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Iraq opens case against foreign oil companies still operating in Kurdistan

The seven international companies have been summoned to appear before the Karkh Commercial Court, under scrutiny for continuing to operate in the region outside of a new agreement with the federal government
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AFP/HAIDAR MOHAMMED  -   Oil refinery in Iraq

The repercussions of the Iraqi Supreme Court's ruling, made public last February, continue to drag on to this day. According to the order of the country's highest judicial authority, the law allowing the semi-autonomous region of Iraqi Kurdistan to manage and trade its oil and gas resources would be "unconstitutional" and Kurdistan would have to hand over all of its hydrocarbon production to the federal government.  

As part of this decision, the undersecretary of the Ministry of Oil, Karim Hattab, contacted all foreign oil and gas companies operating in Iraq - in fields ranging from logistics and consultancy to services - on 12 June to obtain their commitment not to operate in the Kurdistan region. This information is known thanks to leaked documents from the Federal Oil Ministry, reported by Al Arab.  

"In the case of existing contracts or projects in the Kurdistan region, companies must commit to terminate them within three months from the date of notification," Hattab urged in a statement to all companies. The implications of the Supreme Court's order go beyond the national territory, also compromising exports and contracts between Kurdistan - which, located in the north of the country, is home to significant actual and potential oil and gas reserves - and international companies.

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REUTERS/AZAD LASHKARI  -  Taq Taq oil field in Arbil, Iraq's Kurdistan Region

Thus, earlier this month the Commercial Court under the Federal Court of Appeals in Karkh, Baghdad, began reviewing complaints filed by the Iraqi ministry against seven foreign oil and gas companies operating in the Kurdish territories. Western Zakros, Sharman, DNO, Genel Energy, HKN, AWACS and Golf Keystone were the companies called to appear before the specialised court on 20 June, accused of working in the country outside the parameters of the Iraqi constitution.  

The Kurdistan Ministry of Natural Resources has described this as an "illegal procedure". The companies "carry out their work in accordance with the Oil and Gas Law in the Kurdistan Region of 2007, approved by the Kurdistan Regional Parliament in accordance with the Iraqi Constitution," the Kurdish body said in a press release.  

In parallel, the Kurdish Ministry of Natural Resources itself made public its complaint against the leader of the Federal Oil Ministry, Ihsan Abdul Jabbar Ismail, for 'taking advantage of his position and intimidating and harassing companies operating in the Kurdistan Region' to interfere with their contracts through letters and emails. It called for the "referral of the cases filed against the international companies to the Erbil Tribunal for investigation as evidence of a criminal complaint based on the 1979 Iraqi Code of Criminal Procedure", arguing that the matter should be resolved in Kurdistan's civilian courts because the foreign companies are registered and operate in the region.

Meanwhile, as Abdul Jabbar himself explained last month, attempts to negotiate between the federal and Kurdish governments over the administration and control of Kurdistan's hydrocarbons continue to fail. While the Kurdish authorities appeal to articles 112 and 115 of their constitution for the management of oil and gas - stating that 'all powers not stipulated in the exclusive local powers of the federal government belong to the regional authorities', and locating the post-2005 fields here - the federal government and the state oil company, SOMO, are sticking to article 111, which states that 'gas and oil are the property of all Iraqi people in all regions and governorates'.  

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Iraqi Parliament Media Office via REUTERS  -   Iraqi lawmakers attend a session of the new Iraqi parliament in Baghdad on 9 January 2022

All this comes amid a political crisis that has paralysed the country for the past eight months, and continues to convulse following the resignation of all 73 parliamentarians from the Sadrist Movement, led by the cleric Muqtada al-Sadr, at the end of last week. Indeed, as the oil and gas deal between Erbil and Baghdad continues to be complicated, the court's ruling itself represents significant constraints for any Iraqi government, even as it tries to maintain a conciliatory tone with Kurdistan.

What is Iran's role in the Kurdish-Iraqi conflict?

The energy potential exhibited by Kurdistan in recent months, which has already claimed to want to strengthen its role as an exporter of natural gas to the rest of Iraq, Turkey and Europe, appears to pose a threat to Iran, which has so far emerged as one of the main suppliers of hydrocarbons to these powers.  

Indeed, the recent missile attacks in Erbil on 13 March - claimed by the Iranian Islamic Revolutionary Guard - and on 6 April and 1 May - the responsibility for which is unknown but suspected to lie with Bartella's pro-Iranian Shia militias - only reaffirm the view that Kurdish energy threatens Tehran's oil revenues.