Special Report: How Exxon helped make Iraqi Kurdistan

LONDON/ARBIL (Reuters) – In January 2011, Exxon hired one of the best connected men in Iraq: Ali Khedery, an American of Iraqi descent who had served in Baghdad as a special assistant to five U.S. ambassadors and a senior adviser to three U.S. generals.

At a meeting with Exxon a few months later to analyze Iraq’s future, Khedery laid out his thoughts.

Iraq under Prime Minister Nouri al-Maliki was moving toward dictatorship and civil war, he said he told the session. “We will see a rise in violence and a total paralysis in Baghdad,” he recalled saying. Iraq was likely to align itself more closely with Iran, which will “have an adverse impact on U.S. companies.”

The gloomy scenario grabbed the attention of Exxon executives. Just two years earlier, they had signed a $25 billion deal with Iraq to develop West Qurna, one of the largest oil fields in the country.

“No one wanted to hear that they had negotiated a multi-billion dollar deal in a country which will soon implode,” said Khedery, who has detailed to Reuters the meeting and subsequent events for the first time.

He suggested an alternative: Kurdistan, a semi-autonomous region in northern Iraq that was politically stable, far from the chaos in the south, and had, by some estimates, oil reserves of 45 billion barrels.

Less than a year later, Exxon signed a deal with Kurdistan. The story of how that happened explains much about the would-be nation’s growing power.

Interviews with key players in the secret 2011 negotiations – the talks involved not just Exxon but also fellow Western oil giant Royal Dutch Shell – show how Exxon’s decision to invest infuriated both Washington and Baghdad, and helped propel Kurdistan closer to its long-held goal of independence.

Kurds like to say they are the world’s largest ethnic group without a state. Numbering some 35 million, they inhabit a band that stretches from Syria across southern Turkey and northern Iraq and into Iran. Most follow Sunni Islam and speak their own distinct languages.

The Exxon deal fueled Kurdish self-belief. The presence of the biggest U.S. oil company has helped not just financially but also politically and even psychologically.

“Part of the process of building our region has to do, of course, with dealing with oil, signing contracts, negotiations with various countries,” Fuad Hussein, chief of staff to Kurdistan’s president, told Reuters. The Exxon deal validated smaller oil deals Kurdistan had already signed and was “a big victory for us.”

Exxon declined to comment.

Despite the deal, Kurdistan’s path to nationhood is far from certain. Independence is opposed by Washington, Baghdad, neighboring Turkey and Iran. It also remains unclear whether the Kurds have the strength to stand alone in this volatile region. As militant group Islamic State (IS) advanced through Iraq this summer, Baghdad’s troops melted away, leaving the Kurdish fighters known as peshmerga to halt the extremists.

When IS threatened to take Arbil, Iraqi Kurdistan’s capital, the United States bailed out the Kurds with a bombing campaign. On Tuesday, a temporary agreement between Baghdad and Arbil to end their dispute over oil exports and budget payments looked, at first glance, like Kurdistan returning to the Iraqi capital’s control.

But the deal does nothing to resolve the issues between Arbil and Baghdad, while forcing the Iraqi capital to effectively acknowledge Arbil’s development of its energy resources with Exxon, other foreign companies and Turkey. Arbil has compromised, but it has also locked in the progress of the past three years.

kurds oil

A CHANGE OF THINKING

Oil companies have been interested in Kurdistan for years. But after the United States toppled Iraqi strongman Saddam Hussein in 2003, a series of governments in Baghdad made clear that to get a slice of the biggest prize – the huge reserves in Iraq’s south – firms should not cut separate deals with the Kurds.

The fear: Letting the Kurds control the oil would rob central government of billions of dollars in revenue and bring a breakup of the country closer.

Western firms’ reluctance began to melt after Kurdistan passed more business-friendly oil legislation in 2007. Mid-sized firms began to invest, though the biggest players remained on the sidelines.

Baghdad finally divvied up the oil concessions in Iraq’s south in 2009 and 2010, and oil majors rushed to sign. But terms were tough and many firms, including Exxon, were soon frustrated.

