Russia and Iraq's Oil Game: A Twist in the Global Oil Market
Hey there, fellow energy enthusiasts! 🛢️ Today we're diving deep into a story that's been sizzling in the oil and gas sector. Let's talk about Russia's control of the oil sector in Kurdistan (KRI), Northern Iraq, in 2017, and why it's essential to the new global oil market order. (Spoiler alert: it's also a topic of my latest book!) 📖
Why Russia Went For the Oil
So, why did Russia go for this region? There are four BIG reasons:
Oil and Gas Reserves Galore: The KRI is a treasure trove of oil and gas. Who wouldn't want a piece of that pie?
Playing the Mediator Role: With tensions between Northern and Southern Iraq, Russia saw a chance to be the 'cool uncle,' mediating between the two sides. Diplomacy? Check. Leverage? Double-check.
Expanding Influence: That leverage? Russia wasn't shy about using it to extend its grip over Southern Iraq, too. More oil, more control!
Stymying the U.S. and Allies: This move had some spiciness to it, effectively throwing a wrench in the U.S. and its allies' plans to rebuild influence in Iraq.
Then came March, and the Iran-Saudi Arabia relationship agreement, brokered by China. A very high-ranking Kremlin official even said, “By keeping the West out of energy deals in Iraq... the end of Western hegemony in the Middle East will become the decisive chapter in the West’s final demise.” Talk about geopolitical drama!
The Master Plan: Last Phases and the West Qurna 2 Field
Russia's control over the KRI marked the start of a fascinating saga with Iraq's oil fields. West Qurna 2, one of the world's largest oil fields, became a centerpiece. Iraq had big plans, aiming to boost production to around 7 million barrels per day by 2027. With recoverable reserves of 13 billion barrels, this field is a gold mine!
Things took a turn when Russia's Lukoil, a major player in West Qurna 2, got cranky about being paid just $1.15 per barrel. With an $8 billion investment and $6 billion still owed by Iraq’s Oil Ministry, the situation became tense. Things got spiced up further when Lukoil agreed to invest an additional $1.5 billion to raise production. 🌶️
Plot Twist: Independence and Chaos
Then came the independence vote in Kurdistan, causing chaos. Iranian forces moved into KRI with Russian support, and Russia effectively took control of the region's oil sector. The chess match between Russia and Iraq’s Federal Government continued with disagreements over production rates, payments, and more.
Things seemed to cool down a bit until recently. Lukoil increased production, raising eyebrows and expectations. An Iran source even said, "With the Iran-Saudi deal, the last part of Russia’s move with China to secure the whole region [Middle East] is in play." 🌍
What's Next?
The story doesn't end here. With a unified Iraq being a vital part of a larger geopolitical strategy involving Iraq, Iran, and Saudi Arabia, the stakes are higher than ever. This drama is a game-changer for the heart of the Middle East's oil and gas reserves. The U.S. plan has stumbled, but Russia's plan is still unfolding.
So, grab some popcorn, oil lovers! 🍿 This saga is shaping the future of the global oil market, and we're only witnessing the beginning.