Hydrocarbons support the global diplomacy of the Kurdistan Region / Углеводороды поддерживают глобальную дипломатию Курдистана Hydrocarbon legs back the Kurdistan Region’s global diplomacy

Hussein Dalsooz Jalal кандидат политических наук аспирант, кафедра зарубежное регионоведение, Нижегородский государственный университет им. Н. И. Лобачевского 603005, Россия, Нижегородская область, г. Nizhny Novgorod, ул. Ульянова, 37 Hussein Dalsooz Jalal PhD in Politics Postgraduate at the Department of Foreign Area Studies of Nizhny Novgorod University  603005, Russia, Nizhegorodskaya oblast', g. Nizhny Novgorod, ul. Ul'yanova, 37 dalsoozjalal@gmail.com Другие публикации этого автора

Introduction

Since 2003, economic ambitions and the supply of its products (in particular, Oil & Gas) to international market have become another foreign relations strategy for the Kurdistan Region Government (KRG). The Kurdistan Region is a home to approximately 50% of Iraq's undiscovered oil reserves. According to the KRG Ministry of Natural Resources, the territory of Kurdistan Region is rich in 45 billion barrels of oil and 100-200 trillion cubic (TCF) of natural gas reserves. This equals to the total oil reserves projected for Nigeria and Libya. Over the past two decades, the oil and gas industry has become a priority and played a key role in the KRG global policy^[1]. From 2005 to 2015 almost ‘200 wells have been drilled encountering recoverable reserves estimated to be in excess of 15 billion barrels of oil equivalent’. In this regard, a part from other tools– terrorism and Anfal ^[2], the KRG has been able to successfully use its hydrocarbons to formulate its foreign policy. Theoretically, this policy is underlined in framework of the KRG’s global ‘soft power’. The KRG understood that the Kurds historically tested the policy of ‘hard power’ –revolutions and resistance movements– but they could not come to a conclusion. And it even reached the reality that the Kurds ‘hard power’ policy always turns into the creation of further regional anti-Kurdish attitudes. Therefore, the strategy implementation of soft power in multilevel system has become the KRG’s prior objects for its global policy. Since recognized, on one hand, its soil is very rich in various resources (in particular oil and gas), and on the other hand, the world demand for hydrocarbons is growing steadily. Here, in this article, we follow to explain how the KRG uses its energy as an excellent tool for entering the global market. We will further delve into the analysis of the hydrocarbon strategy underlying the “soft power” of the KRG to form its foreign relations.

The three main parts will be our discussion target in this article. First, we will give a general overview of Kurdistan’s raw materials and a brief history of oil on Kurdish soil. Second, we will bring hydrocarbon (oil and gas) and the process of marketization under discussion and further give our attention to explain how the energy strategy substantially legs behind the KRG’s global diplomacy. Concluding and the future policy of the KRG for economic diplomacy will be our final part discussion.

A brief history of oil and gas in the land of Iraqi Kurdish

On the lands where Kurds live in Northern Iraq, the discovery of oil and gas fields was first dated to 1901, in the area Chia Shor. The process of searching for oil in other Kurdish areas continued, eventually they were able to find a number of oil and gas fields, such as in Chemhemal in the 1920s, Kor Mor in 1953, Demir Dagh in 1960, and Taq Taq in 1978 (see figure 1). But development in these areas was very slow or even never achieved before the Gulf war ^[3].

