Iraq’s Kurdistan works to establish 2 oil firms as Irbil-Baghdad tensions rise

Iraq’s Kurdistan works to establish 2 oil firms as Irbil-Baghdad tensions rise
Oil has fueled Kurdistan’s boldness and heightened tensions with Baghdad that have simmered for decades over land and identity. (AP)
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Updated 18 June 2022

Iraq’s Kurdistan works to establish 2 oil firms as Irbil-Baghdad tensions rise

Iraq’s Kurdistan works to establish 2 oil firms as Irbil-Baghdad tensions rise
  • Statement follows dispute between Irbil and Baghdad February, with federal court ruling that the legal foundations of the Kurdistan region’s oil and gas sector unconstitutional

IRBIL, Iraq: Iraq’s Kurdistan Regional Government is working to establish two oil firms, the latest move in the battle between Irbil and Baghdad to control the oil sector in the semi-autonomous region.

The KRG’s new oil firm KROC would specialize in oil exploration, while the second — KOMO — would focus on oil exports and marketing from the semi-autonomous region, a spokesperson said in a statement on Friday.

The regional government has presented the idea and discussed it with the federal government in Baghdad recently, the KRG spokesperson said in a statement.

The statement follows months of disputes between Irbil and Baghdad after a February federal court ruling that deemed the legal foundations of the Kurdistan region’s oil and gas sector unconstitutional.

The Oil Ministry in Baghdad has since made fresh attempts to control revenue from the Kurdistan region, including summoning seven firms operating there to a commercial court on May 19. The firms were Addax, DNO, Genel, Gulf Keystone, HKN, Shamaran and WesternZagros.

The commercial court sitting has been postponed twice as some of the representation for these international oil firms did not have power of attorney, several sources told Reuters. The court session is due to resume on June 20.

As well as announcing plans to establish its own oil company in the Kurdistan region, the Iraqi Oil Ministry has ordered international lead contractors and subcontractors through Basrah Oil and Iraq’s national oil firm to pledge not to work on contracts or projects there.

Through letters sent on June 7 and 12, the firms were given three months to terminate existing contracts or projects in the KRG oil sector or face being blacklisted, according to two sources familiar with the matter.

The Oil Ministry is using two law firms — Vincent and Elkins and Cleary Gottlieb Steen and Hamilton — to help with gaining control of the KRG oil sector, according to two sources. Both firms have declined to comment.

The KRG has repeatedly rejected the federal court ruling. On June 5, the KRG’s Ministry of Natural Resources filed a civil suit against the minister of oil in Baghdad, Ihsan Ismael, for sending emails and letters to intimidate oil firms operating in the Kurdistan region and for interfering with the contractual rights of these firms and the KRG, according to a June 13 statement. Also on June 5, the Irbil court of investigation ruled that the commercial court sessions against international oil firms must be brought to the Irbil court.

There have been years of attempts by the federal government to bring KRG revenues under its control, including local court rulings and threats of international arbitration.

The implications of the latest dispute are not fully clear as more than eight months since elections in Iraq, the formation of a government is still underway.


Turkish drone kills 4

In another development, a Turkish drone targeted a vehicle traveling in Iraq’s Kurdistan region on Friday, killing four Kurdish militants, Iraq’s Kurdistan’s counterterrorism service said. In a statement, it said the drone struck the jeep in the town of Kalar in the northern province of Sulaymaniyah. A fifth passenger was wounded and was being treated in hospital.

The militants were from the Kurdistan Workers Party, which is listed as a terrorist organization by Turkey, the US and the EU, and has led an insurgency in southeast Turkey since 1984 which has killed tens of thousands of people.

Turkey regularly carries out airstrikes into northern Iraq and has sent commandos to support its offensives. In April, it launched its latest offensive, named Operation Claw Lock in parts of northern Iraq — part of a series of cross-border operations which it started in 2019 to combat the outlawed PKK who are based in the mountainous regions of northern Iraq.

The Turkish Defense Ministry said in a tweet Friday that 6 PKK “terrorists” were neutralized in Iraq as part of an ongoing military campaign, but did not offer more details.