The Kurdistan region’s economy is dominated by the oil industry (with potential reserves of around 45 billion barrels), agriculture and tourism. Due to relative peace in the region, it has a more developed economy in comparison to other parts of Iraq.
Prior to the removal of Saddam Hussein, the Kurdistan Regional Government received approximately 13% of the revenues from Iraq’s Oil-for-Food Programme. By the time of the US invasion of Iraq in 2003, the program had disbursed $8.35 billion to the KRG. Iraqi Kurdistan’s food security allowed for substantially more of the funds to be spent on development projects than in the rest of Iraq. By the program’s end in 2003, $4 billion of the KRG’s oil-for-food funds remained unspent.
Following the removal of Saddam Hussein’s administration and the subsequent violence, the three provinces fully under the Kurdistan Regional Government’s control were the only three in Iraq to be ranked “secure” by the US military. The relative security and stability of the region have allowed the KRG to sign a number of investment contracts with foreign companies. In 2006, the first new oil well since the invasion of Iraq was drilled in the Kurdistan region by the Norwegian energy company DNO.
The stability of the Kurdistan region has allowed it to achieve a higher level of development than other regions in Iraq. Iraqi Kurdistan currently has the lowest poverty rates in Iraq. Iraqi Kurdistan also has strong economic relations with neighboring Iran and Turkey.
KRG-controlled parts of Iraqi Kurdistan contain 4 billion barrels of proven oil reserves. However, the KRG has estimated that the region contains around 45 billion barrels (7.2×109 m3) of unproven oil resource. Extraction of these reserves began in 2007.
As of July 2007, the Kurdish government solicited foreign companies to invest in 40 new oil sites. Gas and associated gas reserves are in excess of 100×1012 cu ft (2,800 km3).Notable companies active in Kurdistan include Exxon, Total, Chevron, Talisman Energy, MOL Group, Genel Energy, Hunt Oil, Gulf Keystone Petroleum, and Marathon Oil.
Other mineral resources that exist in significant quantities in the region include coal, copper, gold, iron, limestone (which is used to produce cement), marble, and zinc. The world’s largest deposit of rock sulfur is located just southwest of Erbil.