Figure 1. field discovery

Source: The Oxford Institute for Energy Studies 2016

Scholars and the Kurdistan government constantly refer to this region as a very rich territory, where Kurds live in Northern Iraq, with various resources, including Oil, Gas, Iron, Chrome, Nickel, Platinum, Gold, Copper, Barite, Zinc and etc. But the persistence of national, political, and security-related reasons has always been serious obstacles to governments (both Iraq and Kurdistan) receiving healthy benefits from these sources. In addition, the lack of a clear geographical border has made the situation even more complicated, and we (researchers) are also confused when we talk about Kurdish areas. But in General, the Kurdish land in Iraq is estimated at 78.736 km2 (including disputed territories). And according to the KRG's Foreign Relations Department, the territory currently under the KRG control is 40,643 square kilometers (see figure 2). So here, in this paper, we focus only on those areas that are currently under the political hegemony of the KRG. As its obvious, there are disputes between the Kurdish government and the central government of Iraq over number issues including, geographic territories. These disputes areas are very wealthy in large amount of oil & gas. Due to the lack of political stability and security reasons, neither governments nor companies (in particular, international companies) have been able to carry out their business comfortably in these areas.

Figure 2: Kurdistan Region and disputed areas.

Source: crisis group 2018

After the Kurdish people rebelled against the former Iraqi regime (Saddam's regime) in 1990, some progressive movements were made by Kurds in almost all sectors. But with regards to hydrocarbons, the progress was much slower. For example, very little progress was made only in the oil field of Taq Taq in 1994. The KRG finally was able to test and complete Taq Taq-1 and Taq Taq-2 ‘signalling the first production from Kurdistan’^[4]. The products of these fields were used by the KRG only for local needs. The UN sanctions, unclear political situation and civil war restricted the KRG in expanding its activities and signing contracts with international companies to work in the region. And indeed, the KRG itself did not have the technical or financial resources to carry out such development in the field of oil exploration or promote it on its sites. The situation continued in this rhythm until 2003. Since then, the Kurds gradually have become a great player in almost all sectors of the new Iraq, including hydrocarbons.

The Kurdish authorities played significant role in the process of regime change (Saddam regime) in 2003 and rebuilding of the new Iraq. Prior to this period, a number of attempts were made at the local and international levels to re-designing the political governance of Iraq after Saddam. In this regard, the case of Iraqi hydrocarbon had predominantly attracted the special and substantial attention. The main players –the Americans, the British, and the Iraqis – eventually came to the conclusion that the energy sector should be denationalized. As ‘on 1 June 1972, the [former] Iraqi government nationalized all the assets of the Iraq Petroleum Company (IPC), a consortium of US, British, Dutch, and French oil firms operating in Iraq’ ^[5]. They were further advocated for creation of a Production Share Agreement (PSA) model of contracts for Iraq to attract foreign investments[[11]].

Based on these understanding, the new authorities formulated the Constitution of Iraq in 2005. The constitution recognized the KRG as an official foundation, as well as increased the power of KRG in new Iraq. It provided the Kurds a good opportunity to see some of their ambitions. For instance, the Articles 116-121 highlighted the powers and actions of the Kurdistan Region as a ‘constituent unit with political, juridical and military power to administrate internal and external affairs’. The Iraqi Constitution also recognized and adopted all laws passed by the Kurdistan National Assembly since 1992.

Theoretically, the Kurdistan region, within the framework of the Iraqi Constitution, can do and achieve too much, but practically most of them are inaccessible or revoked. Even in some cases, the Constitution becomes a major contentious fact between the central government of Iraq and the government of Kurdistan. Disputes such as: first, about the lands and geographical boundary of the KRG-Iraqi Central government; second, about the management of Iraqi hydrocarbons (oil and gas). The constitution was vaguely structured as to how to address these problems.

The Constitution defines the Iraqi energy as a national resource that should be managed by Iraqis and serve all Iraqis equally. Article 109-115 clarify ‘the guidelines for the political and juridical structure of Iraq as federal state’ ^[6]. And they further focus on energy issue between the central government and regional authority. Eventually, the KRG began conducting oil and gas operations on its territory in accordance with Articles 111,112,113. In particular, the KRG can see its full rights to deal (exploit and vend) with hydrocarbons under Article 112. The article shows that the Iraqi government has authority over oil fields, further specifying that all regions and provinces receive economic shares of oil fields within the territory of regions or provinces.

Oil and Gas Provisions of Iraq’s Constitution

“Article 111: Oil and gas are owned by all the people of Iraq in all the regions and governorates.

