Iraq and Gulf Analysis

Exxon Moving into Seriously Disputed Territory: The Case of Bashiqa

Posted by Reidar Visser on Thursday, 17 November 2011 11:46

More details continue to emerge about the recent deals cut by Exxon Mobil with the Kurdistan Regional Government.

A key point in this respect is newly-emerged information that at least two of the six exploration blocks are in so-called “disputed territories” that are formally part of the Nineveh governorate but since 2003 have been administered by the Kurds who occupied these areas at the beginning of the war. This includes both the Qush and Bashiqa blocks. 

In itself, this move by international oil companies into “disputed territory” is not entirely unprecedented in Iraq. Other companies including Hunt Oil and Gulf Keystone have previously concluded deals for blocks in disputed territory in Nineveh.

Once again, it is to some extent of course Exxon’s stature as a “Big Oil” company – and over above that as “American Big Oil” – that is particularly significant as far as the new disputed-territory dimension is concerned. It is noteworthy in this respect that previous attempts by the central government in Baghdad to auction off service contracts in disputed territories in Kirkuk failed, both in the first and second licensing rounds in 2009.

But there is a particular dimension to the Exxon contract for Bashiqa. It is commonly assumed that pro-Kurdish areas of the Nineveh governorate like Shaykhan and even Tall Kayf (where Qush is situated) may eventually gravitate towards the Kurdistan Regional Government when final status negotiations get going – to some extent as the result of pro-Kurdish feeling among Yazidis and Christian minorities there. However, in Bashiqa the situation is far from clear. A good study on the disputed territories by Sean Kane of USIP uses elections data at the district level to highlight Bashiqa as an area of Nineveh where Kurdish claims are not particularly popular among the local electorate. Additionally, to the extent that there is a pro-Kurdish tendency among parts of the population, much of it is actually Christian. As such, it is torn between the idea of joining the KRG and the alternate (and constitutionally dubious) scheme of a Christian-dominated sub-governorate administrative unit in the Nineveh plains. It is not unlikely that Bashiqa and its oil will end up remaining outside the final KRG borders and hence outside Kurdish jurisdiction.

In other words, in Bashiqa, Exxon is not only going into “disputed territory” but is becoming involved in a particularly disputed area. By so doing, Exxon is positioning itself in direct opposition to the longstanding official US government policy of trying to build trust and détente in these areas through so-called “joint patrols” with Kurdish and central-government participation. Additionally, this particular move may prove to be yet another thorn in the relationship between Kurds and Sunni Arabs: The Nujayfi family of Mosul and its two leading brothers (Usama, the parliament speaker, and Athil, the governor of Nineveh) have been personally involved in the quest to keep Bashiqa as part of Nineveh. This could in turn have a negative impact on recent tendencies of rapprochement between Sunni Arabs and Kurds as the result of growing interest in federalism among Sunnis, especially in Salahaddin.

In sum, one cannot help wonder whether Exxon may have been lured into a trap by including such a contentious and risky piece of real estate as Bashiqa in its recent bouquet of exploration blocks. There is now the impression that Exxon has wedded itself to a policy of Kurdish maximalism from which there can be no easy or partial retreat.

The Kurds may well have tried to sell the whole Exxon package as an “all or nothing” deal. As such, it is looking singularly successful.

20 Responses to “Exxon Moving into Seriously Disputed Territory: The Case of Bashiqa”

  1. Kjetting said

    And I cannot imagine in an way shape or form that the US Department of State would have given any kind of blessing to this given the blocks – this is contrary to any reflex they would have. The US has focused on avoiding strife in these areas, not igniting it going forward. Stunning, and it makes it even more difficult for Baghdad to swallow.

  2. Reidar Visser said

    I can imagine the Nujayfis will try to put pressure on Maliki in this case. Bashiqa is one of the places where Athil al-Nujayfi has tried to visit but where he was met with Kurdish peshmerga opposition. It seems to have a certain “Kirkuk” quality to it from the Nineveh point of view.

  3. Exxon may have been lured into a trap…

    But the people who run the company aren’t stupid – in fact Exxon’s usually more conservative than its supermajor peers. The whole episode remains confusing – I can only guess that there’s something behind it that we can’t see yet.

  4. Observer said

    The solution is to pass the oil law and end control of a single entity on the oil policy. Put it in the parliament, where it belongs (IMHO)….

