The Kurdistan Region’s Khor Mor gas field exemplifies the potential and challenges of enhancing energy security and economic growth amidst geopolitical and security threats.

In a world grappling with economic uncertainties and concerns over energy and food security, oil operations in the Kurdistan Region face a complex web of challenges. These include security threats, political and legal hurdles, financial constraints, and geological obstacles. Yet, within these challenges lie significant opportunities to harness Kurdistan’s hydrocarbon potential and enhance revenue streams.

Dana Gas recently announced a 50% increase in gas production from the Khor Mor field since early 2022, spotlighting this region’s significance. Recognized as Iraq’s largest gas field, Khor Mor aims to boost its production to 750 million cubic feet per day in the coming years. Despite enduring nine attacks by Iraqi militia groups over the past two years, this field exemplifies the resilience and potential of Kurdistan’s energy sector.

This article explores the opportunities and threats to energy security in the Kurdistan Region, offering insights into the broader landscape of oil operations while focusing on the specifics of the Khor Mor Block.

An overview of the Khor Mor gas field

Pearl Petroleum, a consortium of Dana Gas and Crescent Petroleum, leads the Khor Mor Gas Project in the Kurdistan Region of Iraq (KRI). This partnership extends to collaboration with three European energy giants: OMV, MOL, and RWE. Together, they develop the Khor Mor gas field and maintain ongoing investments in the Kurdistan Region’s oil and gas sectors. Dana Gas and Crescent Petroleum each hold a 35% stake, while the European partners, previously involved in the Nabucco pipeline project, each own a 10% stake.

Kurdistan’s hydrocarbon potential has long been recognized. Initial oil exploration in the Middle East began in 1901 at the Chia Surkh field, located in Garmiyan’s Qoratu sub-district, under the oversight of the Kurdistan Regional Government (KRG). The British conducted pioneering explorations in the Khor Mor and Chamchamal fields in 1928 and 1929. The geopolitical landscape shifted significantly in 2003 with the U.S.-led intervention in Iraq, culminating in the rewriting of Iraq’s constitution in 2005 and the establishment of the KRG Ministry of Natural Resources in 2006. Contracts between the KRG, Dana Gas, and Crescent Petroleum followed in 2007, leading to successful gas production from the Khor Mor field after 18 months of exploration.

Exploring Kurdistan’s Khor Mor gas field’s potential in reserves and production

An assessment by Gaffney, Cline & Associates (GCA), an international auditing firm, revealed substantial reserves within the Khor Mor block: 4.4 trillion standard cubic feet of natural gas, 136 million barrels of oil, and 13.3 million tons of liquefied petroleum gas (LPG). Other sources estimate over 7 trillion cubic feet of natural gas reserves. Spanning approximately 175 km2, the Khor Mor field has seen significant investments, including over $630 million for plant expansion by the end of 2021, with $250 million from the United States. Despite security challenges from militia groups, the field’s gas production increased from 305 million cubic feet per day in 2018 to 552 million cubic feet per day in 2024, with projections of 650 to 750 million cubic feet per day in the future.

The field’s gas production primarily supports electricity generation via a 24-inch pipeline, extending 58 kilometers to Chamchamal and 116 kilometers to the Erbil Power Plant in the Pirdawd area. Plans for 2024 include preparations for gas exportation to other Iraqi provinces to bolster electricity generation. The field’s gas supports the generation of 4,200 megawatts of electricity daily, with 2,800 megawatts serving the Kurdistan Region and the remaining capacity allocated to Kirkuk and Nineveh. Approximately 70% of the Kurdistan Region’s electricity is generated from Khor Mor gas, with sustained production expected until 2080.

Another significant product extracted from the Khor Mor block is oil, separated from the gas based on density and subsequently stored. Oil production from 2018 to 2024 is projected to remain consistent, ranging between 15,000 and 20,000 barrels daily of gas condensates. Contracts have been awarded for its transportation to the Khurmala Dome reservoirs, where it integrates into the Kurdistan-Jayan pipeline network. Historically, this oil has been exported to refineries in Iran, particularly to Bandar Abbas. Additionally, the Khor Mor block produces approximately 1,050 tons of liquefied petroleum gas (LPG) daily, distributed by a local company at $315 per ton, meeting household demands in the Kurdistan Region.

Understanding the social and geographical dynamics of KRI’s Khor Mor gas field

Khor Mor, synonymous with Dana Gas, is situated a few kilometers west of the Qadir Karam subdistrict and nestled in the southern Chamchamal district. The area has a tumultuous history, marked by massacres and resistance, shaping its narrative of resilience and struggle. Despite these challenges, Khor Mor and surrounding areas have been central to regional conflicts and economic activities, particularly following the fall of Saddam Hussein’s regime in 2003.

Since 2022, the area has faced repeated attacks from Iran-affiliated Iraqi militias, with the most recent drone attack on April 26, 2024, resulting in fatalities and injuries. Contracts in the Kurdistan Region, primarily structured as Production Sharing Contracts (PSCs), differ for the Khor Mor field, which operates under a service contract. This model grants the KRG’s Ministry of Natural Resources greater intervention rights compared to other contracts, allowing for comprehensive oversight and management of the entire process.