Article 112:

First: The federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields, provided that it distributes its revenues in a fair manner in proportion to the population distribution in all parts of the country, specifying an allotment for a specified period for the damaged regions which were unjustly deprived of them by the former regime, and the regions that were damaged afterwards in a way that ensures balanced development in different areas of the Country, and this shall be regulated by a law.

Second: The federal government, with the producing regional and governorate governments, shall together formulate the necessary strategic policies to develop the oil and gas wealth in a way that achieves the highest benefit to the Iraqi people using the most advanced techniques of the market principles and encouraging investment” ^[7].

The report of the Iraq Study Group, entitled the Baker and Hamilton Report, which followed the Iraqi oil and gas issue, concluded with the ‘Article 112 authorizes the KRG to explore, extract and sign oil contracts with oil companies’^[8]. The Kurdistan region, on the one hand, relied on this understanding, and on the other hand, since the Iraqi Parliament could not to pass a Federal law on oil and gas, issued its own (KRG) law on oil and gas in 2007. The fact that this law paved the way for the KRG to independently conduct its oil and gas revenues (exploiting and vending on the world market).

“The Kurdistan region oil and gas law.

Article 18: The Regional Government, consistent with the conditions stated in Article 19 of this Law, shall:

First: agree with the Federal Government in the joint management of oil and gas extracted from Current Fields in the Region;

Second: cooperate with the Federal Government in formulating strategic policies to develop the Petroleum resources of the Region in a balanced manner compared with the other Petroleum activities throughout the country, and in a way that achieves the highest benefit to the Iraqi people using the most advanced techniques of market principles and encouraging investment, consistent with the provisions of Article 112 of the Federal Constitution;

Third: cooperate with an intergovernmental federal oil and gas council (the Federal Oil and Gas Council), the composition of which is to be agreed with the Regional Government, to establish the standards, model contracts, and commercial terms for negotiations and contract award procedures in Iraq” ^[9].

Immediately after the adoption this law, the KRG began to formulate its own energy strategy. The aim here was to draw the attention of international companies to Kurdish oil & gas. In this regard, the KRG could record great level, and very quickly emerge as a significant player in Iraq’s energy sector. At the beginning the KRG has “sought to build an energy industry from scratch in the shortest time possible”. And it further looked to establish its own energy sector, independent of Baghdad. That this could ultimately help guarantee the KRG’s future full economic independence.

Statistics show that KRG's strategic project in the oil sector was initially successful. In Iraq, for the year 2012, 128 licenses were issued to foreign enterprises in the oil and gas sector with a potential value of over $ 6.3 billion, out of which 67% went to the KRG ^[10]. From 2005 to 2015 almost ‘200 wells have been drilled encountering recoverable reserves estimated to be in excess of 15 billion barrels of oil equivalent’. Other statistics show that the KRG over five years (from 2010 to 2015) can attract about 16.2 billion dollars of foreign investment. Most of these was coming from oil sector^[11]. And during 2012, more than 40 foreign companies from 19 different countries actively worked in the Kurdistan oil fields (see the figure 3). The companies came from countries such as US, Canada, UK, Turkey, Russia, China, Australia, Africa, Spain, India and some others.

Figure3: Foreign oil companies investing in Kurdistan region of Iraq for 2011-2012.

The name and originality of those companies which invest in oil exploration and development in the region and have signed contracts with Kurdistan regional government to work in one or more blocks

Sources: (The oil and gas year, 2012; Amon, 2011; The websites of the companies)

Initially, the KRG exported its oil by tank-trucks to Turkey and Iran, which led to its transformation in small quantities and it costed too much. This continued until it built its pipeline by the end of 2013. Since then, the oil export process has become more regulated with the commissioning of the KRG oil pipeline in 2014. It began with the transfer of 150,000 b/day from the territory of the KRG to Ceyhan port in Turkey.

Figure4: Kurdistan Pipeline 2014.

