PAYNE INSTITUTE COMMENTARY SERIES: COMMENTARY

By Peri-Khan Aqrawi-Whitcomb

May 26, 2025

Abstract
This commentary examines the Kurdistan Region’s recent multibillion-dollar oil and gas deals with U.S. companies, framing them as a pivotal moment of economic and geopolitical significance. While these agreements open the door to long-term prosperity, their success depends not only on the Kurdistan Regional Government but also on its international partners. In a region marked by both human-made and natural volatility, all stakeholders share a responsibility to align fossil fuel development with environmental integrity, inclusive growth, and long-term resilience. Bold governance, strategic cooperation, and sustainable innovation will be essential to ensure these deals deliver more than revenue—they must help secure a stable and equitable future.

Keywords
Kurdistan, Iraq, natural gas, oil, U.S. energy deals, gas flaring, sustainable development, climate vulnerability, energy diplomacy, ESG (Environmental, Social, and Governance), regional autonomy, European energy security, and climate-smart infrastructure. 

Introduction
The Kurdistan Region of Iraq (KRI) is entering a defining chapter in its energy story. In May 2025, the Kurdistan Regional Government (KRG) signed multibillion-dollar oil and gas exploration agreements with several U.S. companies. These are not just business transactions—they are geopolitical signals of renewed trust, economic ambition, and a desire for regional stability. But in today’s climate-aware world, the actual test will be whether Kurdistan can convert its fossil fuel wealth into inclusive, climate-smart development.

To succeed, KRI must pursue a dual mandate: generating growth and promoting political stability through responsible resource management, while embedding sustainability and technological innovation at every step.

A Historic Window of Opportunity
Kurdistan’s resource base is substantial. It holds an estimated 45 billion barrels of oil according to the KRG Ministry of Natural Resources, and 20 to 40 trillion cubic feet of natural gas. The Miran field alone is believed to contain approximately 8 trillion cubic feet (Tcf) of recoverable gas.

Operational costs are increasingly well understood. While earlier figures cited $1–2 per barrel, more recent estimates from Iraq’s federal budget place typical production and transport costs closer to $16–25. In July 2024, Rudaw Research Center calculated that the operational cost to produce a barrel in Erbil stands at roughly $10.7— excluding investment, marketing, and transport overhead.

The recent agreements with U.S. companies—notably HKN Energy and WesternZagros—target key fields such as Miran and Topkhana-Kurdamir in Sulaymaniyah. These deals, while promising, have reignited long-standing tensions with Iraq’s federal government. Baghdad has declared the agreements “null and void,” insisting that all natural resources belong to the Iraqi people and must be regulated by federal institutions. The KRG, on the other hand, argues that the deals are legally valid and consistent with prior rulings by Iraqi courts.

Beyond commercial interest, these deals carry significant strategic weight for the United States. As regional tensions with Iran persist, Washington views Kurdistan as a relatively stable and cooperative ally in a turbulent neighborhood. Deepening economic ties through energy investment not only support the KRG’s autonomy and development but also bolster U.S. influence in northern Iraq, counterbalancing Iranian sway in Baghdad and southern Iraq. Furthermore, securing diversified energy flows from allies like the KRG aligns with broader U.S. goals of supporting European energy security in the wake of reduced Russian supplies. In this context, the U.S. interest is not merely about barrels—it’s about building strategic resilience in a region critical to global stability.

Learning from the Past: Avoiding the Resource Trap
Despite these opportunities, KRI has historically struggled to turn energy wealth into equitable development. A combination of revenue disputes, inadequate oversight, and oil smuggling has undermined transparency and citizen trust.

Moreover, too many past agreements failed to incorporate safeguards for environmental and public health impacts. Gas flaring—the routine burning of excess natural gas—has remained widespread, contributing not only to emissions but also to serious health consequences. Cancer rates have risen in areas surrounding oil and gas operations, and many communities face long-term exposure to polluted air and water.

It’s not just about the environment—it’s also about survival. Iraq and the Kurdistan Region are among the five most climate-vulnerable countries in the world, according to the UN. This fact alone should drive urgency and policy reform.

Sustainability Can’t Wait
To meet these challenges, the Kurdistan Region of Iraq (KRI) must embed sustainability in its energy vision. The Kurdistan Regional Government (KRG) has made significant progress, particularly in reducing gas flaring through the implementation of reinjection and capture technologies. Notably, the KRG issued a directive to oil companies to phase out flaring by 2023, giving them 18 months to comply. Companies like Aggreko have responded by launching one of the most significant flare gas-to-power projects in the Middle East, converting flared gas into electricity near the Sarqala field in the Garmian block, reducing flaring by a third.

However, implementation remains uneven. According to a Rudaw Research Center analysis published in April 2025, there are 45 locations in the Kurdistan Region where associated gas is flared daily, with 22 of those located in Erbil province. This highlights the urgent need for the directive to be enshrined in law, with enforceable mechanisms that compel compliance and accelerate progress toward meaningful environmental reform.

One of the most critical steps underway is expanding 24/7 electricity access. The KRG’s “Runaki” initiative aims to provide round-the-clock power across the Kurdistan Region by the end of 2026. As of March 2025, nearly half a million people and businesses across the region are enjoying uninterrupted power for the first time in 30 years. This progress has already enabled the shutdown of nearly 600 diesel-powered neighborhood generators across all governorates.