Quietly, in late 2010, Exxon began putting out feelers to the Kurdish regional government. Proper talks began in early 2011, according to Hussein, the Kurdish president’s chief of staff. Khedery had resigned from the U.S. administration the previous year to protest against U.S. policies in Iraq, which he thought were hurting Washington’s interests in the region.

In the oil world, filled with Texas oilmen and former U.S. military types, Khedery stood out. Young, rail thin and with the bearing of an academic, he appeared confident and well connected. He had been privy to many of the backroom political deals in Iraq since 2003, and had a direct channel to the president of Kurdistan.

“He knew almost every official from the American side in Baghdad and he used to know every Iraqi leader,” said Hussein, who had befriended Khedery when they worked together as advisers to the U.S. occupation authorities in Baghdad.

Exxon began to rethink its approach to Kurdistan when a small group of company officials met long-time CEO Rex Tillerson and his deputies a few times in the spring of 2011.

The first meeting took place at Exxon’s headquarters near Dallas. The small Exxon team briefed Tillerson in his huge conference room. The oil boss listened quietly to the presentations, most of which focused on technology and geology, with a brief talk on Iraqi politics. Afterwards, most of Tillerson’s questions were about politics. That’s when Khedery spoke up.

“I told him everything I thought would happen in Iraq,” Khedery said. “I said that if you want to manage risk, then the last place you want to be is in Baghdad or southern Iraq.” Those zones, he warned, were filled with Shi’ite militias, who had killed and maimed thousands of American troops, as well as “neo-Baathist insurgents, al Qaeda sleeper cells, and Iranian Revolutionary Guards.”

He pointed instead to Kurdistan, which was “more peaceful, more predictable, and overwhelmingly pro-American.”

kurdish oil tankerREUTERS/Tom DuncanThe oil tanker SCF Byrranga, which was renamed the United Kalavryta in March 2014 (also known as United Kalavrvta) and is currently off the coast of Texas with a cargo of Kurdish crude oil, is seen off the Isle of Arran, Scotland in this handout photo taken February 21, 2014. 

NEAR FAILURE

Serious talks with the Kurds began soon after, with a call from Khedery to Hussein, according to the presidential chief of staff. The two sides met secretly in London, Dubai and Arbil.

On the Kurdish side, the main negotiator was Oil and Gas Minister Ashti Hawrami. But Kurdistan President Massoud Barzani also tapped Hussein to attend discussions. Unusually, the president even joined some meetings himself. Exxon was represented by senior executives from Texas.

But it was not just Exxon and the Kurds talking. Europe’s biggest oil major, Shell, was also involved, according to Hussein. Shell was Exxon’s junior partner in the West Qurna field and had a separate deal with Baghdad to invest tens of billions of dollars in southern Iraq’s Majnoon field. Exxon and Shell believed that teaming up – they had a combined market capitalization of more than $600 billion – would make it hard for Baghdad to throw them out of the south even if they cut a deal with Kurdistan.

The first meeting was in Arbil, which is dominated by a central citadel that is one of the oldest continuously inhabited settlements in the world. The Exxon team, concerned about Kurdistan’s relationship with Baghdad, and longterm stability, quizzed Barzani on his views of Iraq.

“They wanted to know how my president is thinking, what is his vision,” Hussein said. The chief of staff said Barzani called Prime Minister Maliki’s policies damaging to Iraq. “(Barzani said) that if it will continue this is bad for the country, this is dangerous, the path must be changed.”

Barzani and Maliki both declined to comment.

In the summer of 2011, as negotiations continued, Kurdistan sold two oil blocks to Hess, a U.S. company. Exxon and Shell had been keen to get the blocks, and the surprise sale nearly ended the talks, according to Hussein. To show Arbil was still serious, Barzani promised more attractive terms, according to both Khedery and Hussein.

A signing ceremony in Arbil was planned for mid-October, but another complication arose. Shell was in the final stages of talks with Baghdad to obtain exclusive rights to process all natural gas produced in Iraq’s south, a deal worth $17 billion. If Shell signed with Arbil, Baghdad might scuttle the gas deal.

At a meeting with Barzani in the Imperial hotel in Vienna, where the Kurdish president was on holiday, Exxon executives said they were committed to signing. Shell’s executives, though, seemed less sure.