Source: Banker Ports News WorldWide October 2017

But the reality is that since 2014, the curve of oil exports from the KRG to the world market has never been stable. The Iraq’s lack of security, the local political and legal reasons have always had significant impacts on the KRG’s oil process. For example, as the security of disputed oil-rich areas laid under the control of KRG Peshmerga, was due to either increased terrorist attacks and the withdrawal Iraqi troops, the KRG’s oil pumping rate increased from 150,000 in 2014 to 650,000 per day in 2015. During this time, the KRG gained full access and was able to pump the oil of Kirkuk through its own pipeline.

Figure 5: the KRG oil production 2007-2016.

Source: Crude Oil Peak November 2017

The Iraqi central government was very sceptical of the KRG’s conduct in relation to Oil & Gas and called it illegal. It further tested various diplomatic and legal ways to stop the KRG and even tried to create ramps for its contracts with international companies: first, to cut the budget of Kurdistan region in 2014; second, to blacklist all companies that signed contracts with the KRG; third, to bring the KRG to international and local courts; and lastly, the Iraqi Prime Minister called on the world governments to stop buying the Kurdish oil. And even the Iraqi Ministry of Oil ultimately declared that exporting oil without Baghdad’s permission “is not legal and not constitutional. The ministry considers any oil exported without the knowledge of the government and the ministry of oil to be smuggled”^[12].

All these hindrances could not stop the KRG from exploiting and vending its oil to the world market. And number of countries even did not pay attention to the concerns of Bagdad and regularly bought the KRG’s oil. The countries like, Turkey, Israel, Malta, Hungary, China, Greece, Croatia, Taiwan and Romania. And by November 2015, KRG Minister of Natural Resources Ashti Hawrami stated that about 10 countries were buying Kurdish oil^[13].

Figure 6: Countries bought KRG oil till 2018.

Source: Bloomberg December 2019

After the referendum for independence held by the Iraqi Kurds on September 25, 2017, the curve of KRG oil production and sales rapidly decreased from 650,000 to 250,000 barrels’ p/d. This was due to the fact that the KRG lost almost all disputed areas that had been under its control since 2014. It further cannot deal with oil and gas in disputes areas. This ultimately limited the KRG’s oil production capabilities, and it can currently produce only 250,000 barrels of oil per day.

Hydrocarbon diplomacy

Since the KRG started exploiting its oil and gas, number of countries have wished to do business in Kurdistan and could not take their eyes off it. The Kurdistan regional government followed and formulated a special strategy to further attract the attention of the foreign companies as well as States. Within this strategy, it first verified the law of investment in 2006^[14] and, secondly, issued the law for oil and gas 2007^[15]. The KRG’s strategy has been able to meet international satisfaction, and number of States see great opportunities for their companies to start business in Kurdistan. In particular, companies from countries like USA, Russia, China, Turkey, Norway, Canada, Australia, Emirate, France, UK, India, South Korea, Malta, Ireland, Hungary, Spain, Austria, Moldova, South Africa and some others. It has also helped bring some States out of their previous antagonistic attitudes towards their current economic partner, as happened with the Turkish government in relation to the KRG.

From an economic point of view, there is no doubt that the primary object of each company is to expand the range of its interests. But partly from this, each state forms a special policy for its companies operating abroad, which must follow and comply with local financial rules, and policies. Within this circle, the state provides comprehensive support and protection to its companies around the world. That, ultimately, the state formulates its foreign policy with great respect for the wishes of its companies.

Based on this understanding, the KRG leaderships saw good opportunities and followed a ‘soft policy’ strategy to shape its world relation. It used oil and gas (apart from marketing) for further forwarding its strategy. This was quite effective and had good result, as happened in the case of ExxonMobil signing contract with KRG in October 2011. Fuad Hussein, the chief of staff of the Kurdistan president, told Reuters in 2015 “part of the process of building our region has to do, of course, with dealing with oil, signing contracts, negotiations with various countries,”^[16]. However, as far the contract with ExxonMobil, the U.S. government was initially somewhat reluctant about what could ultimately have a negative impact on US policy in Iraq. The US planned to rebuild Iraq on the basis of a strong Central government capable of controlling all sectors.

