Monthly Spotlight: Power, Profit, and Politics – The Barzani Family’s Involvement in Oil and Gas

From the Barzani Watch Editorial Board – Since gaining control over much of Kurdistan’s oil sector in the early 2000s, the Barzani-led Kurdistan Regional Government (KRG) has faced multiple accusations of facilitating illicit oil sales and using Kurdistan’s oil resources to further its own political agenda. The Barzani family’s vast wealth – Masoud’s personal fortune alone was estimated at $55 billion in 2017 – can at least in part be attributed to its control over the region’s oil. 

The Export Suspension That Wasn’t 

In September 2019, OilPrice.com reported, in a now-deleted story, that the Iranian government had “allegedly hard evidence” that Masoud and Masrour Barzani had stolen 28% of the KRG’s entire oil export stock. The report added: “The resulting funds had then allegedly been deposited in an account in a bank in Northern Cyprus under the name of Masrour’s then-mistress, who, Iran said, was connected to Russia’s Sluzhba vneshney razvedki foreign intelligence agency.” 

Oil exports from Kurdistan have been suspended since March 2023, following a ruling by a Paris-based arbitration court in favor of Iraq against Turkey. The court determined that Turkey had violated a 1973 pipeline agreement by permitting Kurdistan to commence independent oil exports in 2014. 

However, trade continues. In July 2024, Reuters reported that more than 1,000 oil tankers were transporting at least 200,000 barrels of discounted oil daily from Kurdistan to Iran and Turkey in unapproved, off-the-books transactions, generating approximately $200 million a month. The report cited 12 sources as saying that the Barzani-controlled Kurdistan Democratic Party (KDP), along with the PUK, were the “beneficiaries” of these transactions.  

The report also cited a US official as saying the activity could put Kurdistan on a “collision course” with Washington as it examined whether the trade violated any U.S. economic sanctions on Iran.  

This diversion of oil not only undermines Iraq’s national economy but is also thought to contribute to tensions between the KRG and the central government. In May 2021, then-Iraqi President Barham Salih, cited by CNN, said that an estimated $150 billion in oil revenues had been lost to smuggling activities since the collapse of Saddam Hussein’s regime in 2003. 

From Russia, With Love?

 In October 2017, Rosneft, Russia’s state-owned energy giant, signed a $4 billion deal with the Kurdistan Regional Government (KRG). The agreement included production-sharing contracts for several oil fields in Kurdistan, control of the export pipeline, as well as the development of five exploration blocks, making Russia Kurdistan’s single biggest financier, The Financial Times reported in October 2018. The deal gave Russia a 60% stake in Kurdistan’s main oil pipeline, with the Barzani-linked KAR Group owning the remaining 40%. It is unclear whether this remains the case.

The deal, however, wasn’t just about oil production. VICE reported shortly after it was announced that it was a key part of what made that year’s independence referendum possible. “Rosneft’s economic assurances — and the implicit support of Moscow that came with them — gave Kurdish leaders confidence that they could weather the post-referendum storm, according to sources closely involved in the region’s politics and oil sector”, VICE added.

In June 2018, The Washington Institute for Near East Policy wrote that Russia’s involvement in Kurdish oil affairs would “likely give Moscow at least some leverage over KRG politics.”

The Barzani family’s control over Kurdistan’s oil and gas resources, coupled with alleged smuggling operations and foreign partnerships with Russia, has helped to solidify their wealth. While they live in luxury, much of the Kurdish population continues to face dire economic challenges, further fueling demands for transparency and accountability in Kurdistan.