-locked country - plus trade corridors to the Mediterranean via Turkey and the Black Sea via Georgia (news7RussiaTurk&WahhabiRevsnsmAug11-08 & news23SaudiRfm&GlblPeaceDec1-08).
It is speculated in Ankara that, if Yerevan goes along with the above, then Baku will be persuaded by the US/EU and Turkey to shift its gas to Nabucco, instead of Russia's South Stream. According to an APS source in Ankara, such a shift will be followed by a proposed construction of a gas pipeline from Turkmenistan to Baku to link up with the Nabucco line. Together with natural gas from Iraq's Kurdistan, Nabucco could eventually be able to double its planned capacity to 62 BCM/y, thus obviating the need for the South Stream.
From Ankara's side, the forces behind Nabucco are PM Recep Tayyip Erdo?an and his Foreign Minister Ahmet Davuto?lu, Deputy PM and top economic co-ordinator Ali Babacan, and Energy & Natural Resources Minister Taner Yildiz. Davuto?lu has been the architect of Ankara's foreign policy and Turkey's shift of emphasis to the GME as well as to the Saudi-led Sunni front; but he has also been behind Ankara's rapprochement with Tehran.
FEED