Beyond profit: Examining multinational corporations as key actors in global politics

Understanding global complexities and regional security dynamics is crucial for effective navigation of the contemporary landscape. Engaging with multinational companies requires a thorough understanding of their principles and roles. Liberalism, a prominent theory in international relations, defends non-state actors and advocates for a free market economy, emphasizing the importance of multinational corporations in facilitating international relations.

Neoliberalism, emerging in the late nineteenth century, advocates for unbridled market freedom and minimal state intervention, emphasizing the market’s hegemony in all spheres. This ideology has influenced global corporations’ justifications for their existence, highlighting their role in economic development, job creation, and investment diversification.

Liberalism views non-state actors like global companies, private universities, and international organizations as essential components of international relations. These entities facilitate economic and social interactions across borders, creating a more interconnected world. Neoliberalism, which gained prominence in the late nineteenth century, supports market freedom and reduced state control, arguing that economic growth and social progress are best achieved through minimal government interference.

The rise of neoliberalism has led to the establishment of powerful elites, including multinational corporations, that influence global politics and economics. These entities often control significant resources and can shape policy and public opinion through their economic power and media ownership. The influence of multinational corporations extends to shaping international relations, as their interests often align with the geopolitical strategies of their home countries.

Charting a path to the KRI’s energy security: A call for superpower

Realism, a dominant theory in international relations, underscores the state as the primary actor in international affairs, advocating for its role in maintaining and augmenting power. Neo-realists emphasize the significance of a state’s position within the global framework, highlighting the importance of national security and power.

The Kurdistan Region faces internal political divisions and external threats from Turkey, Iran, and factions within the Iraqi federal government. With drones and missiles posing tangible threats to energy security, the United States must bolster its presence in the region to promote energy security. Efforts to safeguard oil and natural gas reserves, delineate water resources, promote renewable energy, and advance electrification hinge on the actions of dominant states like the U.S., aimed at maintaining order within the international arena.

Neo-realism posits that external threats necessitate structural changes within states, with powerful nations acting as unitary actors to drive actions within the international system. The Kurdistan Region must prioritize its national security by enhancing its power and ensuring the security of its energy resources. This involves bolstering the presence of international coalitions to safeguard airspace and secure gas fields, thereby ensuring regional energy security.

Under pressure: Unveiling threats to Kurdistan’s natural reserves

The Mediterranean Institute for Regional Studies (MIRS) has identified several main factors challenging energy security in the Kurdistan Region, including geological issues, price volatility, and security concerns. These factors impact the region’s energy market and production capabilities, highlighting the need for effective management and sustainable solutions.

Geological challenges include well deterioration, corrosion, and the mixing of water and oil during extraction. Poor treatment of wells by companies and technical deficiencies can exacerbate these issues. Price volatility poses another significant threat, as oil prices are inherently unstable and subject to fluctuation. The global shift towards clean energy and renewable resources further complicates the market dynamics.

Security concerns are particularly alarming, with ongoing conflicts and threats from armed militia groups affecting energy production and distribution. The Kurdistan Region’s geopolitical position exposes it to risks from neighboring countries and internal political divisions. Effective management of these challenges requires robust national institutions and strategic international partnerships.

KRG’s oil contracts: What are the underlying issues?

The KRG’s oil and gas sector faces several challenges, including the absence of national economic and industrial capacity, reliance on foreign companies, high operational costs, and the need for strategic political and economic restructuring. Addressing these issues is crucial for sustainable growth and stability in the region.

The absence of national economic and industrial capacity limits the KRG’s ability to fully capitalize on its natural resources. Friedrich List, a prominent realist thinker, emphasized the importance of local industries in fostering competitiveness and economic nationalism. Establishing local energy services companies would mitigate the region’s current debt and reduce the high costs associated with oil production.

Operational costs in the Kurdistan Region are disproportionately high, spanning logistics, extraction, transportation, and security. Establishing a local oil company could streamline operations and reduce costs, fostering economic resilience. Additionally, the region’s political leaders must re-institutionalize the political economy and engage in international discussions to secure favorable terms for energy production and export.

Amidst Iraq’s multifaceted challenges, the prospect of a resurgence toward reconstruction and heightened regional and global relevance remains promising. Recognizing the pivotal role of the Kurdistan Region’s oil processes in the global energy landscape, institutionalizing its oil and gas affairs becomes imperative. The Kurdistan Region needs to rethink its energy policy, encouraging political unity and geopolitical shifts that provide more diplomatic, military, and economic support. Safeguarding the airspace and securing gas fields through international coalition efforts are crucial for ensuring energy security in the region.

To navigate the complexities of global energy markets and geopolitical dynamics, the Kurdistan Region must prioritize the development of robust national institutions and strategic international partnerships. The involvement of multinational corporations, while beneficial for economic growth, must be balanced with national interests and security considerations. By addressing the underlying challenges and leveraging its hydrocarbon potential, the Kurdistan Region can fortify its future and secure its energy sovereignty in an increasingly uncertain world.