Regardless of whether Iraq’s recent turbulent history has been brought about by its vast oil stocks, there is little doubt that the black stuff will be a major determinant of its future. Iraq is blessed, or cursed, with one-third of the world’s conventional oil reserves. It is similarly blessed/cursed by its complicated situation: at the crossroads of the Arab world, and possessing a volatile portfolio of neighbours, with two of whom it has fought wars – both of which were at least partly about oil.
It is inevitable that Iraqi oil will eventually return as a player to the market, which will keenly refocus attention on its role and relationships in the region.
In a recent interview with fDi in Baghdad, the chief spokesman for the Iraqi government, Ali al-Dabbagh, outlined some of the scenarios that he envisioned playing out as the country gradually recovers capacity.
Iraq, he says, will of course respect the regulations and quotas set by the Organisation of the Petroleum Exporting Countries (OPEC). But in return, he says, OPEC will have to recognise Iraq’s need for income and investment in infrastructure, and should be compensated because of its reduced exports since 1980, since when Iraq had not taken what Mr Dabbagh describes as its “real share”.
Any oil wealth the country accrues, says Mr Dabbagh, will be used as a force for stability in the Middle East, even suggesting that Iraq could forge a working relationship not only with, but also between, the region’s two big rivals, Saudi Arabia and Iran: possibly providing opportunities for Iran to pipe resources to the Mediterranean (a scenario that the US is unlikely to support, given the current sanctions on Iran’s petrochemical sector), while Turkey, he suggests, will also be enthusiastic about increased throughput of Iraqi oil and gas. “The time has [passed] for us to use our oil as a weapon,” he says.
However, oil seldom loses its potency, and increased production is bound to ruffle feathers. Many known (and possibly unknown) Iraqi fields straddle borders with neighbours including Iran and Kuwait, and the Risha gas field is shared with Jordan. In 2008, relations between Iraq and Iran were briefly but severely strained when Iranian engineers, accompanied by troops, occupied and started producing from wells at Fakka, on the Iran/Iraq border. Given the extent of Iranian influence in Iraq, the incident illustrated the country’s vulnerability to its powerful neighbours.
Mr Dabbagh acknowledges that shared fields have historically been a source of conflict but is keen to stress Iraq’s interest in peaceful solutions.
“We will never accept and allow any countries to unilaterally use [a shared field] without negotiations with Iraqis. It should be understood that Iraq will never allow any of its neighbours to threaten its resources,” he says. “But at the same time we would like to use such resources and such common oil fields to improve relations and create good relations and this could be used in either negative or positive ways. We are willing to use these common oil fields [in a positive way] towards improving relations with our neighbours.”
Whether that is possible carries heavy implications for security in the Middle East and well beyond.