Garmian is a subdistrict of the Sulaymaniyah province, which, by definition, falls under the control of the Patriotic Union of Kurdistan (PUK) party, led by the Talabani family since its creation in 1975). This sub district is one of the few areas of the Kurdistan Region of Iraq (KRI) to contain oil fields. Like all sub-districts of Sulaymaniyeh, Garmian is under the influence of local PUK chieftains, namely Mahmood Sangawi, Adnan Hamaimina and Ali Shahid Muamad. These leaders have long played a decisive role in the attribution of oil concessions while also secretly setting up their own companies to benefit from the oil production in Garmian.
Garmian, a border area between the autonomous region of Iraqi Kurdistan and the federal areas known as the disputed territories as defined by the Iraqi constitution, is an unstable area where tensions remain between kurdish (peshmerga) forces, Iraqi federal army and Shia militias. Adding to this, the poor coordination between these military factions significantly hampers the fight against terrorism, which remains strong in the area, especially in the Kifri area of Garmian. Without surprises, these security problems are strongly affecting oil production, on top of many other issues in the region.
This article hopes to describe how these oil fields are being managed while providing technical elements regarding the oil exploitation of the Garmian oil fields. It sheds light on how blocks are operated, and how the different oil fields within these blocks are managed between companies, while explaining the power struggle between local and provincial powers for the control of this crucial resource.
In the Garmian area, there are nine oil blocks supervised by different companies. A curious particularity of the Garmian area is that when the drilling infrastructures reach the oil, the wells are often shut down and abandoned. So far, neither the government nor the drilling companies have given any apparent reason why this happens. The Garmian subdistrict is known to be under the grip of local chieftain affiliated to the PUK, including Mahmood Sangawi, Adnan Hameimina and Ali Shahid Muhamad.
Until now in the Garmian area, only two oil blocks have been functioning. Nonetheless, this report will present information about four oil blocks that have been drilled so far in Garmian. International oil companies operating in Garmian include Russian Gazprom and Turkish Petoil in Chia Surkh. The two fields, in total, produce more than 20,000 barrels of oil daily.
The Kurdamir block
One of the blocks is Kurdamir Block, south of Sangaw district and north of Kalar town. According to Scotia Capital reports, its crude oil reserves are near 5,139 million oil barrels. There are four oil wells, two of which have oil, while the other two have gas, estimated at around one billion cubic feet.
At first, this block was operated by Canadian Talisman Energy Inc, and later because of some conflicts, it was sold to Spain’s Repsol. Currently, the oil block has four oil fields in it, and one has reached oil and has been tested, extracting three to five crude oil barrels per day. However, its production was put on hold later.
The oil fields are as follows:
K-1 and K-3 (Kurdamir 1 and 3), also known as Kurdamir Ahmad.
K-4 (Kurdamir 4) also known as Kurdamir Faqe Hussein.
K-2 (Kurdameera 2): also known as Kurdamir Hamai Sleman. It has been tested and three to five thousand barrels of oil are extracted from it daily.
K-1 has more gas than oil, making it impossible to extract oil from it at the moment. Simultaneously, K-3 had more water than oil which was also problematic and prevented the oil extraction at this point.
K-4 only has only been scanned so far and no agreement has been reached with the Ministry of Natural Resources to allow for drilling an oil well. Therefore, it has been abandoned for now.
By the end of 2021 and until early 2022, the Canadian Western Zagros oil company started working on K-4 and K-5 again; however, their efforts were futile, and they quickly stopped their operation. According to some sources, the reason behind the Canadian company’s withdrawal was caused by the pressures from Iraqi and Federal court, as international companies are still legally obliged to get a license from the Iraqi federal government to work in the autonomous region of KRI.
The Chia Surkh block
This block has nine old oil wells and three new ones. The first-time operation in this block occurred in 1902 and was led by an Iranian-Anglo company. The old oil wells still exist till this day. One of them is still in excellent condition : oil well number seven. This is also why the new company, Genel Energy, dug a new well next to this one recently.
Genel Energy has drilled two new oil wells, number 10 and 1. Both have provided large quantities of oil. A third one which counts as number twelve has been drilled by the Turkish Petoil company. The well was finished in 2016 after blowing it up three times until reaching oil.
Currently, this oilfield is operating, and three thousand barrels of oil are extracted from it daily. The low number of extractions is due to the oil resource being mixed with water. For every oil truck, an equivalent of a water truck is extracted.
Sarqalla field in the Kifri district
Gazprom has four oilfields in the Garmian block of the Sarqalla district; the oilfields number from one to four.
Until the beginning of this year, Gazprom was extracting more than 25 thousand oil barrels in this oil block every day. However, in the last three months, and because water mixed with the oil in wells three and four, the extraction has decreased to 16 thousand barrels per day.
