Coming of the Global Energy Reset


A week after Putin’s troops launched the invasion of Ukraine, the West is cautiously whispering sanctions against Russia, because European countries, even those who believe in the need for these sanctions, could not suspend the import of fossil energy resources from Russia. The selection of the coldest days of winter to attack Ukraine not only shows the deep dependence of Europe’s energy security on Russian natural gas, but has proven the fault of Western leaders in diversifying energy suppliers. EU energy. Russia’s share of natural gas in the EU market, increased to 40% in 2021 from just 27% in 2011, which could rise to 50%, if US concerns do not ban gas flow in the Nord Stream II gas pipeline. Although EU countries are avoiding removing all Russian banks from SWIFT, mainly to avoid the risk of even a short cut in the flow of Russian gas, which could shake their energy market, but now the American and European countries are thinking harder about new and more reliable sources of gas, but the choices are not abundant, or need a long time to develop their infrastructure to reach Europe.

While expanding the capacity of current suppliers, mainly Iran and Azerbaijan, could be technically complicated, the development of recently growing Mediterranean natural gas reservoirs, such as North Africa, Israel and Cyprus- Greece, is facing reserve ownership issues, bilaterally and with Turkey. Another reliable option is natural gas from Kurdistan, a rich semi-autonomous region in northern Iraq. The development of Kurdistan’s gas reserves, which is estimated at around 3 TCM (2% of the world total), began in 2007, but progressed after 2019. Kurdistan’s main gas field was developed by PEARL Petroleum, a consortium international, mainly led by the UAE gas companies, Crescent Petroleum and Dana Gas. Production from the field is reached at over 450 MMSCUFPD and forecast at over 700 MMSCUFTPD by 2023 and double the current amount by 2025. The consortium recently secured $250 million in funding from the US International Development Finance Corp (DFC) for its development. plan. These recovery plans have allowed the KRG to assess different scenarios, including supplying internal demands (mainly for power generation, industrial and residential consumers), or supplying Iraqi power plants, which now receive mainly natural gas from Iran, or possibly foreign markets. , including Turkey and Europe. Kurdistan’s geopolitical advantages are a key factor for easy access to Turkish and European markets. In addition, the characteristics of the natural gas reservoirs of the ARK, which have enabled its rapid development, have increased the chances of this region to adhere to the European strategic plan for the diversification of their gas sources.

While the Iraqi federal government has failed over the past 18 years in the development of its natural gas fields, and even in the gathering and processing of its enormous associated gas capacities, which are the second largest amount flared in the world (approximately 1.7 billion cubic feet per day), providing fuels for electricity. plants becomes a crisis. Iraq’s current electricity demand is estimated at more than 40,000 MW/h, while current potential capacity is less than 30,000 MW/h, but about a third of this amount is missed, mainly due to lack of fuel . This is why the acting Iraqi Minister of Electricity visited Qatar, on February 7, 2022, to discuss the import of natural gas from Qatar. This plan could not only satisfy Iraq’s growing demand for natural gas from one of the largest producers, alongside its current pipeline from Iran, but could also fulfill the dream of the Qatar gas pipeline- Turkey, which was archived by the Syrian internal war. The geopolitical situation of Kurdistan, linking Iraq to Turkey, could accelerate the development of Kurdistan’s infrastructure and natural gas production plan, if it could be connected to the Qatar gas pipeline. In the future, Kurdistan’s natural gas network could join the Iranian gas pipeline in the role of a regional gas hub to the EU and Turkey.

Despite Kurdistan Gas have significant advantages, but should go through a bumpy road. The main challenge is the vision of the Iraqi federal government on Kurdistan’s oil and gas. An obese government, a heavy public wage bill, underdeveloped private sectors and endemic corruption are the main motivations for the Iraqi federal government to be hungry for oil and gas from Kurdistan. While approximately $1 trillion in Iraqi federal government revenue from oil revenues over the past 18 years has not seen significant public welfare improvements or economic growth, Iraqi parties are attacking permanently oil and gas from Kurdistan, but without any plan for more effective direction of the federal oil sector, which produces more than 4,000,000 barrels of oil per day.

