The oil dispute puts Baghdad in front of “big” legal problems.. Billions of compensation for Erbil (details)

[horsesoldier]

" can be resolved " ... But when, because these folks never get tired of the sound of their own voice. Well, and as long as everything remains in flux, stealing $$$$$ is so much fun.

[6ly410]

 

[6ly410]

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Oil minister says Iraq to act to annul Kurdish oil deals

BAGHDAD (AP) — Iraq’s oil minister said on Thursday the government will take steps to enforce a recent court decision to annul oil contracts the semiautonomous northern Iraqi Kurdish region made with international companies.

The minister, Ihsan Abdul-Jabbar Ismail, told The Associated Press the deals, which circumvent the government in Baghdad, are illegal and amount to oil smuggling.

His remarks were the strongest yet by a senior government official since Iraq’s Supreme Federal Court issued a landmark ruling in February against the northern region’s independent oil sector. Ismail said in total 17 oil companies will be targeted for their dealings with the Iraqi Kurdish region.

Ismail said the international companies that have signed these deals would first receive a cautionary note.

“We will give them a soft message: ‘You are working in the smuggling of oil.’ If they are a respectful company they will listen to us,” Ismail told the AP in the exclusive interview.

Kurdish officials, including the ruling Kurdistan Democratic Party in Irbil, have dismissed the court ruling as politicized and claim the supreme court itself is unconstitutional.

The ruling came against the backdrop of political upheaval in Baghdad, where Iran-backed groups are pressuring Kurdish parties to join their efforts and proceed with the forming of a government after influential Shiite cleric Moqtada al-Sadr, the winner of the parliamentary elections last year, stepped down from the political process because he could not corral enough lawmakers in the 329-seat house. The Kurdistan Democratic Party was allied with al-Sadr.

The Iraqi Kurdish region has also faced a rising number of attacks targeting its energy infrastructure. Rocket and mortar fire repeatedly struck a gas field while others targeted a pumping station and refineries last month.

For years, Iraqi Kurdish authorities exploited a constitutional loophole, and managed to exports crude and maintain a modicum of financial independence from the federal government in Baghdad. They have kept details of their operations secret, including their production rates. Iraq Oil Report, an oil industry publication, estimates this to be 440,000 barrels per day.

Now, Baghdad officials are looking to close that door, Ismail said.

The February court ruling effectively rejected the Iraqi Kurdish oil law as a legal basis that the region had used to carry on with independent exports and contracts. Many questioned the timing of that ruling, given that it had been delayed for years. At the time, the Kurdistan Democratic Party and al-Sadr had tried to form a government without Iran-backed parties.

Ismail agreed the ruling came during a politically sensitive time but denied that it was a politicized decision. After the ruling, the Oil Ministry launched lawsuits against seven international companies, including Norway’s DNO, Canada’s Western Zagros and the U.K.-listed Gulf Keystone.

This week, Baghdad’s Commercial Court issued rulings invalidating four of the seven contracts, the oil minister said, with the other three to be decided on by the court at a July 17 session.

Ismail said the overall goal is to invalidate a total of 17 contracts. Some of the contracts are with companies from the United Arab Emirates, others are with Chinese and some with Russian companies, he said.

Caretaker Iraqi Prime Minister Mustafa al-Kadhimi has so far maintained distance from the recent developments, issuing conciliatory statements over the fraught relations between Baghdad and the Kurdish authorities.

But Ismail said the ministry has a plan to also act on the commercial court ruling and would give foreign companies the option to cancel their contracts, request that Iraq’s federal government grant them a waiver — or transfer them from Kurdistan’s Ministry of Natural Resources to the federal government’s Oil Ministry in Baghdad, he said.

He dismissed claims that it would be technically impossible to transfer contracts from one authority to another, saying it’s a matter of “just paperwork.” The Kurdish region uses a production sharing contract model that is incompatible with the federal government’s preference for technical service contracts.

If the companies do not comply, Ismail said the government would resort to “the law and banks” to enforce decisions.

“We also have the Oil Police, but we haven’t asked to use them,” he said.

Key oil service companies, including Baker Hughes, Haliburton and Schlumberger pledged to obey the ministry’s blacklist policy and have said they will not seek new tenders with the Iraqi Kurdish authorities. For years, international companies have been operating in the Kurdish region with assurances from Kurdish officials that they would not face legal risks.

Oil companies contracted with the Kurdish region operate in territory de facto outside the federal government’s control. Sending federal police to physically shut down the operations in the Iraqi Kurdish region would amount to an unprecedented escalation.

By World News Guru|July 7th, 2022|Categories: World|0 Comments

[6ly410]

Iraq's autonomous Kurdistan region on Wednesday deplored "unjust pressure" from the federal government's oil ministry, days after the judiciary nullified oil contracts between the Kurds and foreign oil firms.

After the oil ministry filed a judicial complaint, a commercial court in the Iraqi capital on Monday invalidated contracts between the Kurdish region and four companies with production or exploration operations, according to a senior oil sector official in Baghdad and confirmed by a Kurdish government official.

Both sources spoke on condition of anonymity.

 

The move comes as the Kurdish region and the federal government remain locked in a tug-of-war over the management of hydrocarbons.

Iraq's supreme court in February ordered Kurdistan to deliver the oil produced in its territories to the federal government. It also gave the latter the right to review all oil contracts, or even cancel them.

Since then, Baghdad has sought to enforce this judgement, opposed by Kurdistan, which wants to preserve the autonomy of its energy sector.

On Wednesday, the Kurdish government said in a statement it was "reviewing all the constitutional and legal procedures (available to) Kurdistan in the face of the unjust and unconstitutional pressure exerted by the oil ministry" in Baghdad

"The court invalidated the contracts that did not conform with the decision of the federal supreme court," the anonymous oil sector official in Baghdad told AFP.

He said that the federal government has initiated judicial proceedings against a total of seven companies operating in Kurdistan, along with the autonomous region's natural resources minister and his predecessor.

Kurdistan says it is open to a negotiated solution to the spat.

Iraq's oil ministry has said that oil majors Schlumberger, Baker Hughes and Halliburton have committed not to initiate new projects in Kurdistan.

These companies are also working to "liquidate and close" existing contracts, according to the ministry.

Iraq, including the Kurdish region, sits on enormous oil reserves and revenues from the sector feed 90 percent of the federal government budget.

[6ly410]

 

[6ly410]

Due to the ambiguous and problematic energy resource-sharing scheme in the Iraqi constitutional structure, Iraq's problems are no longer limited to the domestic constitutional level, but now have global repercussions. The problems arise not only from a textual constitutional deficiency, but also from the constitutional court's ineptness. The Iraqi Federal Court’s recent decision invalidating the legal basis for current international oil contracts granted by the Region of Kurdistan to Turkish Companies may result in immediate military intervention by Turkey in Iraq, as well as a global economic disaster in terms of energy.

Since 2005, the number of reasons for the state's failure and constitutional misery has been growing daily and is expected only to increase as 2023 approaches. It's ironic to hear voices among those who blame the state’s failure from those who have served as advisors to two former Iraqi presidents. This crisis goes beyond political corruption, statelessness, conflicts, and mass migrations. It is an international responsibility, because the international community was responsible for much of Iraq’s problems. So, today's major issues are not directly related to the over five million refugees forced to flee the country during the government's ethnic cleansing from 2006 to 2010; nor to the emergence of the Islamic State in 2013 following the government’s massacre of civilians who questioned the constitutional vigour; or the war that followed, which killed another million people and destabilized the Middle East. All of these issues aren't so important for the international community because, from my perspective, such groups of people don't seem to bother western ethics. However, the current constitutional issues will have a significant impact on the global energy market, as Iraq produces more than three million barrels of crude oil per day and is forecast to expand capacity by around four million barrels over the next five years.

Negotiated vs. Imposed Constitutions

A constitution is a dialogue among equals, however in Iraqi history, constitutions were always either hegemonic impositions or military state coup proclamations. The first ‘post’-colonial constitution of 1925 was written and provided by British colonial authority and approved by popular referendum (in which the so-called choice was either to approve that text or serve the protectorate). After the US-led coalition invaded Iraq in 2003, another constitutional text was written by the coalition command. The new Constitution of 2005 was coined by its translators in the absence of a third of Iraq’s population, under the segregation policy. The text neither represented Iraq’s social complexity, nor was genuinely assisted by lawyers, thus the English text is more comprehensible than the officially adopted Arabic text. 

The Constitution is troubling not only in terms of its dubious legitimacy and legality but also in terms of its lack of coherence and openness to misinterpretation. It plainly has orthographic errors, which make its ambiguity seriously problematic, and it has many open examples which may give rise to problematic interpretations.

