Kurdistan’s New Gas Play Just Exposed the Real Battle for Iraq
- New long-term gas sales from the Chemchemal field signal a deeper Western effort to anchor influence in Iraq and counter Chinese, Russian, and Iranian dominance over its energy sector.
- Expanding Kurdish gas production could help Iraq cut its reliance on Iranian gas and electricity imports.
- This strategy makes projects like Chemchemal and Khor Mor strategic flashpoints—evidenced by recent attacks widely linked to Iran-backed actors..
The deal itself is straightforward enough. It involves Dana Gas (headquartered in the UAE) and London-headquartered Crescent Petroleum, together with their partners in the Pearl Petroleum Consortium (Austria’s OMV, Hungary’s MOL, and Germany’s RWEST) agreeing to supply up 142 million standard cubic feet per day (mmscf/d) of gas to cement and steel producers for a period of 10 years, starting in the second half of 2027, when production from the Chemchemal field is scheduled to begin. According to company disclosures, the gas will be delivered to industrial users in Erbil and Bazian through new private-sector pipelines, including a dedicated 40-kilometre pipeline linking the Chemchemal field directly to the Bazian industrial area. This agreement follows an acceleration last year in the development by the Pearl Petroleum partners, which featured a USD160 million commitment to drill three wells, install an extended well test facility, and build associated infrastructure to support a future full-field development phase. The Chemchemal field lies just north of the Khor Mor gas field, which was the focus of its own gas expansion project in October 2025. This added 250 mmscf/d of processing capacity, increasing total capacity to 750 mmscf/d. As it stands -- and before any further output expansion at Chemchemal -- the Khor Mor gas plant supplies more than 80% of the Kurdistan Region’s electricity generation and has attracted cumulative investment exceeding USD3.5 billion.
This recent flurry of activity is going ahead despite last November’s rocket attack on the Khor Mor field, shortly after it had been announced that the output expansion programme had been completed eight months early. The attack on Khor Mor had, in turn, been the most significant since the July barrage of drone strikes on several of the Kurdistan Region’s oilfields that reduced oil production by around 150,000 barrels per day (bpd). The strike against Khor Mor caused widespread power outages, given its leading role in the provision of energy for the Sulaymaniyah region and beyond. Although there were no official claims of responsibility for the attack, senior security sources close to Iraq’s Oil Ministry highlight the likely involvement of Iran – through one of its many Iraqi conduits – as ultimately being behind it for two reasons. First, as a warning of more to come if the Kurdistan Region continues to develop its still largely latent gas potential, which would allow Iraq as a whole to more easily reduce its long-running dependence on Iran for up to 40% of its power needs through gas and electricity imports. Second, to reinforce the wedge between Iraq and the U.S. that centres on this continued relationship between Baghdad and Tehran, which looks to be reducing with a recent influx of Western firms back into the country.
The West’s response to the Khor Mor attack was a very tangible signal of intent that it still sees the Kurdistan Region as a core interest in its re-establishment of influence across Iraq and the broader Middle East, following years of Chinese and Russian advances across key areas. The U.S. bought a cargo of oil from the Kurdistan Region -- the first since the reopening of the critical Iraq-Turkey Pipeline (ITP) around two months before -- loading it onto the Seaways Brazos tanker in the Turkish port of Ceyhan and let it be known that more would follow. Not just this, but -- as evidenced in the latest Chemchemal announcement -- the U.S. and its allies will do whatever it takes to maintain a geopolitical backdrop in the Kurdistan Region to ensure that international energy firms can move ahead with their development plans as they see fit. Part of this will be a further increase in the presence of other Western firms in the KRI, which also carries with it the entitlement under international law for such developments to maintain whatever security presence on the ground that they think necessary to protect their assets and investments. In short, as a senior Washington-based legal source connected to the U.S. Treasury Department exclusively underlined to OilPrice.com after the U.S. oil tanker unloaded its Kurdistan cargo in November: “This [the recent oil shipment from Iraq to the U.S.] is just part of the whole which says, ‘we’re here again now, and this time we’re not going away’.” This idea was further reinforced with the tightening of U.S. and European sanctions on Russia that focused on specific companies -- including Rosneft.
These Western efforts also recently led to the flagship Kremlin oil firm having to reduce its stake in the Kurdistan Pipeline Company (KPC) from the 60% it acquired in 2017 to 49%. The KPC is the key operator of the feeder pipeline network within the Iraqi Kurdistan region, which connects oil fields (such as Taq Taq and Tawke) to the border metering station at Fishkhabur. At Fishkhabur, the pipeline links up with the main ITP system. It is this system that remains key to the financing of the Kurdistan Regional Government (KRG), and it was this system that was closed down in March 2023 before reopening last September. Rosneft’s wider operations in the Kurdistan Region meant Russia effectively controlled its vital oil infrastructure, as fully analysed in my latest book on the new global oil market order, through three far-reaching deals struck with the KRG in 2017. First, Russia provided the KRG with USD1.5 billion in financing through forward oil sales payable in the next three to five years. Second, it took an 80% working interest in five potentially major oil blocks in the region. And third, it established 60% ownership of the critical ITP pipeline by dint of a commitment to invest USD1.8 billion to increase its capacity to one million barrels per day. Removing Rosneft’s majority ownership of assets in the Kurdistan Region has consequently underlined the foundation of its power there.
That said, this is not pure philanthropy on the part of the West, as the Kurdistan Region has vast gas potential, in addition to that from oil. Kurdistan’s Ministry of Natural Resources (MNR) estimates that there is 25 trillion cubic feet (Tcf) of proven gas reserves and up to 198 Tcf of unproven gas resources, around 3% of the world’s total deposits. The figures look realistic, given that the US Geological Survey believes that undiscovered resources in just the Zagros fold belt of Iraq, a large part of which falls in the Kurdistan Region’s area, amounts to around 54 Tcf of gas. Discovered reserves total less than 10 Tcf of proven plus probable reserves and less than 30 Tcf of contingent resources, with the bulk of these being non-associated gas deposits located in the Region’s central and southern areas, especially those in the Bina Bawi, Khor Mor, Khurmala, Miran and Chemchemal fields. Judging from the 65% success rate of drilling activity in its oil operations, the International Energy Agency estimates a high degree of prospectivity in gas operations is likely.
By Simon Waktins for Oilprice.com