According to a source close to Gazprom, 35% of the volume extracted by the company consists of water which caused a reduction of oil production.
According to an internal source, as of now, the Russian Gazprom is busy drilling the Sarqalla oil well number 5. So far, they have drilled nearly 2300 meters, and it is expected to reach oil after 4000 meters. In the middle of 2015, Gazprom bought this block from the Canadian Western Zagros company.
Economic and environmental challenges
The data on the amount of crude oil and gas in these blocks are outdated, and new information has not been released yet. Regarding the oil exploitation in this particular oilfield of the Garmian area, Dr. Ghalib Muhammed, an oil analysis expert and former member of parliament explained how the drop of oil prices have impacted the production: “the oil companies partnering with the Kurdistan Regional Government don’t want to extract oil now and want to save it for better conditions.”, he described, adding the “it is still not clear if the Ministry of Natural Resources is forbidding companies from extracting oil or if it is the companies themselves that are waiting for a more favorable economic situation. Maybe they’re waiting for a chance to be able to transport the oil through pipelines, as it has an extra cost to do so through trucks.”
Dr. Ghalib added, “the best solution for the Garmian area is finding a way to transport the oil through pipelines to Iran and shipping it to the world.” Besides these, there are many other problems in the area that people are dissatisfied with. For instance, people with ties to political parties and officials mingle in the area’s businesses, especially regarding employment.
Environment problems also add to those social and economic issues. Water expert at Garmian University, Dr. Abdulmatin Rafaat explained to The REd Line how water mixing with oil and gas affects the production. “ Manually injected water to extract the oil more efficiently is not being treated with the adequate technology; therefore, the water is spilled into the land, harming the farms and the nature of the area.”.
On top of these technical issues, recent political turmoil has also impacted the oil sector in Garmian. further exacerbating the uproar in the province. The issue here is related to cronyism as influential people in Garmian have put pressure on companies to obtain job for their relatives or close ones. Others have managed to secure royalties from these companies on somewhat dubious claims of land ownership. Oil companies offices’ are regularly besieged by these claimants who use their political relations in order to secure annuities. “I stoppedrepresenting Gazprom because of that. I was harassed by inhabitants in Garmian who were desperate to make profits or get a job etc…”, explained an inhabitant from Garmian and former employee of the Russian company who agreed to talk under the condition of anonymity.
Aside from these major international oil exploration companies, two local Iraqi Kurdish companies have been operating the Garmian district in the last two decades. These include BlackBulls Oil (BBO) company and Keep of Oil (KOO). Both were directed by local Kurdish businessmen (Mr. Dana Haji Saleh for BlackBulls and Mr. Azad Abdul Kader for Keep of Oil). However, our local investigation found that these two men were only screen owners to these companies and that those actually running them and profiting from the benefits of the oil production in their wells were powerful leaders of the Garmian region, namely Mahmood Sangawi, Adnan Hameimina and Ali Shahid Muhamad.
Despite these local chieftains having controlled parts of the oil business of the Garmian area for a long time, this situation came to an abrupt halt a few months ago. A few weeks after Bafel Talabani took control of the PUK party in Sulaymaniyah this year, following a “coup” done at the expense of other members of his family, BBO and KOO were suddenly merged into a new company called Natron. Our source was adamant to claim that Natron was a new screen which allowed Bafel Talabany to take over the Kurdish companies previously controlled by Garmian’s local chiefs. This takeover has significantly disrupted the balance of power of the Garmian province, which might lead to further instability in the oil production of the Garmian sub district.
Located at the outskirts of KRG, the Garmian sub-district has many specificities. The presence of oil in its ground makes it a highly strategic area. Yet, the constant tension between Erbil and Baghdad regarding the attribution of oil extraction permits has significantly disturbed the development of the sector. Indeed, according to the Iraqi constitution which the Kurdish authorities have signed, all oil companies must obtain a license from Baghdad and not from the regional government to work in KRG. Moreover, the profits stemming from this production should be transferred to the Federal treasure before being redistributed as salaries to the Kurdish regional authorities. Unfortunately, since 2005, when the new constitution was approved, this agreement has never been honored by the KRG who regularly bypassed the federal government and delivered licenses on its own. Following pressures from Baghdad, several companies reluctantly withdrew from KRG in order to avoid severe sanctions in Iraq.
Kurdish authorities’ stubborn efforts to exploit oil in their region without collaborating with Baghdad seems to have reached its limits. This oil is generally exported to neighboring countries such as Turkey and Iran, which adds to its geopolitical value. These two regional powers could fight over controlling the profits of this precious resource. The taking of control over oil installations by Bafel Talabani, who is close to Turkish interests (contrary to his family’s’ traditions of collaborating with Iran) is reassessing the regional balance of power and brings back the fear of an intra-Kurdish conflict. In this power struggle, Garmian’s oil could have a major geostrategic importance.