Constitutional Calamities

Calamities in Iraq have been numerous. But the most significant one currently, which may have global repercussions, is the decision of the Iraqi Federal Supreme Court of mid-February 2022, which reveals a constitutional crisis, with even more and deeper problems of ambiguity. The verdict and this ambiguity are leading Iraq towards a serious confrontation of powers internally and an imminent Turkish invasion of the country, which may cause a global economic disaster in terms of oil resources and impacts on prices. The conflict arises from an idle type of constitutional redaction and contradictory schema of the text.

The Explanation

Article 111 of the Iraqi constitution states that “oil and gas are owned throughout [Iraq] by Iraqi people in all provinces and regions”. Even this designation is ambiguous, as it does not refer to other potential hydrocarbons or minerals throughout Iraq: it names only oil and gas, excluding other resources. Meanwhile, the successive Article 112.1 contains yet another ambiguity. It states: 

The federal government administers the oil and gas extracted from the current mines with the regional and provincial governments with the obligation of distributing [the oil and gas] equitably to all the people all over the country, within a specific designation in a specific period to the sinistered regions which have been excluded during the old regime to ensure an equitable development nationwide a law should regulate this.

The lack of clarity in this provision is not due to my English translation of this text, as I attempted to meticulously observe and reflect the original. The entire article does not include more than one single comma and is expressed as I have presented it. From this article nothing is clear, we don’t know: 1) exactly what would happen with future mines, as the provision refers only to the current mines; 2) what should happen with other minerals, as the country has many minerals other than oil and gas; 3) what the association with regional and provincial authorities means and if this refers only to the existing mines, and what or how this association would be with future mines; 4) if there’s any definition of the sinistered regions and if the article affects the so-called sinistered provinces also, or if this word is only related to regions in general (the original English text uses the term “damaged regions”, which has no clear meaning); or 5) how such classification should be attributed and during which period. However, the most significant problem lies in the last part of the provision, which leaves all these ambiguities to be regulated by law.

Before going into a further explanation, I will show the successive two articles’ same ambiguity and contradictions. Article 112.2 states the following:

The federal government with regional and provincial governments’ oil producers must collectively design strategic policies to develop the Iraqi wealth of oil and gas for a higher benefit of the Iraqi people according to the most modern techniques of the market economy and to attract investments.

As it stands, there is no way to understand the meaning of this schema, nor how this association should be implemented; to understand the meaning, one must read the original English text, not the officially adopted Arabic text, on which the people voted in a referendum, and which was terribly written by American translators. All this is further complicated by article 115, which states:

All that had not been precisely designated as federal competencies shall be understood in favour of regions and those provinces that do not belong to a region and those subjects that share the federal and regional governments the superiority shall be understood in favour of the regional law and the provinces not belonging to a region when contradiction is appreciated.

Worldwide Unequalled Constitutional Scenario

I would challenge constitutionalists worldwide to find an equivalent scenario to the lack of clarity produced by these articles. It’s not necessarily a problem that the constitution was written by foreigners, translators or even invaders. The problems arise not only because of linguistic discrepancy between the original English and the officially adopted text, but the situation in which seemingly deliberate ambiguity has created confusion between federal and  regional powers in relation to the globally critical question of the management of natural resources.

Dilemma of the Constitutional Suspension by the Constitutional Court: The 2012 Court Decision

In 2012, the Iraqi Federal Supreme Court heard a suit by the central government's Ministry of Oil against a decision of the Kut city council, which voted to restrict the exportation of oil produced in their city in order to conform to the local necessities of oil derivates, applying articles 111 and 112.1 of the Constitution. The Court ruled, in case-law 8/fed/2012, that the matters in these articles required regulation by ordinary law. Since that ordinary law has not yet been implemented, the constitutional provision is deferred or suspended until a legislative regulation is provided. As a result, a constitutional statement that designs a specific schema is suspended by the Court and rendered ineffective until ordinary legislative regulation is enacted. The entire Constitution is then suspended by the constitutional court itself because of vacatio legis, the ordinary legislator failed to provide ordinary regulation.

The Forecast of a  Constitutional Crisis: The 2022 Court Decision

The worst of the crisis has now emerged. The regional government of Kurdistan in 2007 adopted a regional law to promote investigations to find new mines in its regional territory. That law has not ever been contested by the central government. As a result, even without an international personality, the Kurdish government had research contracts with some foreign companies to find new oil mines, and these contracts were not contested by the central government. When they discovered oil and began extracting and transporting it through the national pipeline toward Turkey—a country that patrols Iraqi territory—the federal government began to contest the use of the pipeline, blaming Turkey and bringing the case to the Supreme Court in 2012. The Court took ten years to give a verdict (by contrast, the court solved the earlier conflict with the southern city of Kut within weeks). But the court's solution is even more perplexing than the long, agonizing process that led to it. In February 2022, the Court finally declared unconstitutional the Act of Oil and Gas of the Region of Kurdistan (2007); even though no one in the litigation process had contested this specifically. The Court then ordered the regional government to “empower” the central government to renegotiate the current contracts on the understanding that as a federal concern, according to article 112.1 of the Constitution, the resource sharing scheme is deferred and dependent on ordinary legislative regulation. So, those contracts that had been formed under a regional law that was not contested at the time, have been declared unconstitutional now, and are therefore null. Nobody knows how the consecutive contracts should be renegotiated and what the “empowerment” of  the federal government actually involves.

How can this text qualify as an acceptable Constitution and those senior agents as statesmen? A country that presents itself to the world without a proper constitution is akin to showing up to a dance party in a swimming suit. As a result, here's what's most likely to happen now: Turkish troops are crossing the Iraqi border to protect the oil mines discovered by their companies under these contracts, on the basis that the constitutional statement only referred to existing mines at the time the constitution was written, not future mines.

A New Constitution 

It is clear that the current constitution needs an overhaul. It has resulted in more problems, disasters, ambiguities, and social segregation than it has solved, of which the issue of energy resources traced in this article is only one example. Now that there is a real risk of international conflict with global repercussions, the matter is even more urgent. Iraq requires urgently a new constitution that deals clearly with the ownership and management of resources, that embraces clear language over ambiguity and which reflects the basic principles of constitutionalism.

Samer Alnasir is an Ass. Prof. in Legal History at University Carlos III of Madrid, and a Bi-PhD Candidate in Ethics and Political Philosophy at UNED, Spain

Suggested Citation: Samer Alnasir, ‘Iraq Urgentl

[6ly410]

 

KRG 'SMUGGLING OIL'- IRAQI OIL MINISTER

 

PM:12:09:08/07/2022 

520 View

 

SULAIMANI — The Iraqi Minister of Oil, Ihsan Abdul-Jabbar called the Kurdistan Regional Government (KRG)’s oil contracts with International Oil Companies (IOCs) "smuggling oil” and said the ministry will enforce a recent court decision to annul oil contracts.

Abdul-Jabbar told the Associated Press (AP) yesterday (July 7) that the deals, which circumvent the government in Baghdad, are "illegal and amount to oil smuggling."

In February, the Iraqi Federal Supreme Court issued a verdict against the KRG's law on oil contracts, which ruled the contracts were against the constitution.

The KRG has rejected the ruling describing it as "political and unconstitutional."

The KRG said on July 6 that it will not give up its constitutional rights or submit to pressure or threats from the federal government that would violate the rights of the people of the Kurdistan Region.

The Kurdish service of Voice of America (VOA) said on July 4 that a court in al-Karkh, Baghdad, issued a decision on the same day on four international oil companies operating in the Kurdistan Region. 

VOA added that the court’s decision was in the interest of the Iraqi Oil Ministry and that the court did not reveal the ruling.

Abdul-Jabbar told the AP that the Oil Ministry "will give them a soft message: You are working in the smuggling of oil."

"If they are a respectful company they will listen to the Iraqi Ministry," he added.

The KRG’s Minister of Natural Resources filed a civil suit against the Iraqi Minister of Oil on June 5 for sending letters to oil companies working in the Region, calling for them to appear before the court’s sessions.

A statement from the Ministry of Natural Resources noted the companies summoned to the court included DNO, ASA, Western Zagros, HKN Energy, ShaMaran Petroleum Corp., Genel Energy, Addax Petroleum and Gulf Keystone Petroleum.

While Baghdad and Erbil have conflicted with the oil and gas sector for years, the dispute intensified the political disagreements between the Shia parties in the Iraqi parliament over forming the new government.

The KRG has not been observed to respond to the Iraqi oil minister's comments at the time of publishing this report.

(NRT Digital Media)

[6ly410]

SULAIMANI (ESTA) — Iraq’s Ministry of Oil renewed its call on Friday to revoke to oil contracts that the Kurdistan Region government has made with international oil companies.