What Barzani and Exxon did not know was that Shell’s CEO Peter Voser was in Baghdad, meeting Maliki to clinch the gas deal in southern Iraq. Just three days before the Kurdish deal was to be signed, Shell told Exxon it was no longer interested.

A Shell spokesman declined to answer questions about the Kurdistan deal. “Today our focus is on delivering the Basrah Gas Company project and the Majnoon Oil Field development, both of which are projects of critical importance to the reconstruction and economic development of (Iraq),” the spokesman said.

map reuters kurdsReutersMap of the Middle East showing distribution of the Kurdish population in the region. 

 

TERRITORIAL AMBITIONS?

Exxon pushed ahead. The firm believed that rivals such as Chevron and Total would follow suit.

The Texans kept things low key, though. An Exxon delegation flew to Arbil to sign the deal. Tillerson stayed in Dallas.

The six blocks Exxon won were scattered around the autonomous region. One block was near Turkey and another near the border with Iran. The three most controversial were along the line that divides Kurdistan and the rest of Iraq, straddling areas whose control is disputed between Arbil and Baghdad. The Kurds included the blocks in the deal and later managed to bring the governor of Nineveh, one of the provinces affected, on board.

To some, it looked as if Arbil was using Exxon to consolidate its borders. Hussein said Arbil already controlled the disputed territories and did not need Big Oil’s legitimacy. Barzani, though, has since described the presence of companies such as Exxon as a form of insurance for Kurdistan.

“A FEW F-BOMBS”

When news of the deal leaked in early November 2011, both Baghdad and Washington were furious. Maliki wrote a letter to President Barack Obama demanding he push Exxon to scrap the deal. Iraq’s deputy prime minister for energy affairs summoned Exxon executives to explain.

To Washington, the deal was an embarrassment. The U.S. strategy was built on support for Maliki and its ‘one Iraq’ policy of a unified nation under a strong central government. Now one of America’s most powerful corporations had undermined that approach.

A former U.S. diplomat told Reuters the U.S. government had less than a day’s notice of Exxon’s deal. U.S. Ambassador to Iraq James Jeffrey was livid, said the former diplomat. “My understanding is that (Jeffrey) dropped a few F-bombs,” he said. “He was less than amused.”

Hussein remembers a tense meeting he and the Kurdish oil minister, Ashti Hawrami, had with Jeffrey in Baghdad soon after the deal. “He was very angry,” Hussein said. “We were trying to explain that what we are doing is in the interest of Iraq, what we are doing is in the interest of Kurds, what we are doing is legal.”

Hawrami declined to comment. Jeffrey has since left the State Department. He is reported to be a consultant to Exxon, but declined to comment for this story.

Despite the anger, the deal was a political triumph for the Kurds. Exxon had shown Arbil could attract oil majors regardless of what Baghdad thought. Hawrami unveiled the deal at an Arbil energy conference in late 2011. Kurdistan had initially signed contracts with “small and beautiful” companies, he said. Now it was working with “the giant and magnificent.”

Within a few months, both Chevron and Total signed deals, further strengthening Kurdistan. A pact with Russia’s Gazprom followed.

“What really binds Kurdistan to Baghdad is money,” said Robert Ford, who retired from his post as U.S. ambassador to Syria in February and previously served three stints for the State Department in Iraq. “The more the Kurds have an independent source of income, especially from energy, the more it feeds into their desire to establish greater autonomy if not independence from Baghdad.”

In January 2013, Exxon CEO Tillerson made his first and so far only visit to Iraq, traveling to Baghdad to mend fences with the central government. It isn’t clear what happened in that meeting, but Baghdad has not canceled its own contract with the Texas firm. Arbil has even built a pipeline to Turkey, which makes it easier to export its oil.

The Iraqi capital remains riven by strife, but things are looking up for Exxon. The firm’s main Iraqi critics – Maliki and two other senior politicians – were pushed from power this year in elections. The men who replaced them are more amenable to a compromise, as this week’s agreement with Arbil shows.