On the other hand, however, the second part of article 112 of the Iraqi federal constitution, which was approved in 2005, clearly authorized the semi-autonomous regions of Iraq, still comprising only the regional government of Kurdistan, to manage the non-productive and future fields. oil and gas, but Iraqi central governments have continually sought ways to undertake oil and gas from Kurdistan. Several complaints to domestic and international courts, threatening International Oil Companies (IOCs) working in Kurdistan, and complaints against Turkey, are just a few attempts to push the KRG to hand over Kurdistan’s oil and gas dossier to the central government. The latest action against oil and gas in the region was taken recently by the Federal Court. The court’s decision, 15 years after the approval of the regional oil and gas law and 10 years after the complaint was registered with the court, found the law was “unconstitutional”, and therefore invalidated the legal basis for the independence of the Kurdistan region’s oil and gas sector, Rudaw English reported. Analysis gap on the main causes of the approach of this court, which qualified as “unconstitutional” and “unjust” the KRG, dealing with the capital stage in the gas industry of Kurdistan. The court decision comes a few days after the visit of KRG Chairman, Mr. Nechirvan Barzani, to Turkish President, Erdogan, on February 2, 2022, where they mutually discussed opportunities for natural gas from Kurdistan in the Turkish and European markets. . Erdogan’s interview after his visit to Ukraine, two days after his meeting with President Barzani, raised objections against Kurdistan’s natural gas industry in Baghdad, especially when following the Prime Minister’s visit KRG Minister, Mr. Masrror Barzani in Qatar, where he met with the Emir of Qatar, Sheikh Tamim Bin Hamad, just a few weeks after his meeting with the Crown Prince of Abu Dhabi, Sheikh Mohammed Bin Zaed.

While Kurdistan’s natural gas requires rapid and sweeping improvements in administration, as well as rapid infrastructure expansion, to meet export needs, but the recent Baghdad showdown could slow the country’s gas development plan. Kurdistan. The role of natural gas in EU energy security and the fierce competition from major suppliers for market share, interpreted as the main cause of Syria’s fate, when it was named as a potential gas route to the Europe, could make Kurdish leaders more cautious about their gas expert project.

The abandonment of the Kurdish people in the conflicts of Erbil and Baghdad against the control of the Kurdish region outside the KRG, mainly the oil-rich city of Kirkuk, could clearly show a hostile relationship between the two capitals and the lack of support of the Kurds in the west for the geopolitical conflicts. Second, the potential confrontation over natural gas not only could deepen bilateral conflicts, but could threaten plans to supply natural gas to the EU, both from Kurdistan and Qatar. Now is the time for the US and the EU to bring the two governments closer together and resolve key constitutional differences, as they have done for the past two decades. The easing of conflicts could accelerate the expansion of the oil and gas field in disputed areas, according to Article 140 of the Iraqi federal constitution, thus releasing significant potential to supply the EU market.

Conducting this arrangement, of course, would face opposition from Russia, which occupies a critical position in the Iraqi oil and gas sector and the KRG. The Russian giants Rosneft and Gasprom hold a significant share of the large oil and gas fields in the two regions, which could be taken into account in any export or transit of gas from Iraq. The reduction of US and EU involvement in Iraqi oil and gas, sought as a strategic plan, opened the door for Russian and Chinese companies to the Iraqi oil and gas industry, which must currently be managed if the West looks to Iraq to play a role in their European Energy Puzzle.

Natural gas from Kurdistan could be a reliable and stable source for Turkey and the EU, only if the US and EU are serious about resisting challenges, internally or with competitors. Then months could be vital for EU energy security, diversifying or relying on Russia….

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