Iraq court orders Kurdistan to ship all oil to Baghdad
The top federal court in Iraq ordered Iraqi Kurdistan to deliver all of the oil it produces to Baghdad, calling the autonomous region's oil and gas law unconstitutional.
The Kurdish Regional Government (KRG) has been developing oil and gas resources independently of the federal government, and in 2007, it created its own oil law that established how the region would administer the resources.
On Tuesday, the court’s decision stated that the Kurdish government must hand over all crude from the KRG and neighbouring areas directly to the federal government, represented by the oil ministry in Baghdad.
The ruling declared KRG contracts with oil companies invalid, which includes exploration, extraction, export and sales agreements.
This comes a day after France’s TotalEnergies (TTEF.PA) and Baghdad struck a $27bn deal in hopes of reversing the exit of oil majors from the country, Reuters reported. Iraq expected the deal to be completed sometime from March onwards.
Kurdistan leader, Massoud Barzani, described the federal court’s opinion as “purely political” and contrary to the Iraqi federal constitution. “The aim of it [the court’s decision] is to antagonise the Kurdistan Region and the federal system in Iraq,” Barzani, the leader of the ruling Kurdistan Democratic Party, said.
“We hope that the governments of Iraq and the Kurdistan Region will be able to overcome the obstacles and agree on the oil and gas file,” Barzani added in a statement.
Oil and gas are valuable to Iraq’s economy, which is the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).
In 2020, Iran produced less than two million barrels per day of crude oil, a 40-year low, according to the US Energy Information Administration. According to the Law Reviews, if the Kurdistan region “were an independent country, the amount of oil and gas reserves would place it among the top 10 oil-rich countries in the world”.
The Kurdish region delivers 250,000 of its more than 400,000 barrels of oil per day to Baghdad, in return for its share of the federal budget, as per a deal between Baghdad and the Kurdish capital Erbil, AFP reported. The share is used to pay the salaries of Kurdish civil servants and Peshmerga fighters.
The ruling could reignite long-standing tensions, with Kurdish authorities unlikely to comply, given years of disputes over Baghdad's share of Kurdish petrol.