As the US has seen a continued increasing in violence in Baghdad, and Iraq is likely to align more closely with Iran, this has had a negative impact on what the US would like to see in Iraq. The United States saw that its plans for Iraq was already paralyzed. So it followed a new strategy called "power sharing" in Iraq, and eventually won the admiration of the US by allowing ExxonMobil to follow its facilities in Kurdistan. With this regard, the former President of Kurdistan Region, Masoud Barzani, said that ‘the presence of companies such as Exxon as a form of insurance for Kurdistan’^[17]. This simply means, the Kurdistan region is a matter of foreign interests and will be under great protection. Directly few months later, other big companies such as Chevron, Total as well as Russia’s Gazprom reached agreement with Kurdistan. This was a further strengthening of the position of Kurdistan. As the Washington post wrote in 2014, one of the main reasons that prompted Obama to reach a decision to protect the Kurdistan region during the fighting with ISIS, in addition to what he called "the protection of humanity and the genocide of the Yazidis", was economic ambitions. As Obama said “Iraqi Kurdistan is rich in oil resources and hosts thousands of foreign workers as well as a U.S. consulate in Irbil”^[18].

And recently, in 2020, the US released its further interests for Kurdish energy. In particular, when the US Secretary of Energy Dan Brouillette heaped broad praise on “the Kurds” and with refers to the KRG prime minister states “Today we are going to celebrate a miracle, your [PM Barzani’s] miracle. For those of you [reporters] who do not know what I am speaking of, as you know, the Kurds are the landlocked people in the middle of a continent,”. He continuous to tell “We are going to help you expand [oil exports] even further”^[19]. He expressed hope for further expansion of economic ties with Kurdistan region.

Another remarkable example of how oil and gas have brought it closer to Kurdistan is the State of Turkey. A couple of decades ago, no one could ever have imagined that one day we could be discussing the Turkish and Kurdistan Region relations. This is based on historical fact that since its creation after the collapse of the Ottoman empire, the state of Turkey has never been interested with the case of Kurds. It has continuously viewed the Kurds as the source for its national problems. Therefore, Turkey has always been cruel and antagonistic in response to any Kurdish movement, wherever it occurs. As in December 2002, the current president of Turkey, Recep Tayyip Erdoğan stated with regards to Kurdish movement in north of Iraq “we are against Kurdish state even if it is established in Argentina”^[20]. And even, the state of Turkey has always been at the forefront of the response of almost all Kurdish movements that have taken place in Turkey, Iraq and Syria. And even it regularly reached agreement with other neighbouring States on how to bring the case of Kurds hush up, such happened (1923 treaty Lausanne; the Bagdad pact 1955 between Turkey, Iran, Iraq, Pakistan and United Kingdom; Frontier Security and Cooperation Agreement on February 1983; border security and cooperation agreement 1983; Security protocol between Ankara and Bagdad 1984 and Adana Agreement 1998).

Even when the Kurdistan regional government was established in Northern Iraq in 1992, the State of Turkey did not recognize it as an official foundation. And the Turkish president called the political leaderships of Kurdistan Region as tribe leaders. This was aimed at reducing the reputation of Kurdish leaders at the international and local levels. The state of Turkey remained at a high level of antagonistic attitude towards the Kurds until the end of 2007.

But the empowerment of the Kurdistan Region, and the onset of its de facto independence have sown the seed for the KRG and Turkey official, institutional and direct relations from 2008 onwards. The economic and business object was recorded prime reasons that prompted Turkey to make radical change in the direction of Kurdistan. As it turned out, the Kurdistan Region is very wealthy in energy resources, and can also be a very good market for Turkish exports. However, other reasons also contributed to the further strengthening of relations between Turkey and the KRG. Reasons such as: first, the KRG started be indicated as an actor with an effective role in the region; second, the world state superpowers (in particular, America and Russia) had positive vision and built good relations with the KRG – as for the first time the US president invited president Massoud Barani to White House on October 25, 2005, and Russia opened its consulate in Erbil in 2007; third, for Turkish national reason, the Iraqi Kurdish leaders can have great influence on the case of Kurdish in Turkey. All these eventually made the Turkish government to build strong relations with the KRG and officially recognize it in 2008.

