MINISTERS for Kurdistan, the semi-autonomous region of Northern Iraq, are in talks with City investors to raise billions of pounds to finance its bloody battle against Isis terrorists.
The negotiations reflect a dramatic shift in the Middle East power balance in which Kurdistan has been transformed from a forgotten backwater to an influential oil producer and a bulwark against the jihadists.
Its finances have been left in a shambles, however, by the halving of the price of crude and a long-running dispute with the federal government in Baghdad.
The City, which financed the oil producers at the heart of Kurdistan’s transformation, could hand it a fresh lifeline. Late last year, deputy prime minister Qubad Talabani led a Kurdistan Regional Government (KRG) delegation on a roadshow to raise up to $5bn (£3.3bn) in loans from Western investors, but failed to secure a deal.
It is thought that Goldman Sachs and Deutsche Bank were advising the government. Both banks declined to comment. Talks are now thought to be focused on selling rights to tolling fees on a pipeline that takes crude to the Turkish port of Ceyhan on the Mediterranean, in exchange for an immediate cash injection. The 174-mile link, completed in November 2013, has become hugely important because Isis, also known as Islamic State, damaged pipelines and pumping stations in nothern Iraq.
Advertisement
The Ceyhan line is now the only export route for Iraqi crude produced in the north, as well as Kurdish oil. It has been pumping a steadily increasing flow of crude to the Mediterranean. Next month daily output could hit 700,000 barrels.
The KRG is also understood to be considering selling equity stakes in some of its oil fields or forward selling oil. Todd Kozel, the former chief executive of Gulf Keystone Petroleum, one of the pioneering developers in the region, is raising money to buy the government stakes. Any cash the KRG raises could also be used to pay Gulf Keystone and other companies that are owed hundreds of millions for past crude sales.