The Iraqi Minister of oil Ihsan Abdul Jabar has revealed, that Bagdad will take the necessary measure to execute Iraq’s Federal court’s decision aimed at revoking the Kurdistan Region oil contracts with international oil firms.

“All of the Region’s oil contracts are unlawful”, and “Previously Iraq’s Federal court has deemed oil and gas law as unconstitutional,” he said.

“Selling the Kurdistan Region oil will be considered in a frame of oil smuggling” he added.

He also pointed out that, “every necessary measure will be taken against the 17 IOCs which operate in Erbil”. Those companies that possess contracts with the Kurdistan Region will be notified in writing and if they do not comply with the decision, tight measures will be taken against them, according to the Minister’s words.

The Kurdistan Regional Government (KRG) has been developing oil and gas resources independently of the federal government, and in 2007 enacted its own law that established the directives by which the region would administer them.

However, Iraq has recently made fresh attempts to control oil revenue in the Kurdistan Region, in February, Iraq’s federal court deemed the oil and gas law regulating the oil industry in Kurdistan unconstitutional and demanded that the KRG hand over their crude supplies. So-far the Region’s government has repeatedly refused officially to abide by the court’s ruling and thus sparked conflict between the officials in Erbil as well as Baghdad.

[horsesoldier]

I could be wrong, but does this show some favoritism ??? Would like to know the back story for this.

[yota691]

The rule of law: the region deliberately violates the constitution and a parliamentary direction to end oil smuggling

 

Baghdad / Obelisk: Representative of the State of Law coalition Jawad Al-Ghazali revealed, on Sunday, the government's parliamentary tendency to end oil smuggling through the Kurdistan region outside the will of Baghdad, indicating that the region deliberately violates the constitution and decisions of the Federal Supreme Court.

Al-Ghazali said in an interview that the oil rights and border crossings are the prerogative of the central government and not the Kurdistan region, stressing that the region now exceeds the government and the unity of Iraq, and the decisions issued by the Federal Court must be adhered to.

He added, that the Federal Court determined the competence of the region and the provinces of Kurdistan with regard to extracting oil and gas, and Article 112 stipulated that the central government is responsible for extracting oil and gas in all the provinces of Iraq.

And he continued, that the region seizes the sums of proceeds from the sale of illegal oil, yet the salaries of employees in Kurdistan and the benefits for the development of the regions are spent from the treasury of the central government.

The Kurdistan region has been exporting its oil for years, independently of the federal government, relying on the region's oil and gas law, which was voted on by the region's parliament in 2007, and Baghdad considers it contrary to the Iraqi constitution.

International oil companies are in the process of extracting and exporting oil and gas from the Kurdistan region, through the Turkish port of Ceyhan, to Asian and European countries.

[yota691]

Coordination framework: Do not negotiate the decisions of the Federal Court on the region's oil

http://fk-news.com/uploads/posts/2022-07/1657519787_screenshot_-_chrome.jpg

 

Politics / Economic News  Today, 09:09  9 views

Today, Monday, the coordination framework announced its support for the decision of the Federal Court on the oil of the Kurdistan region, stressing that it "will not enter into negotiations other than this position.

 

The leader in the framework, Ali Al-Fatlawi, told a journalist that "the coordination framework is with the application of all decisions of the Federal Supreme Court, and with the application of the court's decision on the export of oil from the Kurdistan region."

 

Al-Fatlawi indicated that "this judicial decision is not subject to negotiation or discussion, and it is outside the negotiations to form the new Iraqi government."

 

He continued, "The framework respects judicial decisions and does not negotiate these decisions."

 

The Federal Court had ruled the unconstitutionality of the oil and gas law approved by the Parliament of the Kurdistan Region.

[yota691]

The oil dispute puts Baghdad in front of “big” legal problems.. Billions of compensation for Erbil (details)

 

 

727 Economie 2022/07/16 11:40 Baghdad today -

Baghdad The American international legal firm Gibson Dunn, commenting on the problems between the Iraqi Ministry of Oil and oil companies operating in the Kurdistan region, announced that these companies can file cases in international courts, and demand tens of billions in compensation from the Iraqi government, if the latter insists on its efforts to cancel its contracts. in the Kurdistan region . And the company said in a statement received (Baghdad today), that "taking into account the articles of the Iraqi constitution and the oil and gas law in the Kurdistan region, the file of oil companies operating in the Kurdistan region is strong, to the extent that allows them to file cases against the Iraqi government ." Gibson Dunn stressed in her comment that "the Iraqi government will face major legal problems in light of this, and will have to pay billions of dollars in compensation ." The company added that "the Kurdistan region is part of Iraq in all circumstances, and Iraq must abide by international laws, especially since the Iraqi Oil Ministry has become a threat to the work environment of oil companies in the Kurdistan region ." The company indicated that the Iraqi Oil Ministry's steps "contradict international laws and the decisions of the Organization of the Islamic Conference, of which Iraq is a member," stressing the need for "the Iraqi government's commitment to guaranteeing the rights of foreign investors." The crisis over oil reached between the two governments; Federalism in Baghdad and the Kurdistan Region, advanced stages of complexity, with the Kurdish Judicial Council declaring the Federal Court unconstitutional. The Kurdish oil file has been managed since 2014 according to a formula of understandings concluded during the period of the government of Prime Minister Haider al-Abadi, obligating the region to hand over a percentage of its extracted oil or its revenues, or to deduct a percentage of the revenue values from the region’s share in the budget. The disputes reached their climax after the Federal Court issued a decision on February 15, in which it considered the oil and gas law enacted in the regional parliament contrary to the constitution. And the court’s decision obliges the region to hand over its entire oil production to Baghdad, and to allow the concerned federal authorities to “review all its oil contracts,” but Erbil rejected the decision, so that the Federal Oil Minister, Ihsan Abdul-Jabbar, announced on May 7 that the talks had stalled, and that practical measures had been taken to compel the companies. Foreign women working in the region to cancel their contracts with Erbil and conclude them with Baghdad. And earlier, the Iraqi Oil Ministry issued a clarification regarding the position of the international oil companies operating in the Kurdistan region, northern Iraq, towards the decision of the Federal Court . And the ministry's statement said that, in response to a number of questions addressed to it by the international and local press, regarding the position of American oil services companies operating in the Kurdistan region, towards the decision of the Federal Court, "We affirm that the companies (Schlumberger, Big Hughes, and Halliburton), which are considered It is one of the sober international companies in the field of oil services, and according to its official addresses to the ministry, it confirmed not to submit to new projects in the region, in compliance with the decision of the Federal Court, and the directives of the steering committee formed in the Ministry of Oil . The statement added that the companies, referred to above, are "now in the process of liquidation and closing of existing tenders and contracts ." The ministry confirmed that, according to this pledge, these companies “do not own a commercial entity or other companies operating in the region, whether through their trademark or others, or on their behalf, in a manner that does not violate the decision of the Federal Court, or intersect with the ministry’s directives.” .

[6ly410]

ERBIL — The recent ruling by the Iraqi Federal Supreme Court against the Kurdistan Region's oil industry could trigger investment arbitration claims, Gibson Dunn said on June 17.

"The international oil companies impacted by the Court Decision have numerous legal avenues for seeking redress as a result of the substantial harm they may suffer. It is therefore very possible that Iraq will find itself subject to numerous claims in the range of tens of billions of dollars (if not more) before international fora for years to come due to the Court Decision and the Government’s actions to implement that decision," it said.

In February, the Iraqi court said that the Kurdistan Regional Government (KRG) should "hand over all oil production from oil fields in the Kurdistan Region and other areas from which the KRG's Ministry of Natural Resources extracted oil" to the federal government. However, Kurdistan Region PM Masrour Barzani has repeatedly rejected the court's decision, describing it as "unconstitutional", and explaining that his government is ready to resolve the disputes on the basis of the Iraqi Constitution.

Gibson Dunn noted that Iraq could be held contractually liable for breaching the Production Sharing Contracts (PSCs) by taking any action to either terminate or modify these agreements.

"It could also be held liable for violating the stabilization clause (contained within the KRG Model PSC (“Model PSC”)) if it takes any measure altering the fiscal or economic conditions resulting from laws or regulations in force on the date of signature of these agreements," Gibson Dunn added.

"Iraq could be contractually on the hook since, as a matter of Iraqi constitutional law, the KRG is a constituent subdivision of Iraq."