Great economic ambitions headed further the Turkish government to organize the first historic high-level meeting on May 1, 2008 in Bagdad between the KRG Prime Minister Nechirvan Barzani and Turkey’s Special Envoy for Iraq Murat Özçelik, together with the chief foreign policy adviser Ahmet Davutoğlu. Economic cooperation was a priority and stayed at the center of their discussion. The positive result of the meeting directed for further close bilateral relations. On October 31, 2009, Turkish Minister for Foreign Affairs Ahmet Davutoğlu met with Kurdistan Region president Massoud Barzani, after on June 4, 2010 the first historic meeting between the Turkish Prime Minister with Barzani took place. This meeting was followed by a declaration on the opening of the Turkish Consulate in Erbil in 2010. In turn, “PM Recep Tayyip Erdoğan became the first Turkish premier to visit [the Kurdistan Region] … [on March 2011] since Iraq was created”; a series of regular visits then followed^[21]. It has been consequence of remarkable economic boosts for both sides. According to the Turkish council in Erbil for 2012:

“There are about five Turkish banks, 17 Turkish schools, 600 Turkish construction companies, [and] 17,000 Turkish citizens’ permanent residents in Erbil, direct flights are also operating daily between the KR [Kurdistan Region] and Turkey, a fact which has boosted tourism while the overall trade volume between Turkey and Iraq is about US$12 billion, while more than 70% is with the KRG, let alone that more than half of the foreign companies registered in the KR are Turkish. Turkey enjoys massive economic benefits from a closer economic cooperation with the KRG whose current budget approaches US$13 billion.”^[22]

What more inspired Ankara to move closer to Erbil was the rapid development of oil and gas management in Kurdistan region, as well as the fact that the KRG was able to reach agreement with a number of international big companies to work in Kurdistan. The companies for example, ExxonMobil, Chevron, the English Gulf Keystone, Total of France and Gazprom of Russia.

The Erbil and Ankara continued to broaden their economic deals, eventually reaching an agreement to build a dedicated oil pipeline with a capacity to transmit of one million barrels of oil per day from Kurdistan region to Turkey in 2014. This was identified as a miracle-progress towards strengthening relations between KRG and Turkey. It also named as the Turkish motto for ‘full social and economic integration with the KRG’. The Turkish government focused even more on the KRG, even in the case of Kurds from other parts (in Turkey and Syria). It also realized that the case of Kurds (in particular, the PKK) would not have had any positive result without the participation of Iraqi Kurds. Based on this understanding, the state of Turkey established a Trilateral Mechanism with US and the KRG to develop cooperation regarding the eradication of the PKK in Turkey Iraq border in 2008. However, previous to this period, Turkey had constantly demonstrated its reluctance to deal with the KRG in view of case of PKK. As Recep Tayyip Erdoğan in 2007 called “I met with the Iraqi President and Prime Minister. I won’t meet with any tribe leader... I won’t meet with Barzani or someone else”, and that the “KDP supports PKK”^[23].

But the latest progressive of the KRG and, in particular, economic boost have prompted the state of Turkey to see the Iraqi Kurds as an important player playing strategic role in the region. Even the level of KRG and Turkish relation reached such a level that the Turkish government agreed to allow 200 KRG Peshmerga to pass through Turkish territories in 2014 to help the Syrian Kurds in the fight against ISIL in the city of Kobani^[24]. And during the Iraqi Kurds referendum for independence in 2017, the State of Turkey remained more silent and friendly compared to other States such as Iraq and Iran. The Turkish state also refused the Iraq’s demand and opposed the closure of its border with Kurdistan and the imposition sanctions against it.

