The competition between rival Kurdish factions and Iraq's federal government is intensifying. On March 2, the Patriotic Union of Kurdistan (PUK) deployed highly trained special operations forces from its peshmerga to seize control of several of the Iraqi North Oil Co.'s facilities in Kirkuk province. The head of the PUK's Kirkuk office then issued an ultimatum, ordering Baghdad to stop exporting oil produced in the province within a week's time or it would kick North Oil Co. out. Having halted activity at the facilities for a few hours, the special operations forces allowed technicians to resume production and exports. The fighters said, however, that they would stay onsite to ensure that the PUK's demands are met. The incident was meant to demonstrate that the PUK is a powerful force in Iraqi Kurdistan, one that cannot be ignored.
The PUK's leaders have long used oil produced in Kirkuk to sustain patronage networks and smuggling into Iran, but its access to the province's oil has been severely restricted for several years. When the Islamic State pushed into northern Iraq in June 2014, fighters from the Kurdistan Democratic Party (KDP) moved in from the north and took control of northern Kirkuk's oil fields, displacing the PUK, its main political rival. In the years since, the KDP has held a near monopoly on Iraqi Kurdistan's resources. And it has mostly excluded the PUK from negotiations with Baghdad over how to manage exports from Kirkuk.
With few other options at its disposal, the PUK has resorted to physical intervention and threats to make sure its demands are heard.
Baghdad, meanwhile, has had to reduce production in southern Iraq in accordance with the recent OPEC production cut deal. To maintain activity at refineries in the area, the Iraqi government has discussed diverting 50,000-60,000 barrels per day of oil produced by North Oil Co. in Kirkuk to refineries outside the Kurdistan Regional Government (KRG) — much to the PUK's dismay. (Despite the PUK's claims that the oil will be shunted to refineries in Mosul and Baghdad, however, the Iraqi government appears to be planning to redirect the oil to refineries in the KRG.)
With few other options at its disposal, the PUK has resorted to physical intervention and threats to make sure its demands are heard. The party tried a similar approach in September 2016 after the KDP and Baghdad negotiated a deal to jointly export North Oil Co.'s oil and split the proceeds. In response, Hero Ibrahim Ahmad, the wife of PUK leader and former Iraqi President Jalal Talabani, sent a letter to Iraqi Prime Minister Haider al-Abadi demanding that the deal be stopped or the PUK would cut off production. (Ahmad did not make good on the threat, though.)
Kirkuk's oil production makes it a valuable province in Iraq, but the KRG has not settled the region's status with Baghdad. By putting a well-trained special operations force in charge of the operation at Kirkuk’s oil facilities, the PUK is hoping to establish its place in the province's future, its political status and its oil production. The region could become a flashpoint between competing Kurdish forces, Iraqi troops and Shiite militias as the fight for Mosul winds down. But for now the question is whether the PUK will follow through with its latest ultimatum or whether the KDP and Iraqi government will intervene, turning the standoff into an all-out battle.