"In the circumstances, international and/or English legal principles such as attribution or alter ego are likely to be relevant (English law being the applicable law stipulated in the Model PSC)," it continued. "In this regard, Claimants could in particular point to a recent decision by the High Court of Justice in England which found, in connection with breaches of two oil and gas PSCs, that acts by the KRG "were done in exercise of the sovereign authority of the state of Iraq"."

Gibson Dunn further noted that investors are expected to initiate arbitrations seated in London, and governed by the London Court of International Arbitration (“LCIA”) Rules, as expressly provided for in the Model PSC

[ametad]

So the high international court in London is going to step in and guarantee the rights of forgiven investment. This is stupid, the whole world revolving around the colonial world view of imperialism…. sadly, nobody really cares about what happens to these Iraqis on the International stage, only that their oil is profitably plundered. 
 

Where has this international high court been with respect to the interest of Iraqi nationals? Nobody took notice as long as the oil flowed, they all looked the other way. 
 

Makes my heart heavy in an un-articulable kind of way. 

[boosterbglee]

Both sides are so manipulative and untrustworthy........they are going to kill the Golden Goose!  

[horsesoldier]

46 minutes ago, boosterbglee said:

Both sides are so manipulative and untrustworthy........they are going to kill the Golden Goose!  

Nothing matters to the many manipulative powers that be that control every aspect of global affairs but the systematic ravaging & pillaging of any country's resources.... it's people been damned.

The bottom line and bulging bank accounts are what matters: well then there's the subjugation of the global population which ties so very neatly into this agenda.

[Goggles]

1 hour ago, 6ly410 said:

Gibson Dunn noted that Iraq could be held contractually liable for breaching the Production Sharing Contracts (PSCs) by taking any action to either terminate or modify these agreements.

 

Sounds like Bagdad could get sued internationally. Bagdad should have just done an HCL, right? Even the land that Bagdad and Kurdistan region squabble about doesn't seem worth it compared to this mess. But I'm no expert in the matter, you decide. Maybe they will back paddle into an HCL and wash their hands of(drop) the lawsuit to get out of the international trouble they've gotten themselves into. Wouldn't that be nice? I'm dreaming. 

[yota691]

 

An international law firm: Repealing Kurdistan's oil and gas law will cost Iraq billions of dollars

 

 2022-07-17 08:20

 

 

Shafaq News/ "Gibson Dunn" International Law Office warned, on Sunday, Iraq against taking any action against the oil companies operating in the Kurdistan Region in accordance with the decision of the Federal Supreme Court ruling that the oil and gas law of the region is unconstitutional, indicating that the companies will sue Baghdad for tens of billions of dollars. as compensation.

The office specialized in issues of international oil and gas companies, which is based in the United States of America, expressed a legal opinion regarding the dispute between Erbil and Baghdad over the recent Federal Supreme Court decision unconstitutional of the oil and gas law for the Kurdistan Region and the federal government’s measures to implement it.

The office said that "it is likely that this intervention from the Iraqi government will prompt international oil companies to file legal cases against Iraq, and investors affected by the decision will demand compensation with the international legal community, especially through contractual arbitration agreements in accordance with the terms of contracts signed with the Kurdistan Region and arbitration procedures in accordance with international investment agreements.

He added, "Iraq will also be subject to legal accountability for violating the contracts signed with the region in the event that it takes any action that ends or changes these contracts, and will also be prosecuted for violating the stabilization and stability clause (provided in the contracts for the regional government), if any action is taken that would change the financial conditions. economic or economic emanating from laws or regulations in force at the time of signing these contracts.

The office cautioned that "due to the presence of many international oil companies operating in the Kurdistan Region associated with long-term contracts with the regional government (more than 30 companies), the damages that Iraq may incur as a result of these issues may reach tens of billions of dollars or more."

On February 15, 2022, the Federal Supreme Court, the highest judicial authority concerned with interpreting the Iraqi constitution, issued a decision that the Kurdistan Region Oil and Gas Law No. 22 of 2007 was unconstitutional.

[yota691]

Gibson Dunn: Iraq may pay billions of dollars to those affected by its decision on Kurdistan oil

The Kurdistan Region rejected the Federal Court's ruling on numerous occasions, saying it was a political and illegal decision 

 Kurdistan24 Erbil   22 hours

       

archive photo

 

Erbil (Kurdistan 24) - The American company, Gibson Dunn, which specializes in legal affairs, said that it expects Iraq to be forced before international courts to pay billions of dollars in compensation to those affected by its decision against the oil and gas sector in the Kurdistan Region.

This comes at a time when the oil dispute between Erbil and Baghdad escalated after the Federal Court ruled that the legal bases of the oil and gas sector in the Kurdistan Region are "unconstitutional."

Since then, the Iraqi Oil Ministry has made a series of new attempts to implement the ruling, including summoning seven companies operating there to commercial court sessions that have been repeatedly postponed.

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• Read also: Masrour Barzani: There is no federal court in Iraq and "SOMO" operates under Baath laws

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The Kurdistan Region rejected the ruling of the Federal Court on several occasions, saying that it was a political, illegal decision and not based on the provisions of the constitution.

Gibson Dunn, a multinational law firm, said in a report posted on its website recently that Iraq's decision would prompt international oil companies to initiate legal action against Baghdad "unless the matter is resolved immediately."

She pointed out that investors affected by the decision will seek compensation from Iraq before international forums, especially contract-based arbitration.

The company added that the Federal Court's decision is illegal and is not in the interest of Iraq, especially since the contracts concluded between the Kurdistan Region and international companies are legal.

"Given the number of oil companies operating in the Kurdistan Region under long-term contracts with the Kurdistan Regional Government, Iraq's exposure to damages may reach tens of billions of dollars," she added.

And the Prime Minister of the Kurdistan Regional Government, Masrour Barzani, has previously reiterated his government's commitment to its contracts with international oil companies, and stressed that the Kurdistan Regional Government will not give up its rights.

Last May, the Kurdistan Judicial Council issued a statement challenging the legality of the court's decision and the validity and jurisdiction of the court itself.

Gibson Dunn says that "the court's decision does not automatically terminate contracts with international oil companies, as the Government of Iraq has indicated that it intends to impose a cancellation or a fundamental review of these contracts."

She pointed out that "Iraq can be held contractually responsible for the breach of private security companies by taking any action either to terminate or modify these agreements."

The Los Angeles-based company stated that "Iraq could be in a contractual impasse, given that the Kurdistan Regional Government represents an entity in the Iraqi state under the constitution."

She added that "the plaintiffs can refer in particular to a recent decision of the High Court of Justice in England, in relation to the violations of two oil and gas companies, that the practices of the Kurdistan Regional Government "has taken place in the framework of the exercise of the sovereign authority of the State of Iraq."

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"Gibson Dunn" explained that Iraq entered into several bilateral investment treaties, "which provide substantial protection for investors and obligate Iraq to resolve disputes through arbitration."

The company cited the example of the bilateral investment treaty between Japan and Iraq , which states that "investors must be given fair and equitable treatment and complete protection and security."

The company concluded by saying that “investors who are nationals of an OIC member state can initiate arbitration in accordance with the OIC investment agreement that protects the citizens of the OIC member states from expropriation and allows these citizens, through the MFN ruling, to benefit from proven substantive protection in other investment treaties to which Iraq is a party.

[yota691]

Recent Iraqi Supreme Court Decision Likely to Trigger Investment Arbitration Claims

June 17, 2022

Click for PDF

On February 15, 2022, the Federal Supreme Court of the Republic of Iraq (“Iraq”) issued a sweeping decision upending the existing legal framework governing the oil sector in the country (“Court Decision”).[1]  The Government of Iraq has since taken numerous steps to implement the decision, which may have significant and far-reaching repercussions on international oil companies operating under petroleum contracts with the Kurdistan Regional Government (“KRG”).

The Court Decision, among other things, purports to (i) repeal the Kurdistan Region Oil and Gas Law (No. 22 of 2007) based on which the KRG has entered into Production Sharing Contracts (“PSCs”) with international oil companies, (ii) rule that the Federal Ministry of Oil is entitled to pursue the nullification of any contracts entered into by the KRG with third parties regarding oil exploration, extraction, export and sale, (iii) rule that the Ministry of Oil and the Federal Board of Supreme Audit are entitled to review and revise any oil contracts entered into by the KRG, and (iv) order the KRG to hand over to the federal government all oil production it has extracted from oilfields.