Another major player whose ambitions for oil and gas allow it to get closer to the Kurdistan region is a State of Russia. A part to its historical ties to the Kurds, the State of Russia has planned to become an even more effective game player in current movements in the region. In this regard, the KRG and its hydrocarbon can be golden tools for Russia. In early year of 2010, Russian companies headed to Kurdistan region and were able to reach some big oil & gas deals with the KRG. With the aim of further broaden the Russian oil company’s business in Kurdistan region, as well as strengthen bilateral relations, in 2011 Masoud Barzani was invited for a four-day visit to Moscow to meet with Vladimir Putin and Sergey Lavrov. Its result very soon came appearance, just a year after, in 2012, the Russian state-owned energy giant Gazprom signed a two-block contract for oil exploration and production in the Kurdistan region. This later led to further series meetings and regular diplomatic changes between both sides, such as Massuod Barzani for 2013, and the Prime Minister Nichervan Barzani in 2017 attended at the St Petersburg’s’ International Economic Forum. With refers to the KRG, Putin emphasized that Russia has a “special and very good relationship with the Kurds”^[25]. Few months later Rosneft joined Gazprom in Kurdistan region by ‘signing a deal worth 2.1$bn for pre-paid oil for 2017-2019 and becoming the first major oil company to pre-finance KRG oil’^[26]. And when almost all countries stopped their business and diplomatic relations with KRG after the Kurdish independence referendum on September 25, 2017, Russia continued its contracts and relations. Even Rosneft provided the KRG debt and saved it from economic collapse in 2017^[27]. On September 18, 2017, the KRG also announced that it had reached an agreement with Rosneft to develop a gas pipeline project in Kurdistan region with a planned investment of 1$ billion^[28]. This aimed to transfer gas from Kurdistan to Turkey and eventually export Kurdish gas to Europe with a capacity of 30 billion cubic meters per year. According to Aljazeera cited Masoud Barzani that ‘the Kremlin unofficially made it clear, it was going to stand by [Kurdistan region]’. And also “officially Russia declared a neutral position towards the referendum” ^[29]. This was a viewed as miracle progressive with regards of bilateral relations.

On June 2, 2018 Russia once again invited the KRG Prime Minister Nechirvan Barzani to be attended in the St Petersburg Economic Forum. This invitation resulted in signing of a number of agreements with Rosneft, including three contracts worth $ 400 million for five exploration blocks in the Kurdistan region^[30]. All these brought to deep diplomatic ties between both sides, and even the KRG could eventually obtain significant support from Moscow. Currently, the KRG and Russia are working as two economic partners. As Vladimir Putin in 2018 stated “Our relations with Kurdistan and the Kurds are historical, long-term, and good and [we share] a good trust,”^[31]. And also, in circle of his diplomatic visits, the Russian foreign minister Sergey Lavrov visited the KRI in October 2019. Regarding to this, the Russia’s Deputy Foreign Minister Mikhail Bogdanov declared, “Lavrov met with the Kurdish leaders to speak about economic ties, energy development, trade coordination, military cooperation, and ways to further improve Erbil-Moscow ties”^[32].

Oil and Gas further inflate more countries and actors to have the desire to build relations with Kurdistan. And they referred to Kurdistan as a new active actor that can play an effective role in this sector. Countries such as Canada, China, Emirate Arabia, Norway, France, UK, Jordan, German and some others. Since the last decade, the Kurdistan region has attended and been invited those assemblies and conferences that usually make conclusive decision on oil and gas. For example Abu Dhabi Grand Prix 2012, 2013, 2016 and 2019 – Formula 1 Race at the Yas Marina Circuit^[33], Global Conference for Energy security in Berlin from 2013 to 2020^[34], the St Petersburg International Economic Forum 2013, 2017 and 2018^[35], The U.S. Iraq Business Initiative (USIBI) in America 2011, World Economic Forum (WEF) on the Middle East and North Africa in Jordan 2017, 2019^[36]. And from 2011-2016 CWC Group in London regular organized Kurdistan-Iraq Oil & Gas Conference^[37].The Economist European Energy Summit in Turkey 2013^[38], The Energy Conference in Oslo 2020^[39], the World Economic Forum in Davos 2020^[40].

