Oil Companies--Some Run by Former Bush Officials--Make a Risky Move Into Kurdistan

Enlarge

An Iraqi Kurdish soldier stands guard at the Tawke oil field in the Dohuk province of Iraqi Kurdistan. | Photograph by Muhannad Fala'ah/Getty Images

Enlarge

Map by Mike Reagan

Infographic: Combustible 

The Tawke oil field, just south of Iraq's mountainous border with Turkey, is a bare, windblown patch of hills in one of the Middle East's most isolated corners.

Three hundred miles north of Baghdad, it is also four hours by road from the nearest international airfield and hundreds of miles from the nearest seaport. But on April 12, 2005, more than 100 dignitaries from around the world trooped up to this bleak turf to observe a bit of history. One year earlier, a scrappy Norwegian oil company called DNO had become the first foreign business since the U.S.--led invasion of Iraq, in March 2003, to purchase oil-drilling rights in the Kurdistan region; defying skeptics, the Norwegians had shipped in millions of dollars' worth of infrastructure and equipment, built an oil workers' camp, and brought in technicians from the Philippines, India, and Scandinavia. Now DNO had invited Kurdish officials, local luminaries, and assorted friends of the region to witness the launch of the first exploratory oil well on Kurdish soil in two decades.

Beneath a cloudless sky, the towering Qandil mountains along the Turkish frontier lent a touch of grandeur to the scene. Executives and engineers from DNO took seats on sofas inside a tent erected in front of a Chinese-made drilling tower. Former peshmerga -- Kurdish freedom fighters -- guarded the facility with automatic weapons. Top officials of the Kurdish regional government (KRG), including Nechirvan Barzani, then prime minister, joined the DNO brass. So did one of Norway's wealthiest investors, the London-based Endre Rosjo, who had formed a partnership with the oil company.

Rounding out the entourage was Peter Galbraith, then 54. The son of famed Harvard economist John Kenneth Galbraith, Peter was the former U.S. ambassador to Croatia, a longtime friend of the Kurds, and one of America's most courageous and hands-on diplomats. He had become famous for chronicling the destruction of Kurdish villages by Saddam Hussein in 1987 while serving as a staffer on the Senate Foreign Relations Committee, and for alerting the world to the Kurdish refugee crisis at the end of the 1991 Gulf War. After teaching national-security strategy at Washington, D.C.'s National War College, Galbraith left in late 2003 to sign on as a paid, then subsequently unpaid, consultant to the Kurds; in that role, he spearheaded their constitutional negotiations with Iraq's central government as they pushed for regional autonomy and for control over their own oil riches. Galbraith, looking very much the diplomat in a black-and-gray pinstripe suit, took an honored place in the front row. As the giant drill began its work -- it would ultimately burrow 10,000 feet into the carbonate rock -- the crowd burst into applause.

Not everyone shared this enthusiasm. In Baghdad, central government officials reacted with rage to the news that DNO was drilling. These officials considered the Kurds' sale of Iraqi oil rights to be illegal and warned that it threatened to polarize further a country already fracturing along ethnic and religious lines. When Karsten Tveit, the Middle East correspondent for the Norwegian national television network, sought out Galbraith, the former ambassador shrugged off Baghdad's objections. The Kurds were "on safe ground," he insisted. "The Iraqi Constitution is completely clear about it." The fact that the constitution wouldn't be ratified for another six months didn't concern him: Galbraith, who'd had a hand in writing the document, seemed confident of what the final draft would say about Kurdistan's oil reserves. Iraq's government was responsible for petroleum in existing fields, he explained to Tveit, but the constitution "was silent" about new fields, including Tawke: "Everything [in Kurdistan] not listed as the exclusive power of the federal government belongs to [the Kurds], and [Tawke] falls into that category."

In the era of Photoshopped everything, you'd be forgiven for thinking that the picture of an exploding oil tower that topped our story about Iraqi Kurdish oil fortunes was a digital rendering. But as you'll see from this video, Fast Company hired a pyrotechnics crew in Texas to explode the real thing.