In response to the Court Decision, the KRG Prime Minister reaffirmed the KRG’s commitment to its contracts with international oil companies and emphasized that the KRG will not relinquish any of its rights.[2]  In addition, on May 30, 2022, Kurdistan’s Judicial Council released a statement challenging the legality of the Court Decision and the validity and competence of the Court itself.[3]

While the Court Decision does not automatically terminate contracts with international oil companies, the Government of Iraq has indicated that it intends to force the cancellation or substantial revision of such contracts.  On February 26, 2022, the Oil Minister of Iraq issued an order creating a committee with the purpose of executing the Court Decision.[4]  On March 24, 2022, the Oil Minister issued an order to the KRG to send for its review copies of all oil and gas contracts it has entered into since 2004.[5]  The Oil Minister has also proposed establishing a state-owned regional oil company that would manage oil assets in the KRG and that would be overseen by the Government of Iraq.[6]  More recently, the Oil Ministry has also commenced proceedings with several international oil companies, summoning such companies to appear before the Court in Baghdad on June 5, 2022.[7]  While the date of the initial hearing was postponed in order to allow for the summons to be perfected, the proceedings are ongoing.[8]

Such interference by the Iraqi Government seems all but certain to lead international oil companies to commence legal proceedings against Iraq if the matter is not resolved promptly.  The affected investors are expected to seek redress before international fora, in particular, contract-based arbitrations under the terms of the PSCs and, in parallel, treaty-based arbitrations under applicable international investment agreements.  Given the number of international oil companies operating in the Kurdistan Region pursuant to long-term contracts with the KRG (over 30), Iraq’s exposure to damages claims could well reach tens of billions of dollars.

I. Contract Claims under Production Sharing Contracts

Iraq could be held contractually liable for breaching the PSCs by taking any action to either terminate or modify these agreements.  It could also be held liable for violating the stabilization clause (contained within the KRG Model PSC (“Model PSC”)) if it takes any measure altering the fiscal or economic conditions resulting from laws or regulations in force on the date of signature of these agreements.[9]

Iraq could be contractually on the hook since, as a matter of Iraqi constitutional law, the KRG is a constituent subdivision of Iraq.[10]  In the circumstances, international and/or English legal principles such as attribution or alter ego are likely to be relevant (English law being the applicable law stipulated in the Model PSC).h .[11]  In this regard, Claimants could in particular point to a recent decision by the High Court of Justice in England which found, in connection with breaches of two oil and gas PSCs, that acts by the KRG “were done in exercise of the sovereign authority of the state of Iraq.”[12]

Investors are expected to initiate arbitrations seated in London, England, and governed by the London Court of International Arbitration (“LCIA”) Rules, as expressly provided for in the Model PSC.[13]  Notably, the Model PSC broadly defines the scope of “disputes” to cover, among other things, any dispute as to the “existence,” “validity,” “enforceability,” or “termination” of the contract.[14]

II. Treaty Claims under Applicable International Investment Agreements

Iraq has also entered into several Bilateral Investment Treaties (“BITs”) and multilateral Treaties with Investment Provisions (“TIPs”) that provide substantive protections to investors and commit Iraq to resolving disputes through arbitration.  For example, the Japan-Iraq Bilateral Investment Treaty (“BIT”) protects against “expropriation” and “arbitrary measures” and affirms that investors are to be afforded both “fair and equitable treatment” and “full protection and security.”[15]  Similarly, investors who are nationals of a member State of the Organization of the Islamic Conference (“OIC”) can initiate arbitration pursuant to the OIC Investment Agreement.  The OIC Investment Agreement both protects nationals of OIC Member States against expropriation and allows such nationals, through its most-favored-nation provision, to avail themselves of substantive protections contained in other investment treaties to which Iraq is a party.[16]

III. Conclusion

The international oil companies impacted by the Court Decision have numerous legal avenues for seeking redress as a result of the substantial harm they may suffer.  It is therefore very possible that Iraq will find itself subject to numerous claims in the range of tens of billions of dollars (if not more) before international fora for years to come due to the Court Decision and the Government’s actions to implement that decision.

______________________

[1]   Federal Minister of Oil and Ali Shadad Fares v. Minister of Natural Resources of the Kurdistan Region and Speaker of Parliament of the Kurdistan Region, Supreme Court of the Republic of Iraq, 59/Federal/2012 unified with 110/Federal/2019 (15 February 2022).

[2]   Press Conference of Masrour Barzani, Prime Minister of the Kurdistan Region of Iraq, 3 March 2022.

[3]   Statement of the Judicial Council of the Kurdistan Region of Iraq No. 1511, 30 May 2022.  The KRG maintains that the Court was not properly constituted as the Federal Supreme Court capable of determining matters of constitutional law.

[4]   Iraq Oil Reporter, Uncertainty Deepens After Landmark Ruling Against Kurdistan’s Oil Sector, 8 March 2022, accessible: https://www.iraqoilreport.com/news/uncertainty-deepens-after-landmark-ruling-against-kurdistans-oil-sector-44651/

[5]   Iraq Oil Reporter, Uncertainty Deepens After Landmark Ruling Against Kurdistan’s Oil Sector, 8 March 2022, accessible: https://www.iraqoilreport.com/news/uncertainty-deepens-after-landmark-ruling-against-kurdistans-oil-sector-44651/

[6]   Iraq Oil Reporter, Baghdad Launches Legal Action Against Kurdistan’s Oil Companies, 2 June 2022, accessible here.

[7]   Iraq Oil Reporter, Kurdistan Opens New Front in Baghdad Legal Battles, 9 June 2022, accessible: https://www.iraqoilreport.com/news/kurdistan-opens-new-front-in-baghdad-legal-battles-44896/

[8]   Iraq Oil Reporter, Kurdistan Opens New Front in Baghdad Legal Battles, 9 June 2022, accessible: https://www.iraqoilreport.com/news/kurdistan-opens-new-front-in-baghdad-legal-battles-44896/

[9]   Model Production Sharing Contract, Kurdistan Regional Government, Article 43.

[10]   See Constitution of the Republic of Iraq, Article 117.

[11]   Model Production Sharing Contract, Kurdistan Regional Government, Article 43; See Chevron Bangladesh Block Twelve, Ltd. and Chevron Bangladesh Blocks Thirteen and Fourteen, Ltd. v. People’s Republic of Bangladesh, ICSID Case No. ARB/06/10, Award (17 May 2010); Perenco Ecuador Limited v. Republic of Ecuador and Petroecuador, ICSID Case No. ARB/08/6, Decision on Jurisdiction (30 June 2011).

[12]   Dynasty Company for Oil and Gas Trading Limited v. Kurdistan Regional Government of Iraq and Dr. Ashti Hawrami, English High Court of Justice 2021 EWHC 953 (Comm) (23 April 2021).

[13]   Model Production Sharing Contract, Kurdistan Regional Government, Article 42.1.

[14]   Model Production Sharing Contract, Kurdistan Regional Government, Article 42.1.

[15]   Agreement between Japan and the Republic of Iraq for the Promotion and Protection of Investments, 25 February 2014, Articles 5(1), 5(2), and 5(3).

[16]   OIC Agreement, Articles 8 and 10.

---

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s International Arbitration practice group, or the following authors:

[yota691]

‘Recent Iraqi Supreme Court Decision Likely to Trigger Investment Arbitration Claims’: Gibson Dunn

“The international oil companies affected by the Court Decision have numerous legal avenues for seeking redress as a result of the substantial harm they may suffer.” 

 Dler S. Mohammed   23 Hours

       

A picture shows excess flammable gasses burning from gas flares at the Havana oil field, west of the multi-ethnic northern Iraqi city of Kirkuk, October 17, 2017. (Photo: Ahmad Al-Rubaye/AFP)

 

 

ERBIL (Kurdistan 24) – Iraq may find itself subject to numerous claims in the range of tens of billions of dollars (if not more) before international fora for years to come due to the Iraqi Federal Supreme Court’s recent decision over the Kurdistan Regional Government’s (KRG) energy sector, said Gibson Dunn.

“The international oil companies affected by the Court Decision have numerous legal avenues for seeking redress as a result of the substantial harm they may suffer,” said Gibson Dunn on June 17. “It is therefore very possible that Iraq will find itself subject to numerous claims in the range of tens of billions of dollars (if not more) before international fora for years to come due to the Court Decision and the Government’s actions to implement that decision.”

Gibson Dunn pointed out that “Investors are expected to initiate arbitrations seated in London, England, and governed by the London Court of International Arbitration (LCIA) Rules, as expressly provided for in the Model Production Sharing Contracts (PSC).”

According to Wikipedia, “Gibson Dunn is an American multinational law firm headquartered in Los Angeles, California. Founded in 1890, the firm includes approximately 1,400 attorneys and 1,000 staff located in 20 offices around the world, including North and South America, Europe, Asia, and the Middle East. The firm is known for its litigation practice and in particular its strength in appellate law.”

In its ruling in February, the high court said the KRG is obligated to "hand over all oil production from oil fields in the Kurdistan Region and other areas from which the KRG's Ministry of Natural Resources extracted oil" to the federal government.