  5. Reidar Visser said

    I need to object to the idea expressed both in the comments here and in the media that the parliament version of the oil and gas law is so radically different from the Maliki draft. The parliament version does not give the parliament a lot more say over actual decisions (even if it does give them a greater role in appointing some key decision-makers), nor does it strengthen the regional entities as much as some commentators claim.

    The bottom line is that even in the parliament version of the bill, decisions are made by a centralised board of 5 members plus 3 experts appointed by Baghdad, as well as one representative per producing region or governorate with a minimum output of 150K bpd. In other words, only when there are 8 producing regional entities will the peripheral forces have as many representatives in the commission as Baghdad has.

    I have previously suggested that Kurdish support for the parliament version of the oil and gas bill was not wholehearted, which seems confirmed by the fact that the Kurds and the Maliki government are now reportedly going back to the 2007 draft (with which the Kurds were also unhappy).

  6. Observer said

    Granted. But I would much rather have the decision be in the hands of a committee and not just a single person (as it is now). Even if I were a supporter of Shehristani, I would worry that in the future the decisions would be handled by somebody that does not have the proper attitude. The policy should be set by parliament and execution is left to others. As long as there is a policy and milestones are set, we can hold those who are in charge accountable.

  7. Reidar/Observer,
    I hate to disagree with you guys but I really don’t think that a better written Oil and Gas Law will make much difference, even with policy and milestones like Observer described. The problem as I see it is the non functional overall system of checks and balances which lets the politicians interpret the law with impunity.
    I bet even if we had a superb law we will got numerous interpretations from the likes of Tariq Harb to challenge its effectiveness, and the politicians will follow ridiculous interpretations because they can get away with it.
    We got to go back to square one and guarantee the integrity of the elections, without the exclusive oversight of the US like in the past.

  8. Reidar Visser said

    And I hate to disagree with you Faisal. But as I have said before, the chances of some kind of benevolent external UN-led action that will come to Iraq’s rescue are probably less than for a long time. And if the Assad regime should get ousted in Syria, Iran will probably only seek to strengthen its hand in iraq. I think Iraqiyya needs to make a strategic decision as to whether they should try one last time to bring Maliki to his senses or instead resort to federalism as an alternative, including potentially with support from a new regime in Syria.

  9. To reinforce Faisal’s point, take a look at this statement by a member of Maliki’s bloc: Maliki MP: Giving Provinces Broad Powers Requires Amending the Constitution. He goes on to say that the constitution does not “state clearly” what provincial powers are. This is sheer nonsense, of course; it states expressly that certain powers are reserved to Baghdad (e.g. treaties, border defense), certain powers are to be jointly exercised by the federal and provincial governments (public services), and all other powers not mentioned reside in the provinces. So Baghdad could decide anytime, for example, to block grant money to provinces to build electricity generators, or whatever.

    And re Tariq Harb, I do wish Iraqi media would stop calling him just a “legal expert” and start calling him “attorney who works for Maliki.”

  10. Reidar Visser said

    Yes, and Maliki also made that claim some days ago (“we will give more authority to the governorates even though the constitution does not oblige us to do that”).

    Though I am generally in favour of a stronger constitutional distinction between a federal region and governorate, that distinction must come through constitutional reform and not through ad hoc statements to the press.

  11. Reidar,
    Benevolence has nothing to do with my expectation, and I think you are wrong: There are increasing signs that the US is considering UN intervention, Here is an example.
    And if I may indulge a little bit in I-told-you-so regarding Syria, here is a Facebook report that Iran may have secretly transported 4000 armed men accross Iraq into Syria. I don’t know the veracity of the report but its language does not read like propaganda, and not sure the picture of the busses tally with the story.

  12. Reidar Visser said

    Faisal, with every possible respect, those are the private musings of Wathiq al-Hashimi, can you give me some good reasons why we should actually believe what he is saying?

  13. Reidar,
    I don’t know Wathiq Al Hashimi but his “musings” may have support from recent US media reports of alternatives being considered in order to deal with Maliki. I read a couple but didn’t keep track of them.

  14. Reidar Visser said

    And exactly how would those “dealings” take place? I just can’t imagine the Obama administration going into the coup-staging business…

  15. Reidar,
    You lost me! Who’s talking about coup-staging? You either go to the UNSC Or you stage a coup. These are two alternatives. I said it before: The only side capable of a coup is Maliki’s. The UN deeper involvement may either prevent a coup or come after it.

