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Feb 02 2012

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WSJ(2/2)Kurds Seize On Iraqi Crisis To Advance Bid For Oil, Land

   (From THE WALL STREET JOURNAL) 
   By Sam Dagher 

Exxon Mobil's oil exploration and production deal with the Kurdistan Regional Government, announced in November, was effectively an endorsement by a global energy giant of development in Kurdish-controlled areas of northern Iraq, until then the domain of second-tier companies and wildcatters.

Despite opposition from Baghdad, Exxon Mobil is moving ahead with the project. It is now preparing for seismic studies and securing office space and accommodation for its staff in the Kurdish region's capital Erbil, a Kurdistan official said Monday.

Kurds, meanwhile, are pointing to the Exxon Mobil deal to convince other major oil companies such as Total SA to sign on for other concessions, according to Kurdistan officials. Total declined to comment on its discussions with Kurdistan.

But the prominence of Exxon Mobil, and the fact that three of six exploration blocks awarded to the company are in disputed land in the northern provinces of Nineveh and Kirkuk, have entangled Exxon Mobil in simmering national and local feuds.

Kurdish leaders, who in addition to running their own virtual state in the north participate in the central government in Baghdad, are now openly using a conflict between Shiite Prime Minister Nouri al-Maliki and a Sunni-dominated faction in his coalition government to exact concessions from Baghdad on oil and land.

Kurds say they want to use a coming national conference -- intended to resolve the political crisis in Baghdad -- to settle their own disputes with the central government.

The Sunni faction on Tuesday ended a nearly six-week-long boycott of parliament and signaled it was ready to lift a boycott of cabinet meetings if a list of its own demands are met at the conference.

With Mr. Maliki depending on Kurdish support to help hold his government together, Kurdish leaders are looking to get Baghdad to compromise in exchange for their cooperation.

The Kurds' goals include redrawing internal boundaries in Iraq, holding a referendum in disputed areas to decide whether Kurdistan or Baghdad should control their territory, and passing a long-stalled national oil law that would recognize the Kurdish contracts and formalize revenue-sharing with the central government.

The timing, venue and agenda for the conference haven't been set. Mr. Maliki is expected to try to use Sunni Arab hostility toward Kurdish land claims in the north to avoid making major concessions to the Kurds.

Some residents in the disputed areas view Exxon Mobil's deal as infringing on their own claims.

"The owners of the land, oil and all resources in Nineveh province are the Iraqi people in general and the people of Nineveh in particular," said Abdullah Humeidi Ajeel al-Yawer, leader of a powerful Sunni Arab tribe, in an interview in the northern city of Mosul, seat of Nineveh province.

Mr. Yawer also heads a political party that controls almost one-third of seats on the provincial council. "The central and local [Nineveh] governments must fix the situation and if they both are unable to do so, then we'll have our say," he added.

Mr. Yawer declined to say what he would do should the central and local governments' efforts fail. He commands thousands of armed tribesmen in his Shammar tribe, a group that was on the brink of war with Kurdish forces in 2005.

The U.S. and the U.N. stepped in to mediate that conflict and also facilitated a reconciliation between Nineveh's Gov. Atheel Nujaifi and the Kurdistan government.

With the departure of all U.S. soldiers from Iraq in December, tensions have risen again. Mr. Nujaifi called the Exxon Mobil deal a new wedge for militants to exploit. Militants "want to put us in confrontation with the [Kurdistan] region," he said.

U.S. diplomats in Baghdad said they hope the situation will remain under control because of common economic interests, the promise of oil-fueled prosperity and development in the area and the moderating influence of Turkey, which shares borders, business and political ties with all actors in northern Iraq.

Turkey has a strategic interest in boosting oil and gas exports from Iraq's north through its territory, analysts say.

Turkey's involvement could pave the way for the Kurdish government to exchange fraying ties with Baghdad for Turkish protection, says Joost Hiltermann, a senior analyst with the International Crisis Group and expert on Iraq's land disputes.

"You could see the emergence of an oil-rich, Kurdish-run Turkish vassal state in Iraq," he says.

(END) Dow Jones Newswires

02-02-12 0400GMT