On multiple occasions, Kurdistan Region Prime Minister Masrour Barzani has firmly rejected the court's ruling, describing it as "unconstitutional." Nevertheless, he has said that his government is willing to make agreements with Baghdad based on the constitution. 

Prime Minister Barzani also said that he hoped the Iraqi government would stay away from politicizing the KRG oil and gas portfolio and using it as a card against the people of Kurdistan.

[6ly410]

A law clarifies the possibility of Baghdad demanding financial compensation from oil companies withdrawing from Kurdistan

 

 

news source /Baghdad today

A law clarifies the possibility of Baghdad demanding financial compensation from oil companies withdrawing from Kurdistan (iraqakhbar-com.translate.goog)

Baghdad today - Baghdad
The legal expert, Ali Al-Tamimi, explained, today, Sunday, the possibility of demanding compensation from the oil companies operating in Kurdistan from the federal government in the event that the latter insists on its efforts to cancel its contracts in the region .

Al-Tamimi told (Baghdad Today), that "in the results of the contracts, the international companies return to the Kurdistan region of Iraq in compensation for the damage and not to the central government, meaning that the region is the one who will pay the companies' compensation in full ."

He added, "Iraq is a federal country, not a confederation, and SOMO has exclusive jurisdiction in exporting oil, and the decision of the Federal Court is binding and has become, and it is not possible to go to international courts, as this decision relates to the sovereignty of the state exclusively ."

Al-Tamimi continued, "The Federal Court's decision to cancel the oil and gas law in the Kurdistan region makes the oil and gas law in the region nullified for violating the constitutional provisions in accordance with Articles 110, 111, 112, 115, 122 and 130 of the constitution ."

He pointed out that "the law obligated the regional government to hand over oil imports retroactively from the date of concluding the contracts and to allow the Ministry of Oil and the Office of Financial Supervision to view these contracts. In the case of volumes, these funds will be deducted from the 17% allocated to the region ."

And he indicated that "the Federal Court was based on Article 111 of the Constitution that oil and gas belong to the Iraqi people, and therefore the management of oil and gas is from foreign trade and is within the jurisdiction of the central Iraqi government in accordance with Article 110 of the Constitution."

As for the concept of the current fields contained in Article 112, Al-Tamimi said about them, they are “produced, explored and developed fields according to the most acceptable interpretation, and not only produced as seen by the Kurdistan Region.”

And the American international legal company Gibson Dunn, commenting on the problems between the Iraqi Ministry of Oil and oil companies operating in the Kurdistan region, announced that these companies can file cases in international courts, and demand tens of billions in compensation from the Iraqi government, if the latter insists on its efforts to cancel its contracts. in the Kurdistan region .

The  company said in a statement received (Baghdad today), that "taking into account the articles of the Iraqi constitution and the oil and gas law in the Kurdistan region, the file of oil companies operating in the Kurdistan region is strong, to the extent that allows them to file cases against the Iraqi government."

In her comment, Gibson Dunn stressed   that "the Iraqi government will face major legal problems, and will have to pay billions of dollars in compensation."

The company added that "the Kurdistan region is part of Iraq in all circumstances, and Iraq must abide by international laws, especially since the Iraqi Ministry of Oil has become a threat to the work environment of oil companies in the Kurdistan region."

The company indicated that the Iraqi Oil Ministry's steps "contradict international laws and the decisions of the Organization of the Islamic Conference, of which Iraq is a member," stressing the need for the Iraqi government to "commit to guaranteeing the rights of foreign investors."

The crisis over oil reached between the two governments; Federalism in Baghdad and the Kurdistan Region, advanced stages of complexity, with the Kurdish Judicial Council declaring the Federal Court unconstitutional.

The Kurdish oil file has been managed since 2014 according to a formula of understandings concluded during the period of the government of Prime Minister Haider al-Abadi, obligating the region to hand over a percentage of its extracted oil or its revenues, or to deduct a percentage of the revenue values from the region’s share in the budget.

The disputes reached their climax after the Federal Court issued a decision on February 15, in which it considered the oil and gas law enacted in the regional parliament contrary to the constitution.

The court’s decision obligates the region to hand over its entire oil production to Baghdad, and to allow the concerned federal authorities to “review all its oil contracts,” but Erbil rejected the decision, for the Federal Oil Minister, Ihsan Abdul-Jabbar, to announce last May 7, that the talks had stalled, and practical measures had been taken to compel the companies. Foreign women working in the region to cancel their contracts with Erbil and conclude them with Baghdad.

And earlier, the Iraqi Oil Ministry issued a clarification regarding the position of the international oil companies operating in the Kurdistan region, northern Iraq, towards the decision of the Federal Court .

And the ministry's statement said that, in response to a number of questions addressed to it by the international and local press, regarding the position of American oil services companies operating in the Kurdistan region, towards the decision of the Federal Court, "We confirm that the companies (Schlumberger, BigHughes, and Halliburton), which are considered It is one of the sober international companies in the field of oil services, and according to its official addresses to the Ministry, it confirmed not to submit to new projects in the region, in compliance with the decision of the Federal Court, and the directives of the steering committee formed in the Ministry of Oil .”

The statement added that the companies, referred to above, are "now in the process of liquidation and closing of existing tenders and contracts ."

The ministry confirmed that, according to this pledge, these companies “do not own a commercial entity or other companies operating in the region, whether through their trademark or others, or on their behalf, in a manner that does not violate the decision of the Federal Court, or intersect with the ministry’s directives.” .

[The Englishman]

BARZANI GOES TO BAGHDAD: TROUBLE IN THE KURDISH OIL AND GAS SECTOR

DOUGLAS A. OLLIVANT

JULY 18, 2022

 

 

 

A recent Federal Supreme Court decision in Iraq has put a legal stake in the heart of Kurdistan’s oil and gas sector — the financial lifeline of the region. Only one man has the power to fix this. Masoud Barzani — the 75 year-old former president and de facto patriarch of the Kurdistan region — must go to Baghdad and cut a political deal. Only Kak Masoud has the gravitas, the relationships, the respect, and the political capital to make this happen. Should Masoud choose not to take this opportunity or — worse yet — should his health begin to fail him, it is difficult to see how the crisis in this critical sector will be resolved.

The Kurdistan region of Iraq has had a bumpy history with its parent government in Baghdad. Though the Kurdish provinces have been de facto separated from Iraq since the end of the first Gulf War in 1991, the 2005 Iraqi Constitution established it as a semi-autonomous region. That document left a great deal of ambiguity as to exactly which rights and privileges would be accorded to the region, a lacuna that resonates to this day.

 

The rocky relationship has been highlighted by continual fighting — usually rhetorical but occasionally literal — on issues such as the so-called “disputed territories,” most notably the oil-rich province of Kirkuk, relations between the Kurdish Peshmerga and the security forces of federal Iraq, budget sharing from the federal budget for the Kurdistan region and, most bitterly, the legal standing of its oil and gas sector.

The disputes with Baghdad have also been deeply contoured by various international interests. The United States has been generally supportive of the Kurdistan Regional Government and especially the ruling Kurdish Democratic Party — though not to the point of independence, as painfully demonstrated in 2017 when federal Iraqi forces retook control of Kirkuk from the Kurdistan Regional Government’s Peshmerga forces that had assumed control as part of the fight against ISIS. Turkey has been deeply conflicted, as it has a historic suspicion of the federal arrangement of the Kurdish Regional Government but is also the largest benefactor of its oil and gas sector. In fact, Turkey exercises almost total control over the Kurdistan region’s oil and gas sector, as it owns the pipelines inside Turkey and the exporting port of Ceyhan, an important source of hard cash as the Turkish lira continues to collapse. Iran maintains deep ties with both the major Kurdish parties, but is deeply hostile to the Kurdish Democratic Party’s rumored ties with Israel — to the point of using missiles for emphasis. Finally, both China and Russia see the area as a possible point of expansion into the region. Russia owns much of the Kurdistan region’s internal pipeline and Chinese firms appear anxious to engage in projects in the region. Of course, international sanctions on Russia complicate their involvement.

The Kurdistan regional oil sector was primarily built under Masoud’s nephew, former Prime Minister Nechrivan Barzani from 2012-2019 and pumps between 400-500 thousand barrels per day of oil. But the status of the Kurdish oil and gas sector is now complicated by two legal difficulties. The first — an arbitration challenge by Baghdad at the International Chamber of Commerce with Ankara about the legality of the Kurds putting oil into the international pipeline without approval from the Iraqi State Oil Marketing Organization — is still pending. But the second, a lawsuit brought in 2014 by the federal Government against the constitutionality of the region’s oil law, was finally decided by the Supreme Court in February of this year. Why the decision — pending for years — was made at this particular moment remains a point of argument and speculation. But the Supreme Court has declared the Kurdish oil law unconstitutional, mandating that the Kurdistan Regional Government turn over all oil produced to the federal government, giving Baghdad the right — though not the obligation — to invalidate contracts entered between Irbil and various oil and oil services companies.