At the same time, water reuse strategies and environmental protection measures are being implemented to safeguard the ecosystems that support rural and agricultural livelihoods. In Erbil, the government has unveiled plans to construct a wastewater treatment plant aimed at purifying wastewater for reuse, thereby reducing the demand on freshwater sources.

In remote and underserved areas, hybrid systems that integrate solar with traditional diesel backup could provide affordable, low-emission energy. These models are already being tested in neighboring regions and offer a viable pathway to energy inclusion without expanding the fossil fuel footprint. For instance, studies have shown that hybrid photovoltaic-diesel systems can reduce electricity costs and emissions in off-grid rural locations.

The message to investors is clear: sustainability is no longer an add-on—it is a prerequisite for long-term credibility and competitiveness. Environmental, Social, and Governance (ESG) compliance must be woven into contracts, planning, and reporting.

Technology as an Enabler
The energy sector of the 21st century is not only powered by fossil fuels—it is increasingly powered by data, as emphasized by the International Energy Agency (IEA) According to the IEA, digital technologies and data are critical enablers of clean energy transitions—helping integrate renewables, improve grid reliability, enhance efficiency, and reduce emissions across the energy value chain. The Kurdistan Region of Iraq (KRI) has the opportunity to leapfrog legacy systems by adopting digital tools from the outset, creating a cleaner, more transparent, and more efficient sector than many older systems.

Satellite monitoring and artificial intelligence (AI)-powered analytics are already transforming methane leak detection worldwide. Companies like GHGSat utilize satellites equipped with infrared sensors to track emissions with precision, enabling governments and firms to reduce environmental breaches in real-time. Similarly, digital twins—virtual replicas of physical assets—are being utilized to optimize infrastructure performance and maintenance in oil operations, as demonstrated in case studies from companies such as Cintoo.

Blockchain technology is also proving to be a game-changer in improving supply chain transparency. Deloitte has documented how decentralized ledgers reduce fraud, ensure traceability, and enhance trust in oil and gas transactions.

In parallel, the Industrial Internet of Things (IIoT) and machine learning (ML) are enabling predictive maintenance, smarter drilling strategies, and real-time operational oversight. LinkedIn industry reports offer concise summaries of how AI and IIoT are transforming energy workflows and enhancing infrastructure resilience.

By integrating these tools into its licensing and policy frameworks, the Kurdistan Regional Government (KRG) could position itself not only as a competitive energy player, but also as a modern, responsible one—attracting forward-looking partners while reassuring skeptical stakeholders that Kurdistan is serious about innovation and accountability.

Beyond Extraction: Investing in People
Kurdistan’s energy strategy must ultimately be a people strategy. Oil and gas revenues should not only build infrastructure—they must also fund human development. This means prioritizing healthcare, education, and rural connectivity. Technical education programs focused on climate-smart industries, digital tools, and renewable energy could prepare the next generation for jobs that endure beyond the boom-and-bust cycle of hydrocarbons.

Encouragingly, some first steps are already underway. The Digital School initiative, launched in partnership with the Kurdistan Regional Government and the UAE Ministry of Education, is helping to expand digital literacy, remote learning, and access to inclusive education in the region. As part of this effort, more than 1,500 teachers are expected to benefit from capacity-building programs, including training modules on climate change education and the integration of technology in the classroom.

Public support will follow only if people feel the benefits in their daily lives. That’s the true measure of success.

Smart, Sustainable Partnerships
International companies entering Kurdistan should view the region not only as a resource hub, but also as a strategic partner in the global energy transition. Their commitments must extend beyond production to encompass transparent ESG reporting, local employment, and collaborative climate resilience initiatives.

The Kurdistan Regional Government (KRG) should, in turn, solidify its development agenda through clear and enforceable regulations. Progress is already visible, but now is the time to deepen it. The government’s commitment to reform and economic diversification is outlined in its official development agenda, which prioritizes transparency, economic opportunity, and citizen well-being. Sustainability is no longer a constraint. It is Kurdistan’s competitive advantage.

Conclusion
The energy deals signed in May 2025 represent more than just a commercial opportunity—they are a turning point. Kurdistan has the chance to become a model for how resource-rich regions can align fossil fuel development with environmental integrity and socio-economic inclusion. Today, emerging technologies such as artificial intelligence (AI) are opening new doors to more efficient governance, climate adaptation, and innovative infrastructure, offering tools that can accelerate a prosperous future for the region. Yet Kurdistan is situated in one of the world’s most volatile areas, vulnerable not only to political and economic instability but also to natural disasters. From conflict displacement to flash floods, the region has faced immense challenges. And time and again, its people have demonstrated remarkable resilience. With sustainability as a guiding principle, resilience can be amplified and transformed into long-term stability.

ABOUT THE AUTHOR

Peri-Khan Aqrawi-Whitcomb, Owner PX Consulting and Non-Resident Payne Institute Fellow

Peri-Khan Aqrawi-Whitcomb is a specialist in sustainable development policies and international affairs with a focus on the Middle East and the Kurdistan Region of Iraq. In 2018, she was selected by the US based Payne Institute for Public Policy to become a non-resident fellow in a global network of top policy, energy, environmental, and natural resource experts.

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DISCLAIMER: The opinions, beliefs, and viewpoints expressed in this article are solely those of the author and do not reflect the opinions, beliefs, viewpoints, or official policies of the Payne Institute or the Colorado School of Mines.