Iraqi justice demands Kurdistan hand over all its oil to Baghdad

The autonomous region of Iraqi Kurdistan - located in the mountainous northern part of the country - has consisted of the provinces of Dohuk, Erbil and Solimania since 1991, and is spread across the length and breadth of important oil fields. In fact, the production and trade of crude oil is one of the Kurds' main sources of income. In the absence of a federal law regulating this issue, the Kurdistan Regional Government (KRG) enacted a hydrocarbon management law in 2007 that allows it to manage and trade its oil and gas resources.

However, in the face of lawsuits filed by the Iraqi Oil Ministry (in 2012 and 2019) against Kurdish oil exports without the approval of the federal government, the Supreme Court of Iraq - the highest authority in the country - yesterday issued an order in favour of Baghdad in which it described the Kurdish law as "unconstitutional". 

The ruling - which was published on the court's official website - has declared the obligation of the "KRG to hand over all oil production in the oil fields in the Kurdistan Region (...) to the Federal Government represented by the Federal Ministry of Oil".

And, in the same vein, it has incorporated a legal imperative for the "Kurdistan Regional Government (KRG) to allow the Iraqi Ministry of Oil and the Federal Office of Financial Supervision to review all oil contracts concluded with the KRG with respect to the export and sale of oil and gas". This also includes all agreements relating to the exploration and extraction of hydrocarbons with foreign companies and states, allowing the Federal Government in Baghdad to know the Kurdish region's share of Iraq's overall budgets. 

For their part, the KRG authorities have rejected the verdict as "unjust" and a violation of "the rights and constitutional authorities of the Kurdistan region", as they stated to the Kurdish television channel Rudaw, according to Europa Press. "The aim [of the court's decision] is to antagonise the Kurdistan region and the federal system in Iraq," said the leader of the Kurdistan Democratic Party, Masoud Barzani. 

The risk of the Kurdish authorities ignoring the court ruling is high, as the oil and gas dispute is a conflict that has been going on for several years between the KRG and the Iraqi federal government. In this regard, statements issued by Kurdish representatives have underlined their position: "The Kurdistan Regional Government will not surrender the rights of the region, which are enshrined in the constitution, and will continue to pursue a constitutional solution with the Federal Government. 

One of the key issues in the clashes between Baghdad and Erbil, the capital of Iraqi Kurdistan, in recent years has been oil exports of Kurdish crude. The federal government has demanded that all deals be subject to the supervision of the relevant ministry, the Federal Oil Ministry. 

The height of the disputes was reached in 2012 and 2014, when the Iraqi authorities censured Turkey's stance, where Kurdistan has exported some of its crude oil production for refining, which Ankara has subsequently introduced to international markets. Indeed, the KRG maintains a pipeline that transports crude oil from Iraq's Kirkuk region to Ceyhan in Turkey. 

Until now, the current agreement between Iraq - the second largest oil exporter in the Organisation of Petroleum Exporting Countries (OPEC) with more than 3.5 million barrels per day - and Kurdistan included the delivery of more than half of the daily crude oil production (250,000 barrels of the 400,000 barrels produced in total). In return, the federal government in Baghdad guaranteed the salaries of Kurdish civil servants; especially that of the Peshmerga fighters - armed forces in the territory.