Legally, this decision turned on the interpretation of Articles 110 and 111 of the Iraqi constitution, which deal with ownership and control of the production and export of Iraq’s natural resources — most notably oil. Without getting too deep into a contested constitutional question (those who wish to dig further may read here), both sides have legitimate arguments. The Federal Government’s case rests on the clear mandate given in Article 110, while the Kurdish case rested on its interpretation of exceptions to the rule given in Article 111. In short, the constitution is very ambiguous on this matter, probably by design, and the court had to choose which article — and therefore which government — to favor in its decision.

The decision also occurs in the shadow of the Kurdistan Regional Government’s ill-fated 2017 Independence referendum. In the wake of an overwhelming victory in the non-binding referendum, Baghdad used federal Iraqi forces to re-establish control over Kirkuk province — technically part of federal Iraq but disputed. The loss of this province made independence non-viable, particularly as Baghdad, with Turkish cooperation, demonstrated how quickly the KRG could be isolated.

The court has since made a series of other decisions implementing the February ruling. Just days ago, four oil contracts signed by the Kurdistan Regional Government were quietly annulled. Further, many corporations are responding to the change in the legal status quo and numerous western firms — Baker Hughes, Schlumberger, and Halliburton prominently among them — have begun to disentangle themselves from Kurdish oil projects. Other national firms — most prominently Turkey’s Genel, but also Russian and Chinese firms — may use a different calculus, but for those firms that are from part of the “liberal world order,” Baghdad’s decision is the relevant legal framework. The exception here is Chevron, which continues to operate in the region. As a super-major, it may either be willing to ride out the legalities and continue to work in a gray market situation, or it may simpler be taking a slower, wait-and-see approach to decision making.

Despite a countersuit by the Kurdistan Regional Government and supportive rulings in its own provincial courts, the consequences of the legal ruling by the Supreme Court are now beginning to multiply, threatening the long-term viability of the entirety of the Kurdish oil and gas sector. While Baghdad does not have the ability or desire to send police forces into the north to enforce its decision, it has no need to. As the pre-emptive actions of the oil services companies show, the combined threat of international legal action and “blacklisting” from the (much larger) oil sector of southern Iraq will quickly result in many, perhaps most, international firms departing the region. While the legal regime has not yet threatened the transporters and buyers of Iraqi Kurdish oil with legal action, there can be little doubt that will be coming soon. The actions of these firms also reflect pre-existing concerns that had already made an investment in the Kurdistan region of Iraq less attractive — including both a less stable security situation and serious issues with payment from the Kurdistan Regional Government.

The Kurdistan Regional Government — especially the ruling Barzani-led Kurdish Democratic Party — and their Western supporters have reacted to this court decision by maintaining to all listeners that the decision is a political one, wrapped up in government formation, longer-term anti-Kurdistan region sentiments, and Iranian influence. Only the judges know what was in their hearts, but this charge — even if true — is irrelevant to the facts at hand. From an international standpoint, the decisions of the Supreme Court represent the final interpretation of the internationally recognized Iraqi constitution, which is why oil and gas firms are quickly falling in line.

As a matter of legality, the death knell for the legitimacy of the Kurdish oil sector seems to be final. This does not mean that gray market export cannot continue, as Turkey seems to have no desire to sever this revenue source, and there are plenty of non-Western oil servicing companies that will be happy for the business. But moving to such gray market options removes much of the upside potential and further depresses revenues.

However, legalities do not prevent either side from entering a political deal that rewrites the Iraqi oil and gas law. Now obviously, the legalities contour the art of the possible in a political deal. Let’s be clear — in the Baghdad vs. Irbil contest over the legality of Kurdish oil contracts and exports, Baghdad has won. But that does not mean an end to the political negotiation. Keeping the Kurdistan Regional Government relatively satisfied — and, for that matter, keeping the 400-500 thousand barrels per day of Kurdish oil on world markets — is in Baghdad’s interest. A political deal can yet be reached.

The Kurds could send — and doubtless, have sent, though without fanfare — a lower level, more technocratic team to Baghdad to negotiate. But this approach is unlikely to produce any result, let alone the sort of result that offers real possibilities to the Kurdistan region. A technocratic team is simply not empowered to make binding decisions, and Baghdad knows that.

The Kurds have one great but as yet untapped asset — the person of Masoud Barzani, the former president and de facto patriarch. Only Masoud can go to Baghdad and hope to truly achieve a favorable result, as whatever Masoud legitimates will be unconditionally accepted by the Kurdistan region of Iraq’s citizenry.

It is difficult to overstate the gravitas and political capital that the eldest Barzani holds throughout all of Iraq. While Arab Iraqi leaders have had numerous confrontations with him over the years, he is still held in the highest respect. This point was made very powerfully to me once, when an Arab Iraqi friend of mine went to Irbil to see Masoud Barzani. When I saw pictures of the meeting, I asked my friend why he had paid such a public visit, during a politically sensitive period in which their sides were not aligned. My friend replied, “The man is a historical and important friend to me, and I am more confident in his patriotism than his Kurdishness.”

This deep regard that Arab Iraq holds for Masoud Barzani is singular, at least since the death of his political counterpart, Jelal Talabani. No other living Iraqi Kurd has this kind of gravitas, or commands this much respect from his Arab counterparts.

The legal decision against the Kurdistan Regional Government has put the Kurdistan Region of Iraq in a position of existential danger. But Masoud — and only Masoud — has an opportunity to go to Baghdad and cut a political deal. No other figure will be so welcome in Baghdad, and no other figure has the standing to make the decisions required to reach a compromise. And frankly, only Masoud himself could get a deal that would be acceptable to Masoud. Sending a lesser emissary is a guarantee of failure.

In short, there is an opportunity here, once Baghdad forms a government, to cut a grand bargain. This grand bargain will inevitably involve compromise. While such a bargain may give the three Kurdish provinces an unequal share of revenues that the Arab provinces may find unfair, it will almost certainly involve a degree of entanglement with the Federal Oil Ministry that will make Irbil uncomfortable. It will also force a degree of transparency on the Kurdistan Regional Government’s oil policies that some interests may find awkward.

“Only Nixon can go to China” metaphors are overused. But this instance may be a valid comparison. Only the author of the Kurdish independence referendum can go to Baghdad to salvage the best deal that can be had for the Kurdish oil project. As court decision after court decision begin to cascade against the Kurdistan Regional Government’s oil ministry, Barzani should make it clear that he wants to personally negotiate and then codify the inter-relationship between Baghdad and Irbil in the light of these decisions. That said, I do not believe Masoud has even been to Baghdad since the days when he sat on the Iraq Governing Council. His coming down from Irbil would be a major change in pattern — but it is from this that the gesture would draw its power. His absence from personal involvement “in the fray” for decades will highlight the seriousness of the moment in which he re-engages.

Masoud Barzani has an opportunity to cement a legacy. It may not be the legacy of Kurdish independence that he dreamt of five years ago. But a legacy of securing a privileged place for the Kurdistan region inside a unified Iraq is not nothing. Kak Masoud can still be a hero to Iraq’s Kurds by cementing their long-term financial future. It is hard to see another such opportunity on the horizon. Former President Barzani should gather all his chips, all his political capital, all his personal markers and go to Baghdad at the height of his considerable power, to cut a deal.

https://warontherocks.com/2022/07/barzani-goes-to-baghdad-trouble-in-the-kurdish-oil-and-gas-sector/?singlepage=1

[yota691]

A law clarifies the possibility of Baghdad demanding financial compensation from oil companies withdrawing from Kurdistan

 

 

822 Economy 2022/07/17 23:13 Baghdad today -

Baghdad The legal expert, Ali Al-Tamimi, explained, today, Sunday, the possibility of demanding compensation from the oil companies operating in Kurdistan from the federal government in the event that the latter insists on its efforts to cancel its contracts in the region .

Al-Tamimi told (Baghdad Today), that "in the results of the contracts, international companies return to the Kurdistan region of Iraq in compensation for the damage and not to the central government, meaning that the region is the one who will pay the companies' compensation in full ."

He added, "Iraq is a federal country, not a confederation, and SOMO has exclusive jurisdiction in exporting oil, and the decision of the Federal Court is binding and has become, and it is not possible to go to international courts, as this decision relates to the sovereignty of the state exclusively ."