  16. Reidar Visser said

    But are there reports (apart from Hashemi) saying that the US intends to go to the UN to do things in Iraq??

  17. Reidar,
    I just read Hashemi’s piece again, I don’t think he spoke about intent, just possibility and alternatives. I think the intent will be created by future events on the ground, the difference now as I see it is: The UN route is a possibility but not yet a probability.

  18. Salah said

    Territory: The Case of Bashiqa
    Its beyond that as per below….

    اشد الخبير النفطي العراقي د. عصام الجلبي، المسؤولين في محافظات نينوى والتأميم وصلاح الدين تدقيق المعلومات والخرائط التي تخص أجزاء كبيرة من محافظاتهم، التي تقع حقول النفط التي شملها اتفاق التنقيب عنها بين أقليم كردستان وشركة أكسون موبيل.
    وقال الجلبي، وزير النفط السابق إبان حكم الرئيس الراحل صدام حسين- ويقيم حاليا في عمان، في رسالة بعث بها إلى المسؤولين في هذه المحافظات إن المعلومات التي اكتشفت عن المواقع الستة المشمولة بأتفاقية التنقيب الأخيرة بين أقليم كردستان وشركة أكسون موبيل تشير إلى أن غالبية هذه الأراضي تقع خارج سلطة الأقليم الرسمية وأنها تقع ضمن محافظات أخرى وعلى رأسها محافظة نينوى.

    Disputed Territory?


    This definition-by-criteria is not very helpful because,for one, property claims offices are located throughout Iraq, reflecting the widespread nature of property disputes that do not ecessarily bear on the question of territorial status. Moreover, location and staffing of Article 140 offices have not been free of controversy.A more helpful indicator of disputed territories is the
    list included in the Kurdistan region’s draft constitution.46 However, this is a one-sided definition that itself is disputed,47 and it only reflects territories claimedby the Kurds, not other territories that potentially fall under Article 140, such as parts of Anbar governorate that are claimed by Karbala and Najaf governorates.Kurdish officials say there are 26 disputed territories.48

    Click to access 80_oil_for_soil___toward_a_grand_bargain_on_iraq_and_the_kurds.pdf

  19. Kermanshahi said

    First of all I want to note that I am completely against Exxon mobil, the way they rob American tax payers and the way their campaign bribes to US politicians have cost countries like Iraq hundreds of thousands of lives. If it was up to me we wouldn’t allow these guys to drill anywhere on earth and their CEO’s, just like the wallstreet CEO’s should be prosecuted and imprisoned for their crimes. Now Massoud Barzani (and numerous Arab politicians) wanting to suck up to these guys is absolutely shamefull.

    But, when we come to the issue of the dispute itself, there is only 1 reason why this dispute exists in the first place: because Arabs tried to force their state, through violence, upon the Kurds, and there is only 1 reason why this dispute still exists and that is because one side here (and not the KRG), refuses to allow a democratic process to take place. One one side we can see a lot of good will from Kurdish politicians, offering democratic referendums to allow the people of these disputed territories to solve the dispute themselfes through peacefull and democratic manner, as offered by Kurds. On the other hand you have authoritarian Arab leaders like Nouri al-Maliki backed ex-Saddamists like al-Mutlaq and al-Nujayfi trying to deprive people from their democratic rights. It’s hard not to see who is in the right and who is in the wrong here.

    And Reidar, this dispute is not over territory per se, this is a dispute where one side is saying: let’s allow the people to decide, let them vote on it and the other side saying we do not want any democratic process, because we will loose, instead we want to force our will upon the people of these territories where we do not ourselfes come from, and want to strip them of their democratic rights to increase our power. That’s where this dispute is about. Kurds are not saying give us these territories, they are saying let’s vote for these territories, which is extremely reasonable, and on the other side al-Maliki and teh Ba’athists are saying that they should just be given these territories for no apparentreason and they don’t want to allow a democratic vote, which is completely unreasonable.

  20. Reidar Visser said

    Kermanshahi, in this article I’m just pointing out that a report which investigated likely referendum results highlighted Bashiqa as an area where the Kurds could well lose in this kind of self-determination exercise.

    Salah, Issam Chalabi may be exaggerating a little when he says a majority of the six are in disputed territories. As pointed out in my article, two of them are in Nineveh, one of which is likely to end up within KRG boundaries in a final settlement. I think there is a third field in the eastern parts near Kirkuk or the Iranian border that could be “disputed territory” but I haven’t seen anything authoritative on this yet.

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