Iraq – Kuwait – Turkey: Relations Hit a New Low

Incident: In an indication of the dangerous new low reached in Iraqi-Turkish relations, Iraq’s central government has rescinded an exploration deal with a Turkey’s state-run TPAO and approved a new deal for the same concession with Kuwait Energy. The concession is a 900-square-kilometer exploration block (Block 9) in south Iraq, near the Iranian border. Kuwait Energy is a Kuwaiti-led coalition with Emirati companies. Kuwait Energy will gain a 70% stake in the project, while the UAE’s Dragon Oil will hold the remainder.

Right before the New Year, Asaib al-Haq—and Iraqi militia group that splintered from anti-US Moqtada al-Sadr’s Mahdi Army—threatened Turkish interests in Iraq as relations worsen.

Bottom Line: Baghdad is hitting back at Ankara for the latter’s interference in Iraq and its courting of the Iraqi Kurds—who are creeping towards independence on the back of oil and gas revenues. But it’s hitting back in a small way for now. The bigger deals remain, despite souring relations.

Analysis: Originally, the concession holder was a consortium led by TPAO and including Kuwait Energy and Dragon Oil. The consortium won the contract in May 2012. TPAO has been kicked out unceremoniously. Baghdad had warned Turkey in November that it would be expelled from the concession because of “non-technical issues”.

What are those issues? To wit: Turkey is heavily courting Iraqi Kurdistan’s…

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