Al-Tamimi continued, "The Federal Court's decision to cancel the oil and gas law in the Kurdistan region makes the oil and gas law in the region nullified for violating the constitutional provisions in accordance with Articles 110, 111, 112, 115, 122 and 130 of the constitution ."

He pointed out that "the law obligated the regional government to hand over oil imports retroactively from the date of concluding the contracts and to allow the Ministry of Oil and the Office of Financial Supervision to view these contracts. In the case of volumes, these funds will be deducted from the 17% allocated to the region ."

And he indicated that "the Federal Court relied on Article 111 of the Constitution that oil and gas belong to the Iraqi people, and therefore the management of oil and gas is from foreign trade and is within the jurisdiction of the central Iraqi government in accordance with Article 110 of the Constitution."

As for the concept of the current fields contained in Article 112, Al-Tamimi said about them, they are “produced, explored and developed fields according to the most acceptable interpretation, and not only the produced fields, as the Kurdistan Region sees.”

And the American international legal company Gibson Dunn, commenting on the problems between the Iraqi Ministry of Oil and oil companies operating in the Kurdistan region, announced that these companies can file cases in international courts, and demand tens of billions in compensation from the Iraqi government, if the latter insists on its efforts to cancel its contracts. in the Kurdistan region .

The company said in a statement received (Baghdad today), that "taking into account the articles of the Iraqi constitution and the oil and gas law in the Kurdistan region, the file of oil companies operating in the Kurdistan region is strong, to the extent that allows them to file cases against the Iraqi government." Gibson Dunn stressed in her comment that "the Iraqi government will face major legal problems, and will have to pay billions of dollars in compensation."

The company added that "the Kurdistan region is part of Iraq in all circumstances, and Iraq must abide by international laws, especially since the Iraqi Ministry of Oil has become a threat to the work environment of oil companies in the Kurdistan region."

The company indicated that the Iraqi Oil Ministry's steps "contradict international laws and the decisions of the Organization of the Islamic Conference, of which Iraq is a member," stressing the need for "the Iraqi government's commitment to guaranteeing the rights of foreign investors."

The crisis over oil reached between the two governments; Federalism in Baghdad and the Kurdistan Region, advanced stages of complexity, with the Kurdish Judicial Council declaring the Federal Court unconstitutional.

The Kurdish oil file has been managed since 2014 according to a formula of understandings concluded during the period of the government of Prime Minister Haider al-Abadi, obligating the region to hand over a percentage of its extracted oil or its revenues, or to deduct a percentage of the revenue values from the region’s share in the budget. The disputes reached their climax after the Federal Court issued a decision on February 15, in which it considered the oil and gas law enacted in the regional parliament contrary to the constitution.

And the court’s decision obliges the region to hand over its entire oil production to Baghdad, and to allow the concerned federal authorities to “review all its oil contracts,” but Erbil rejected the decision, so that the Federal Oil Minister, Ihsan Abdul-Jabbar, announced on May 7 that the talks had stalled, and that practical measures had been taken to compel the companies. Foreign women working in the region to cancel their contracts with Erbil and conclude them with Baghdad.

And earlier, the Iraqi Oil Ministry issued a clarification regarding the position of the international oil companies operating in the Kurdistan region, northern Iraq, towards the decision of the Federal Court .

And the ministry's statement said that, in response to a number of questions addressed to it by the international and local press, regarding the position of American oil services companies operating in the Kurdistan region, towards the decision of the Federal Court,

 

"We affirm that the companies (Schlumberger, Big Hughes, and Halliburton), which are considered It is one of the sober international companies in the field of oil services, and according to its official addresses to the ministry, it confirmed not to submit to new projects in the region, in compliance with the decision of the Federal Court, and the directives of the steering committee formed in the Ministry of Oil .

The statement added that the companies, referred to above, are "now in the process of liquidation and closing of existing tenders and contracts ."

The ministry confirmed that, according to this pledge, these companies “do not own a commercial entity or other companies operating in the region, whether through their trademark or others, or on their behalf, in a manner that does not violate the decision of the Federal Court, or intersect with the ministry’s directives.” .

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Baghdad-Kurd tensions compromising Iraq’s oil industry

• AFP
•  July 18, 2022
•  Baghdad-Kurd tensions compromising Iraq's oil industry - Iraqi News
•  5 min

Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries, sits on enormous oil reserves, and revenues from the sector feed 90 percent of the federal government budget

Baghdad – Iraq’s oil wealth is rekindling tensions between federal authorities and the autonomous Kurdish region, in a row that could compromise the lifeline industry and keep investors away, analysts say.

The long-simmering dispute came to a head in February — at a time of political deadlock in Baghdad — when the federal supreme court ordered Kurdistan to hand over oil extracted from its territories to the federal authorities.

Then earlier this month, a commercial court in the Iraqi capital annulled contracts between the Kurds and foreign firms, after the oil ministry in Baghdad filed a judicial complaint.

Authorities in the Kurdistan capital Erbil have cried foul, accusing Baghdad of heaping “unjust pressure” on them and announcing their own legal action.

Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries, sits on enormous oil reserves, and revenues from the sector feed 90 percent of the federal government budget.

It exports an average of 3.3 million barrels of crude oil per day (bpd), while production in Kurdistan amounts to just over 450,000 bpd.

The February ruling stated that a 2007 law adopted by Erbil to regulate oil and gas was unconstitutional.

But analysts say politics play a major role in the dispute in Iraq, whose political barons have failed to reach agreement on choosing a president and a prime minister since October legislative elections.

“When it comes to oil, each side uses their respective powers as carrots and sticks depending on the political atmosphere of the day,” said Bilal Wahab of The Washington Institute for Near East Policy.

“At times when there was political accord, the courts were rather quiet. When there was political discord, however, the reverse was true,” he told AFP.

– ‘Reputation being damaged’ –

The nullification of oil contracts between the Kurds and four international oil companies (IOCs) from Canada, Britain, Norway and the United States at the start of July has inflamed the row.

“For Baghdad to be chasing IOCs out of Iraqi Kurdistan does not serve to show Iraq as a major producer welcoming of foreign investment,” cautioned Yesar al-Maleki, an analyst at the Middle East Economic Survey.

In a fightback, the Kurdish regional authorities in June initiated judicial proceedings against the federal government.

One lawsuit targets Oil Minister Ihsan Ismail, accused by the Kurds of trying to “intimidate” foreign firms operating in the Kurdistan region of northern Iraq.

The Kurdish autonomous government has accused Baghdad of taking “illegal” and “politically motivated” actions.

For Wahab, Kurdish and federal government officials fail to appreciate “how much they are damaging the overall reputation of Iraq’s energy industry”.

“Questioning the sanctity of contracts … adds legal risk to a slew of other regulatory and governance risks that ail the Iraqi energy industry,” he added.

The dispute, he said, “repels much-needed foreign investment”.

Oil revenues are critical for Iraq, a country faced with widespread corruption but also mired in a financial crisis and in need of funds to rebuild infrastructure after decades of conflict.

– ‘Compromise’? –

Despite the legal actions, Kurdistan says it is open to a negotiated solution.

It is working on setting up two companies specialised in oil exploration and marketing that would coordinate with Baghdad, a spokesperson for the Erbil government said.

Baghdad’s oil ministry, meanwhile, marked a small victory after oil giants Baker Hughes, Halliburton and Schlumberger committed not to initiate new projects in Kurdistan.

The ministry says the companies are also working to “liquidate and close” existing contracts.

Baghdad has fought to regain control of output from lucrative oil fields in Kurdistan since the autonomous region began marketing oil independently more than a decade ago.

But under a current deal, the Kurdish region delivers 250,000 barrels per day to Baghdad, in return for a share of federal funds to pay the salaries of Kurdish civil servants.

In recent weeks, tensions have risen further after a series of unclaimed rocket attacks targeting oil and gas installations in Kurdistan.

Experts say the assaults aim to put pressure on the Kurdistan Democratic Party (KDP), the largest in Kurdistan.

The KDP is allied to Shiite leader Moqtada Sadr, whose bloc won 73 seats in the October polls, making it the largest faction in the 329-seat parliament.

The party is eyeing the Iraqi presidency for one of its members, although traditionally the job has been held by a member of the rival Patriotic Union of Kurdistan.

“The timeline of events evidently shows that this whole crisis started because the KDP took the side of the Sadrist movement… opposing the Iran-backed Shiite Coordination Framework,” Maleki said.

He expects a “compromise” will be reached to resolve the oil dispute because “Iraq is a country of compromise”.

“Until then, the supreme court ruling will hang like the sword of Damocles over the Kurdish regional government,” he said.