DESERT TREASURE

Yasmin Helal explains why the Middle East is embroiled in long-term disputes over oilfields

Within the vast deserts of the Middle East lies a hydrocarbon treasure. Prior to the discovery of oil, the local Bedouins paid no attention to boundaries and sought shelter wherever there was a source of water.

But once oil was discovered, the free movement of the Bedouins was no longer desired and the colonial powers rushed to draw lines on maps that meant nothing to the locals. As a result, local chiefs began squabbling over previously undisputed areas.

Under the Uqair Protocol of 1922, a diamond-shaped area was drawn and labelled the Neutral Zone between Saudi Arabia and the area bordering Kuwait and Iraq. The disputed oilfields between Iraq and Iran in this zone contained so much oil wealth that it eventually triggered the two Gulf Wars.

The disputed oilfields were not the only reason that drove Saddam Hussein to wage war on Iran in 1988 although it was a significant one. In sum, Iran shared five oilfields with Iraq that included North and South Azadegan, North Yaran, South Yaran and Yadavaran.

Azadegan is considered the world’s third-largest oilfield with in-place reserves of 33.2 billion barrels and recoverable resources of about six billion barrels. Since 2014, Iraq has been producing 210,000 barrels per day (bpd) from South Azadegan and aims to increase this to 1.8 million bpd from the field.

Even years after the war ended, Iraq and Iran still occasionally squabble over shared oilfields.

In a 2009 article published by Al Jazeera, the US military spokesman in Iraq said: “What happens is… every three or four months, the Oil Ministry guys from Iraq will go to fix something or do some maintenance. They’ll paint it in Iraqi colours and throw up an Iraqi flag. They’ll hang out there for a while until they get tired. And as soon as they go away, the Iranians come down the hill and paint it in Iranian colours,
and raise an Iranian flag. It happened about three months ago and it will probably happen again.”

However, the war between Kuwait and Iraq was because of the oilfields that the two nations shared – viz. the Ratqa field that became part of Kuwaiti territory following the war and the giant Rumaila field.

The Ratqa field, which is now run by Kuwait Oil Company, has a production of 45,000 bpd. Meanwhile, the Rumaila field operated by Iraq’s South Oil Company pumps around 1.3 million bpd. Of the total 615 wells in Iraq, 225 are within Rumaila, which is why the country is so dependent on this field.

A mere few weeks before Iraq’s occupation of Kuwait in 1990, Baghdad had accused Kuwait of stealing billions of dollars worth of oil from Rumaila through horizontal drilling – a charge that was strongly denied by the Kuwaitis.

Carved on the map purely for colonial interests, Kuwait had always been perceived as land stolen from Iraq. But this perception ended with the war. Even today, disputes over oilfields prevail in Iraq particularly when it comes to the conflict with Kurdistan in the north of Iraq.

The Kurds themselves aspire for autonomy, claiming that the Iraqi government represents a foreign occupation exploiting the hydrocarbon wealth of the contested province of Kirkuk. Oil reserves in this region may total some 45 billion barrels – which is the equivalent of almost a third of Iraq’s entire reserves – say the Kurds.

Iraq’s shared oilfields on the other side of the map continue to stain its diplomatic relationships with Saudi Arabia. While very little information is available about the oil production capacity of the fields in this area, the two nations undoubtedly hold dear the little piece of the diamond.

Saudi Arabia’s shared oilfields with Kuwait have seen ups and downs over the years with both countries making pledges to improve relations, followed by little progress. Their shared fields, namely Wafra and Khafji, have a combined output capacity of more than 500,000 bpd. But production has been halted in both fields over the past few years.

“With a capacity of 500,000 barrels per day, the zone (between Kuwait and Saudi) – about as large as the combined areas of Dubai and Sharjah – can today produce more oil than the whole of Australia,” writes the Dubai-based energy analyst Robin Mills.

This is not to mention the Dorra offshore gasfield, which is expected to produce 0.5 billion cubic feet of gas a day. Unfortunately, ownership of the area is being contested by Iran, Kuwait and Saudi Arabia – a dispute that has kept the potentially promising field unproductive.

A little further north in the Levant region, Lebanon (which never enjoyed onshore reserves of either oil or gas) found treasure slightly off its Mediterranean coast in 2014. The Lebanese Ministry of Energy and Water has suggested the potential existence of some 96 trillion cubic feet of gas reserves and 865 million barrels of oil, which could generate a net profit of US$ 600 billion over time.

Nevertheless, issues such as contested territorial waters with Israel and Syria have prevented any major international oil company (IOC) from beginning the exploration and production process.

These conflicts have prevented many of the Middle East’s oil and gasfields from enjoying healthy production at a time when an economic downturn, a rise in demand for energy and scarcity of sources are making local authorities hungrier for oil.