Khedery, who has since set up his own consultancy, is not surprised. “I think for Exxon,” he said, “with their 125 years in business, the opposition from Maliki was simply seen as something that could be managed and eventually mitigated.”

Reuters (Zhdannikov reported from London, Coles from Arbil, Parker from Baghdad; Edited by Simon Robinson)

Elite Student Programme

Working with students and Higher Education Ministries in Western Asia and Iraq, we aim to improve access to information for high achieving students who are applying for national and international scholarships. We offer guidance on applications and application support documentation, course selection and visa application. We do not charge scholarship students for this service.

Elite Student Programme

Qualifying students will receive advice and support for applications to any UK university. Advice includes:

  • University and Course selection in line with career goals and scholarship guidelines
  • Application support materials, e.g. Personal Statement planning
  • Interview and application advise
  • Visa and pre-departure briefings

Kurdistan, Iraq

Levant Education has been active in Kurdish Iraq since 2010. We established the first UK-focussed education exhibition in that year, and have returned twice per year with leading UK universities to offer enrolment advice, information seminars and government liaison sessions.

Turkey

Levant Education has been active in Turkey since 2009. We established the first UK-focussed education exhibition in 2010, and have returned twice per year with leading UK universities to offer enrolment advice, information seminars and scholarship information sessions, working with EU Jean Monet Schoalrship programme.

Azerbaijan

Levant Education has been active in Azerbaijan since 2011. We established the first UK-focussed education exhibition in 2012, and have returned twice per year with leading UK universities to offer enrolment advice, information seminars and scholarship information sessions, working with UKTI, the British Council and Ministry of Education of the Republic of Azerbaijan.

 

For further information about the Elite Student Programme, please contact Programme Coordinator Hayal Bayramova, Hayal (dot) Bayramova (at) levanteducation (dot) com

UK universities draw Kurdish students

The Kurdish Globe: More than 1,600 students have been granted the opportunity (April 2012)

The higher education relationship between Kurdish students and UK universities has strengthened since the KRG launched its Human Capacity Development program, with additional UK universities willing to enroll Kurdish students intent on studying in the UK.

The former KRG higher education Minister Dr. Dlawar Aladdin and UK University's minister of higher education David Willets speak to reporters during a press conference in Erbil./ GLOBE PHOTO/Safin Hamed
The former KRG higher education Minister Dr. Dlawar Aladdin and UK University’s minister of higher education David Willets speak to reporters during a press conference in Erbil./ GLOBE PHOTO/Safin Hame

Some 14 universities from Britain have visited Kurdistan region in the last couple of weeks. This is the first time a group of eminent foreign universities visit the region, thrilling those who want to continue their studies abroad.

“We have a group of universities coming from UK, some for the first time, and some of them have been investing in a relationship for years with Kurdish universities, helping to train and educate students from the Kurdistan region,” said David Mitchell, managing director at Levant Education Consulting, to The Kurdish Globe.

Mitchell believes the presence of UK universities in Kurdistan is a golden opportunity to further improve educational ties between the two sides and to give students a chance to benefit from quality education in Britain. “The main reason we are here today is to invite potential Kurdish students looking to study in UK.”

“It’s a fabulous success,” said Chris Bowers, British general consul in Kurdistan region, during a press conference at Erbil’s British consulate. “Higher education has been one of our major focuses here. We have a great future ahead in terms of the relationship between Kurdish and British universities, and that is tremendously exciting.”

More than 1,600 students have been granted the opportunity to continue their studies at leading international universities in Europe and the U.S. under the KRG’s Human Capacity Development program, which was launched in 2010 with $100 million. It is administered by the KRG Ministry of Higher Education and Scientific Research.

Source.

Expression of Interest – Academic Preparation Centre Kurdistan

Levant Education Group invites Expressions of Interest (EOI) from qualified and prestigious language training providers for short listing / selection of partner for establishing a Training Centre in Kurdistan in partnership with a local university.

