Tavish Scott: Scotland can work with Kurdistan’s Aberdeen

A FAMILIAR face walked across the hotel lobby. Former BP boss Tony Hayward was deep in conversation as Erbil’s Rotana Hotel hosted Kurdistan’s first international oil and gas conference.

The capital of the northern semi-autonomous region of Iraq was buzzing with activity. Kurdistan is the new Saudi Arabia with the fourth-largest oil reserves on the planet and Erbil could be like Aberdeen in the 1970s, albeit without the sea and the harbour and with sand storms replacing easterly wind and sea harr.

The Erbil conference was party to a massive exploration deal signed between the American giant Exxon Mobil and the Kurdistan regional government. But the Baghdad federal government is not happy as they would rather control all the oil and gas developments across Iraq. The Kurds are safe, attractive to do business with and do not want to be held back by the stultifying bureaucracy and delay of Baghdad’s green zone.

Erbil and wider Kurdistan have been mercifully free of kidnappings, road-side bombs and killings since 2007. It feels safe to walk and drive around despite the obvious security, bag checks and police who are present at all major buildings. Drilling for oil in Kurdistan is therefore easier than across the regional border so Exxon Mobil will be followed by other multi-national oil and gas exploration companies. UK interest is considerable, with £3 billion of investment in the past six months alone. Aberdeen headquartered Wood Group have a presence and other export-orientated Scottish service companies will assuredly follow.

I visited the Kurdistan parliament, met the Speaker and discussed where the industry would take politics. The devolved government’s budget has grown from $100 million to $11bn in nine years. Oil and gas revenues operate under a precise formula laid down in the federal constitution and will add a further $2bn to the Kurdistan budget in the next year.

Kurdistan parliamentarians are hungry for their government to work better in both policy and financial terms. They want an independent audit body which has enough staff to scrutinise government spending. But they also want a grown-up relationship with Baghdad. When a region has gone through war and has Syria and Iran as neighbours, a federal system that delivers a fair financial deal while allowing both policy independence and a clear hand to negotiations on mineral assets is the objective.

So in a federal or quasi-federal system it is perfectly possible to have a grown-up relationship, work through policy differences and create jobs through foreign investment without the need for referendums or endless synthetic rows. Scotland’s experiences of government and public policy and the ever-evolving relationship with London provide pointers for relationships elsewhere.

As well as the potential to export oil service expertise from Aberdeen and the merits of Audit Scotland’s professionalism, Scottish universities need to recognise the opportunity. The UK’s stock is very high in Kurdistan. Former prime minister John Major, who visited in May, is recognised for the role he played in supplying food to the Kurds at the end of the first Gulf War.

Kurdistan exports students to study abroad on an increasingly significant scale – 85 per cent come to Britain but all go to English universities. Seven universities were across this week pitching their wares to the Kurdish student body. Heriot-Watt and both Aberdeen and Robert Gordon Universities have strong graduate disciplines linked to oil and gas. They would be well advised to explore this new potential in a very exciting part of the world.