Conclusion & discussion

The Kurdistan Region usually looks for opportunities and chances to build its relations with world actors. Kurdistan region has always tried to use various tools to form its international movements, since it has not been recognized and has not achieved its own sovereignty. Tools as such as terrorism, Anfal and hydrocarbons. This article clarifies that hydrocarbon, as part of its ‘soft power’, leg back to formulate the KRG’s foreign policy. The KRG understands that Kurds historically tested a ‘hard power’ policy and they have never reached conclusion. Therefore, the implementation of soft policy strategy in multilevel system has become a priority of the KRG in its international movements. Based on this understanding, over the last two decades, the KRG has followed the strategy of developing Oil & Gas diplomacy; since it realized on one hand, its soil is very rich in various resources (in particular oil and gas), and on the other hand, it has good opportunity to use the hydrocarbon as a tool behind its planned strategy. The KRG oil and gas strategy from the very beginning showed a remarkable result and was able to catch the attention of the large number of the world companies. Eventually, through these companies, the KRG was able to reach companies home authorities. The process paved a way for the KRG to build strong diplomatic relations with countries such as Turkey, USA and Russia. And this, simultaneously, prompted others to formulate their relations with Kurdistan. The policy was heavily relied on a brave thought and deep encouragement. Since the KRG realized, its process cannot survive from hurdle and difficulties. This is what it faced, on one hand, by cutting the KRG budget from central government of Iraq in 2014, on the other hand, by putting the KRG in front of court. By that period, they could not have longer a serious negative influence on the progressing of KRG global energy policy, since the price of oil was too high – 110$ per barrel in 2014^[41].

But, since the Kurdish referendum for independence in 2017, the energy diplomacy’s curve of KRG has been continuously going down. In particular, in these days in 2020, the KRG has sharply slowed down the implementation of its oil and gas diplomacy. This refers to: First, the oil prices have yet again been halved, and the KRG is even more vulnerable position then in the year 2014. Second, the present-dire economic condition of KRG in the region has been decidedly difficult to meet the demands of its Covid 19 response. Third, on April 16, 2020 the Iraqi Caretaker Prime Minister Adil Abdul-Mahdi froze KRG budget once again. The budget cut decision was made both in connection to the KRG’s inability to fulfil the requirements of the Baghdad–Erbil oil-budget agreement 2018^[42], as well as with due to internal political instability in Baghdad.

In addition to all the above-mentioned difficulties, there is the possibility of a bright future for the KRG’s world movements. This based on the idea that the KRG has already created a structural system for finding an economic direction to enter the world market and formulating its world diplomatic relations. Since KRG was able to build its own oil pipeline in 2014, and signed dozens of big contracts with international companies, including Turkish and Russian companies. In addition, in 2017, it planned to develop a Gas pipeline project soon future. “The project envisions a pipeline with a capacity of 30 billion cubic metres a year to be linked to the Turkish gas network and eventually export Kurdish gas to Europe”^[43]. As far as possible in the future, this structure will be refunctioning and will undoubtedly lead the KRG to integration into its world diplomatic circle. As global demand for Gas ‘since the economic crisis of 2009 with a compound annual growth rate of 2.8%’^[44]. And the total global demand for crude oil (including biofuels) ‘will amount to nearly 140 million barrels per day in the year 2040’, however the ‘global demand for crude oil in 2020 amounted to 101 million barrels per day’^[45]. These statistic number can give us a clear picture that the countries will have never stay away from KRG, which is rich with in 45 billion barrels of oil and 100-200 trillion cubic (TCF) of natural Gas reserves.