EU- Iraq agreement could boost energy relations
The relations between the EU and Iraq are gradually progressing. Should
Turkey become a member of the EU, the two would share a border. Edward
Burke, associate fellow at European thinktank FRIDE, and previously the
deputy head of the International Police Coordination Board Secretariat in
Kabul, Afghanistan, spoke to Interfax about the EU’s first partnership
agreement with Iraq and potential gas imports.
http://interfaxenergy.com/natural-gas-news-analysis/natural-gas-energy-analysis/eu-iraq-agreementcould-boost-energy-relations/
Annemarie Botzki 14 February 2013 | 12:23 GMT
Interfax: Members of the European Parliament supported the EU’s first partnership
and cooperation agreement (PCA) with Iraq. What are the benefits of such an
agreement?
Edward Burke: The immediate benefits are rather limited. However, it sets the EU on a
negotiating platform to improve its overall relationship [with Iraq].
Part of the agreement pertains to energy, which is a particular focus of the EU, which
sees Iraq as a future import market.
With regards to concrete steps to opening up the Iraqi energy sector to the European
market, I am not sure that is going to be resolved the day after this agreement. This is
simply the start of a long, but important, energy dialogue between the EU and Iraq.
But there are other benefits, for example an EU trade dialogue with Iraq and related
governance programmes could help to improve Iraq’s accession prospects to the
World Trade Organisation.
Interfax: What impact does the new agreement have on energy relations between the
EU and Iraq?
EB: The dialogue between the EU director general for energy and the Iraqi Oil Ministry
is in its very early days.
Around five years ago, there were a number of potential energy projects in the region
that could have been implemented. However, now there are problems with the Arab
Gas Pipeline and conflict in Syria – the political unrest negatively influences financial
investments to open up new pipelines and expand networks to European markets. We
are also seeing a deterioration of already strained relations between the Kurdish
Regional Government [KRG] and central government in Baghdad. Relations between
Turkey and Iraq are also more strained.
There are many issues, in terms of how to deliver Iraqi gas to European markets, that
have not been fully solved. I believe the EU will have to work with Turkey particularly
to overcome those issues. Iraq’s internal situation is unstable – the EU and Turkey
need to apply political influence towards trying to alleviate tensions between Baghdad
and the KRG, for example.
Interfax: Regarding the export of Iraqi gas, how important is Turkey as a transit
country?
EB: I think it’s going to be long haul. Relations between Ankara and Baghdad are
complicated. For the EU, Iraqi gas would be a perfect way to diversify its gas imports.
But unfortunately, in the short and medium term, we are not going to see much
progress – simply because of the remaining political problems in the region.
The pipelines in Syria are the singular problem at the moment, as an extension of these
to Iraq is obviously not feasible. There is not a lot of political leeway for the EU to try to
rework its pipelines in the region at the moment. Given that Syria will take years to get
back on its feet, Turkey is probably the best transit option to get more gas to Europe,
but negotiations are slow between the governments at present – strained, of course,
by the KRG problem in Iraq.
Interfax: Does the EU have a long-term strategic vision regarding its relations with
Iraq?
EB: I believe the EU will keep an eye on Iraq in terms of its significant energy potential
in the long term.
Around three years ago, we were optimistic that it could be possible to invest in a
number of infrastructure projects and Iraq seemed to be on a more stable course at
that point. But, of course, the region is more unstable in 2013 than in 2010.
It is interesting that around 20, 30 or even 40 years ago the pipelines in the region
were working, many in better shape than they are now. The Kirkuk-Baniyas pipeline
was opened in 1952, but it was allowed to degenerate and fall into disuse because of
political problems and now the war in Syria has significantly interrupted the prospects
of renovating and expanding it.
The extension of the gas infrastructure has simply not borne fruit. This is regrettable
for Europe, which needs to diversify its sources, and for which Iraq is perfect.
If you had a semi-stable region then you would have a real opportunity for Europe.
There are significant, major influxes of Iraqi gas, which would lower prices and allow
the EU to diversify away from the Russian market. It’s just a shame Europe can’t do it
right now. But Iraq also has major internal problems to do with energy governance.
Many parties are deeply unhappy with the legislative framework for regulating
hydrocarbons.
Interfax: The International Energy Agency’s Energy Outlook Iraq, also points towards
the potential of gas in Iraq. What barriers remain?
EB: There are the enormous political problems. But it [relations with Iraq] should be
more of a priority for Europe, in my opinion. Iraq is not taken as seriously as it should
be in Europe, in terms of its potential.
Instead of just sending officials from DG Energy, I believe the EU needs more political
focus at a high level. Whether that is a high representative or a commissioner, the EU
should try to deal with the ongoing internal and regional problems affecting Iraq. I
have long argued the EU needs a special representative for Iraq – the country is that
important for Europe and the region, especially given the problems with Iran.
It would be extremely expensive for Europe for these problems to continue.
Interfax: Is there potential for improving infrastructure in the region?
EB: Talking to officials in Brussels, it seems there is still a ‘wait and see’ approach to
investing in Iraqi infrastructure. Iraq’s revenues are such that the EU feels it should be
giving it large amounts of assistance. But the same could be said for Algeria – there the
European Investment Bank invested in new pipelines to Europe, because it was in
Europe’s interests. The EU should take another look at Iraq in this regard. Again,
Turkey is the most obvious route if you can deal with the KRG-Baghdad problem and
strengthen relations between the two countries.