Iraq says 'foreign firms' to blame for delay in Kurdistan oil exports

News Desk - The Cradle

Baghdad has blamed the delay on the refusal by foreign firms to hand over oil production to the federal government for export

Iraq’s Oil Ministry said on 25 March that foreign companies operating in the country’s Kurdistan region were partly at fault for failing to resume crude exports from there. 

“One of the main reasons for the pause in exports is the refusal of the foreign companies working in the Kurdistan Region to officially hand over their production to the Regional Government to be exported in accordance with the in-force federal budget law,” the ministry said in a statement.

It added that the federal budget demands authorities in the Kurdistan region to hand over the oil production to the Iraqi government for export.

According to the oil ministry, reports from OPEC and “reliable international secondary sources” indicate that between 200 and 225 thousand oil barrels are produced daily in the Kurdistan region without Baghdad’s “knowledge or approval.” 

Article 13 of the federal budget demands that the Kurdistan region hand over a minimum of 400,000 barrels to the Iraqi State Oil Marketing Organization (SOMO) for export through the Turkish port of Ceyhan or domestic use. 

The ministry adds that Baghdad has previously requested copies of the contracts for review and demanded new contracts in line with the country’s constitution. 

“How is it permissible to demand that this ministry abide by contracts that it has not seen and does not recognize, and which are in principle contrary to clear and binding judicial decisions?”

The oil ministry was responding to a recent statement by international oil producers blaming Iraq’s government for blocking the resumption of Kurdish oil exports, calling it a “blatant interference.”

In late March, Ankara halted the flow of oil through the Iraq–Turkiye pipeline after an arbitration ruling from the International Chamber of Commerce (ICC) in favor of the government in Baghdad over illegal oil exports by the Kurdistan Regional Government (KRG) to Turkiye.

The ICC ruled that Turkiye violated a 1973 pipeline transit agreement between Baghdad and Ankara and ordered it to pay Iraq $1.5 billion in damages for exports between 2014 and 2018.

Baghdad announced in November last year that a deal would soon be reached to resume Kurdish oil exports.