Half way up a barren mountain in northern Iraq the earth begins to shake. Starting slowly, a deep rumble is heard, stopping suddenly with a thin hydraulic hiss. But this is no earthquake. It is part of a seismic test to search for oil in a region where crude is so prolific that it oozes from the rocks.

Andy Grosse, exploration director of Sterling Energy, the British company funding the programme, says: “There is nowhere else left like this on earth — where there is so much potential but so little exploration has been done. For an oil company, it's like being a kid in a sweet shop.”

In Baghdad, officials continue to hammer out details of a new oil law while Western oil giants bang on the door for access to vast, established fields further south. But here in Kurdistan, the scramble for Iraq's immense reserves is well under way.

Since the regional government, acting independently, awarded exploration licences to 24 smaller foreign companies last year, the remote Zagros mountains have swarmed with an international army of seismic crews, drillers, their support staff and security teams.

On Sterling's concession near the village of Sangaw, four huge vibrating trucks with 6ft wheels, each weighing 27 tons, are shooting shockwaves deep into the earth. Behind them, strung in a line for miles along the surface, thousands of small microphones pick up the response, identifying reservoirs of oil that could lie 3 or 4km underground.

A Kurdish employee of Sterling is one of 250 workers on the seismic programme, of which 150 are armed guards. He says with a smile: “It's amazing — we have never seen this kind of thing in Kurdistan before.”

Nobody knows how much oil is here but the potential for big discoveries is obvious, judging by an arid riverbed a few kilometres away where viscous black crude trickles from a gash in the earth.

“This is fairly high quality crude,” says Mr Grosse, a geophysicist, sniffing at it. “It's very encouraging. We know there is oil here, it's just a question of finding the trap in the subsurface where the oil is seeping out.”

Iraq has 115 billion barrels of proven reserves, behind only Saudi Arabia and Iran. Far more might lie undiscovered, much of it in Kurdistan.

“In the early days, they found so much oil further south around Basra where it could easily be exported by tanker that they didn't really bother looking up here,” said Mr Grosse. “It was remote, mountainous. There was no way to export it. Then politics came into play in the 1970s and this became a no-go zone.”

Kurdistan, a region half the size of Ireland, could easily contain 30 billion barrels — putting it on a par with the United States with 29 billion.

Back in Erbil, the capital, where hotel lobbies buzz with oil executives from Paris, London, Houston and Seoul, the sense of excitement is palpable.

There have already been big discoveries. Last year, DNO of Norway found 1.3 billion barrels near the Turkish border. Another find has been made by a Turkish company with Addax of Canada. With so much exploration going on in such a prospective area, more discoveries seem certain. In some blocks “it's a bit like shooting fish in a barrel”, Mr Grosse quips.

As with everything in Iraq, prospecting for oil is not without complications. It is not just the need for new pipelines and infrastructure, the risk that seismic testing using dynamite can detonate unexploded mines, or the need to take tortuous detours along mountain roads to avoid troublespots.

More importantly, political questions continue to hang over the legality of Erbil's decision to allocate oil blocks independently of Baghdad. Oil export licences can be granted only by the central Government, which is still horsetrading with the Kurds over a framework for distributing oil revenues. As no such licences have been granted, it would be illegal for any company to start exporting. It is the political risks that have put off bigger oil companies such as BP and Shell, which are chasing contracts with Baghdad for access to the vast fields of southern Iraq. The small fry believe this leaves them free to find and develop new fields on their own. “This is virgin land,” said Awat al-Barzenji, project director of Kar Group, an engineering company involved in several oil projects. “Some people may be hesitant to jump in but for those that do, the rewards will be great.”

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