Conflict in the Red Sea and the resulting disruption of trade through the Suez Canal – a vital artery for transporting oil and gas to Europe – reminded us earlier this year of the centrality of energy-transit routes for maintaining global economic stability. In 2023, roughly 22% of global seaborne trade passed through the canal, but transit passages fell by 42% in January as tankers were forced to circumnavigate Africa to reach European markets.
Historically, disruptions of oil supplies have precipitated conflict in the Middle East – the 1956 Suez Crisis, the 1973 October War, and the 1984-1988 Tanker War being notable examples – but have also created opportunities for the Kurdistan Region. In response to the canal’s eight-year closure from 1967-1975, Iraq and Turkiye built an oil pipeline that was completed in 1977; later, the disruptions of oil exports from the Gulf during the Iran-Iraq War prompted an expansion of the pipeline system to 1.5 million barrels per day of capacity, making it the largest pipeline system in the Middle East.
Though the Iraq-Turkiye Pipeline is currently mired in a political dispute between Baghdad, Erbil, and international oil and gas companies that is especially destructive for the Kurdistan Region, the pipeline has long served as an economic lifeline that bolstered relations between Iraq, the Kurdistan Region, and Turkiye and helped provide oil-supply security to the world.
The world certainly does not need more oil, with the International Energy Agency and major oil companies projecting global oil demand to peak in 2030. However, the landlocked Kurdistan Region might be able to play a similar role in offering safe, secure exports of two cleaner energy sources – natural gas and solar – to Turkiye and Europe. Both sources have robust demand for the foreseeable decades, especially with the REPowerEU plan that seeks to end EU consumption of Russian fossil fuels by 2030, and present opportunities for the Kurdistan Region to export clean energy resources and bolster and diversify their economy.
Starting with gas
The current context most favors gas. While gas is still a fossil fuel whose leaks release damaging greenhouses gas (GHG) emissions into the atmosphere, the global climate problem is coal, whose emissions grew to an all-time high of 15.5 gigatons of carbon dioxide in 2022, some 37% of energy-related emissions. Gas is a cleaner source of reliable baseload energy that is fundamental to the EU and global strategy to address climate change.
However, gas is also the most politically challenging, as the Kurdistan Region lacks a pipeline to Turkiye and faces formidable competitors in Iran and Russia, who will seek to block Iraq and the Kurdistan Region from competing for market share in Turkiye. The January 2024 missile attack by Iranian-backed militant groups against the Khor Mor field in Sulaymaniyah Governorate was the latest of a string of strikes in recent years against the Kurdistan Region’s primary non-associated gas field and speaks to the dangers that other gas-exporting countries see in the region’s potential.
For its part, Turkiye would certainly welcome a gas pipeline from the Kurdistan Region to diversify the sources of its imports and meet its domestic demand more efficiently. Such supplies can also help it bolster its capacity to become a gas trading and export hub, something it has long sought.
As always, the major benefits of increasing gas production start at home to meet domestic power and heating demand in the Kurdistan Region. Construction is underway for a 36-inch gas pipeline from Khor Mor to a power plant in Duhok, which is roughly 70 kilometers from the Turkish border. This is a key step to signal the Kurdistan Region’s ability to produce and potentially export gas to Turkiye. Energy analyst Robin Mills argued last year that “exports of about 5 billion cubic meters (bcm) per year by 2030, and ultimately about 15 bcm annually, are feasible.”
The costs of a gas pipeline to Turkiye are largely already sunk outside of building it. The pipeline could follow the same route as the Iraq-Turkiye oil pipeline, and so security is already in place. The economic costs of building the link from Duhok to the Turkish grid would be relatively low for such a large payoff, so long as similar links on the Turkish side could be constructed.
A gas link could also bolster Erbil’s position in relation to Baghdad, not least because it could potentially distribute gas throughout Iraq. The country currently imports gas from Iran and is set to welcome imports from Turkmenistan via Iran soon. Iraq already relies on imports of gas and power from Iran for up to 40% of its power supply. The net result could be a win-win for Erbil and Baghdad.
Moving to solar
In recent years, major Middle East oil and gas producers have invested in solar power production to meet their domestic needs and create the potential for exports to Europe. For instance, Saudi Arabia added another 2 gigawatts (GW) of solar capacity last year, with another 20 GW to be tendered this year, all to meet its target of 58.7 GW by 2030.
The Kurdistan Region has solar ambitions of its own. Last year, the Kurdistan Regional Government (KRG) inaugurated construction of its first large-scale project, a 25-megawatt (MW) generation facility in Minara village near Erbil. It plans to build another station in Soran District with 100 MW of capacity. These figures need to rise considerably before exports can be considered.
Yet the Kurdistan Region is no stranger to clean energy, with the KRG having made significant investments in hydropower in recent years to reduce dependency on oil, increase power supplies, and curtail GHG emissions. The Ninth Cabinet has also placed the environment as a top priority in its agenda, streamlining regulations and procedures to encourage foreign investment in the energy sector, among others.
Meanwhile, households and businesses are embracing rooftop solar as a low-cost way to reduce consumption from higher cost power generators. This comes as China’s increased solar panel manufacturing capacity has caused the price per watt of electricity generated from solar modules to fall to $0.11, a 40% decline from last year.
Renewable energy exports to Turkiye could serve a similar role as gas. Turkiye is already a strong wind producer but would, much like in gas, welcome additional imports both to bolster its energy security, its long-term export potential, and its capacity to power its more energy-poor southeastern regions.
In January, Turkiye signed an $200 million agreement with the Iranian Grid Management Company to connect a 400-kilovolt line across the two countries’ border. Countries like Turkiye that have such large demands for energy and power are looking to diversify their options, even with geopolitical competitors.
Finally, as with gas, an abundance of solar power from the Kurdistan Region could help bolster and diversify Erbil’s relationship with Baghdad, as well as with Turkiye.
The future of energy
In March, The Telegraph reported that Britain was looking at a plan to import power from the United States through a series of six trans-Atlantic undersea electricity cables, as technological advancements are making such infrastructure viable for the first time. Last year, Denmark and the UK built a shorter connection along these lines that will power up to 1.4 million British homes.
As intriguing as such new undersea energy links are, the future of renewables generation is local. Britain is an energy-poor island and a major economy. Japan is another, and China will likely export power to its geopolitical rivalry one day if their relationship does not completely unravel.
Yet there are few other similar geographical cases. Power, unlike oil, is not a globally strategic commodity that is linked to military power. Renewables are less valuable than gas, but both are essentially stores of value and money that are most economically consumed either locally or regionally.
Whereas coal and oil required global free trade – respectively supplied by the UK and then the United States – gas and renewables are regional sources that allow countries to reduce their energy-import bills, clean their environments, and power economic growth and emerging technologies.
The best strategy for the Kurdistan Region is to continue on its current path, build out its connective infrastructure, invest in gas and solar power generation, and be ready when the opportunity presents itself.
Exporting gas and solar-generated power to Turkiye or helping bolster Iraq’s power deficit both require long-term visions, steady investment, and shift in global contexts in the Kurdistan Region’s favor, both in stronger geopolitical will from regional and global powers to welcome new supplies onto the market and in an acceleration of the energy transition. The first context is possible; the second, undeniable.