The Training Centre objectives will include:

  • English Language Training for Academic & General Purposes
  • Test preparation working to recognised Secure English Language Tests for university admission
  • Academic preparation for future Masters & PhD students
  • Assisting with PhD Proposal writing
  • Cultural awareness training

Partner Criteria

The partner chosen to work with Levant Education and the local university will have:

  • Experience in international student preparation for post-graduate education
  • The capacity to provide a Director of Studies and core group of Language Trainers for up to 20 weeks at a time, and 40 weeks in total
  •  Curricula and materials suitable for General and Academic English teaching
  • A commitment to excellent, results-driven teaching
  • Examples of delivery of similar off-shore/in-market projects

EOI Submission Levant Education will receive submissions and shortlist potential partners based on submissions consisting of:

  • A cover letter with authorised signature
  • Organisational profile highlighting relevant experience and capacity to undertake the project
  • Review of relevant project team detailing relevant experience
  • List of relevant courses / academic preparation products that will suit this project
  • CV’s of project team, including Project Lead(s), potential DoS and Language Trainers

Partner Shortlisting

Based on the EOI’s, chosen partners will be contacted for follow up meetings and bid proposals.

To register your initial interest, and receive further details, please complete the form:

UK Education Tour or the British Council?

Levant Education presents a handy guide to choosing between the 2 events that are now on offer in Kurdistan, Iraq.

Images UKET Kurdistan

UK Education Tour

  • Successful UK-focussed exhibitions in Kurdistan since 2011
  • Feedback, references available – universities already signed up for OCT 2014
  • Free cancellation in the event of HCDP cancellation or security issues
  • Well known in the region by universities, government and students
  • Investing in local language teaching and enrolment support
  • Operated by Levant Education, a UK registered business
  • Suitable for direct recruitment or working with your agency
  • Independent company working with no ties to the UK government

British Council in Kurdistan

  • No exhibition experience
  • No track record or references
  • Event not confirmed
  • Pulled out of its Erbil teaching operation (last month)
  • Underwritten by UK taxpayer money
  • Complicated international network of business entities for tax efficiency (avoidance).
  • No experience in international HE marketing or recruitment
  • Part of British government foreign policy
  • A history of incompetence in exhibition administration

At the last UK Education Tour in Kurdistan, hotel event managers informed us that British Council staff had been in to visit, researching our events, our operations, how we put together our successful events. If you have to ask, you’ll never know…

Sign up for UK Education Tour Kurdistan here! 

 

New Government formed in Kurdistan 9 months after elections

Kurdish Government

Iraq’s autonomous Kurdistan region finally formed a new government yesterday after months of negotiations.

“Today we announce the formation of the government in complicated circumstances,” said Nechirvan Barzani, KRG Premier and the nephew of the region’s president.

The government includes members of the Goran (Change) movement, which had been in opposition until the September 2013 elections.

Previously, the government was formed by the historic duopoly of Barzani’s Kurdistan Democratic Party KDP and the Patriotic Union of Kurdistan PUK of ailing Iraqi President Jalal Talabani.

Negotiations have been ongoing since the regional parliamentary polls in September, as parties vied for power.

The members of the 8th Cabinet sworn into posts Wednesday include Dr Yusuf Guran as  Minister of Higher Education & Scientific Research.  The Ministry of Higher Education, which runs the Human Capacity Development Programme (HCDP) scholarships, remains in the hands of the Patriotic Union of Kurdistan (PUK) party.

The male dominance of the new government drew criticism from women’s rights activists. Chiman Rasheed told KNNC that women in election campaigns of political parties play a major role, while they are forgotten during the division of KRG’s posts due to the patriarchal mentality of men in Kurdistan.

Chiman stated, “Political parties should answer the question of why they have many female members, yet they do not use women in key governmental positions.”

Chnar Saad Abdullah, a leading member of the Kurdistan Democratic Party, said that the lack of women in the KRG’s eight cabinet violates human rights, and this patriarchal approach increases uncertainty between women and the KRG.

Links:

Kurdistan Parliament approves new KRG Cabinet

UK Education Tour Exhibition October 2014 Erbil & Suleymaniyah

 

UKET Kurdistan Spring 2014 – Photos

This Spring’s UK Education Tour was once again a great success, thanks to the exhibitors, Ministry of Higher Education officials, Pearson PTE Academic testing, Levant Education and over 1000 students hoping to study in the UK.

Exhibitors can see numbers and provide feedback here.