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


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French report: A political agreement and a “flexible” law are enough to solve the oil crisis between Baghdad and Erbil
 

Baghdad - people  

A press report, Tuesday, shed light on the nature of the oil disputes between the federal Iraqi government and the Kurdistan region, in conjunction with the heightened political skirmishes between the two parties.  

  

  

The following is the text of the report published by Agence France-Presse and followed by "Nass" (July 19, 2022):  

  

“Oil and its revenues have returned to a point of contention between the Iraqi federal government and the Kurdistan region, while these current tensions resulting from endless political skirmishes threaten to weaken the desire of foreign investors to head to Iraq.  

Since the beginning of the year, strained relations between the autonomous Kurdistan region and Baghdad have manifested in the judiciary.  

Erbil believes that the central government is seeking to put its hand on the region's oil wealth, while Baghdad demands that it have its say in managing the oil resources that are extracted from Kurdistan.  

Iraq is the second largest oil country in the Organization of Petroleum Exporting Countries (OPEC), and it exports an average of 3.3 million barrels of crude oil per day. As for Kurdistan, it produces more than 450 thousand barrels per day.  

It is impossible to understand this dispute between the two parties without returning to the political crisis that has paralyzed Iraq since the legislative elections in October 2021. Political leaders in the region, as in Baghdad, are unable to agree on the name of a new prime minister and president of the republic.  

Researcher Bilal Wahhab of The Washington Institute for Near East Policy believes that "with regard to the oil file, each of the two sides uses the carrot and stick method, and this depends on the prevailing political atmosphere."  

"When there was a political agreement, the courts remained silent. The opposite happened when the disputes started," he added.  

In February, the Federal Supreme Court in Baghdad ordered the Kurdistan region to hand over oil produced on its territory to the central government, giving Baghdad the right to review and cancel oil contracts with the region.  

And the Federal Court considered that a law passed in Kurdistan in 2007 to regulate the oil and gas sector was contrary to the constitution.  

Since then, the Iraqi government has been trying to implement this decision.  

  

"reputation"  

At the invitation of the Iraqi Oil Ministry, a court in Baghdad in early July canceled four contracts between the Kurdistan region and Canadian, American, British and Norwegian companies.  

It is also possible that the cancellation will affect three other foreign companies, whose decision is expected to be decided by the same court, as a senior official in the oil sector in Baghdad warned in an interview with Agence France-Presse, preferring to remain anonymous.  

For his part, said economist in the Middle East Economic Survey (MEES), Yasar Al-Maliki, "when Baghdad expels foreign oil companies from Iraqi Kurdistan, this does not give Iraq the image of an important oil producer, which welcomes foreign investment."  

The Kurdistan region wants to open the door to negotiations in order to preserve its independence in the field of oil. And he is working to establish two companies concerned with oil exploration and marketing, working in partnership with Baghdad, and this proposal was presented to the federal government, according to a spokesman for the local government in Erbil.  

However, in early June, the region initiated two judicial moves, one of which targets Iraqi Oil Minister Ihsan Ismail, whom Erbil accuses of trying to “intimidate” foreign companies operating in Kurdistan, according to a statement.  

Bilal Wahhab believes that the two parties do not realize to what extent they "damage the public reputation of the Iraqi energy sector."  

He adds that "the status of the sanctity of contracts is under question...adds legal risks to other organizational and governance risks that Iraq suffers from," adding that the dispute between the two parties "repels foreign investments that Iraq badly needs."  

In a victory for Baghdad, Schlumberger, Baker Hughes, and Halliburton announced that they would not "apply for new projects in the Kurdistan region in compliance with the decision of the Federal Court." It added that it "is now in the process of liquidating and closing the existing tenders and contracts."  

  

Settlement  

Relations between Baghdad and the Kurdistan region, which has been autonomous since 1991, are witnessing constant fluctuation.  

Theoretically, the Kurdistan region was supposed to deliver 250,000 barrels of oil per day to be exported from Baghdad, in return for a share of the general budget paid as salaries for government employees and other expenses. But Erbil never delivered the oil, and payments from Baghdad were not regular  

In recent weeks, missile attacks, not claimed by any party, targeted oil or gas sites in the region. Experts see this as an attempt to put more pressure on the Kurdistan Democratic Party, which is in power in Erbil, given that the dispute over the oil file is closely linked to the political crisis.  

The Kurdistan Democratic Party seeks to obtain the presidency of the republic, which is usually held by its political opponents from the Patriotic Union of Kurdistan.  

Yasar al-Maliki explains that "the sequence of events shows that this crisis began when the Kurdistan Democratic Party brought the Sadrist movement closer to confronting the coordinating framework backed by Iran," referring to an alliance that brings together several Shiite parties.  

But "Iraq is a country based on compromises," according to al-Maliki.  

In order to end the oil dispute with Erbil, al-Maliki believes that the best solution is a "political agreement" that guarantees Baghdad's adoption of a "flexible" law regulating the management of the oil file.  

The expert adds that "pending this, the decision of the Federal Supreme Court will remain as a sword for Kurdistan."  

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Economy News _ Baghdad

A press report, Tuesday, shed light on the nature of the oil disputes between the federal government and the Kurdistan region, in conjunction with the intensification of political skirmishes between the two parties.  

 The following is the text of the report published by Agence France-Presse and followed by "Economy News":  

“Oil and its revenues have returned to a point of contention between the federal government and the Kurdistan region, while these current tensions resulting from endless political skirmishes threaten to weaken the desire of foreign investors to head to Iraq.  

Since the beginning of the year, strained relations between the autonomous Kurdistan region and Baghdad have manifested in the judiciary.  

Erbil believes that the central government is seeking to put its hand on the region's oil wealth, while Baghdad demands that it have its say in managing the oil resources that are extracted from Kurdistan.  

Iraq is the second largest oil country in the Organization of Petroleum Exporting Countries (OPEC), and it exports an average of 3.3 million barrels of crude oil per day. As for Kurdistan, it produces more than 450 thousand barrels per day.  

It is impossible to understand this dispute between the two parties without returning to the political crisis that has paralyzed Iraq since the legislative elections in October 2021. Political leaders in the region, as in Baghdad, are unable to agree on the name of a new prime minister and president of the republic.  

Researcher Bilal Wahhab of The Washington Institute for Near East Policy believes that "with regard to the oil file, each of the two sides uses the carrot and stick method, and this depends on the prevailing political atmosphere."  

"When there was a political agreement, the courts remained silent. The opposite happened when the disputes started," he added.  

In February, the Federal Supreme Court in Baghdad ordered the Kurdistan region to hand over oil produced on its territory to the central government, giving Baghdad the right to review and cancel oil contracts with the region.  

And the Federal Court considered that a law passed in Kurdistan in 2007 to regulate the oil and gas sector was contrary to the constitution.  

Since then, the Iraqi government has been trying to implement this decision.  

"reputation"  

At the invitation of the Ministry of Oil, a court in Baghdad in early July canceled four contracts between the Kurdistan region and Canadian, American, British and Norwegian companies.  

It is also possible that the cancellation will affect three other foreign companies, whose decision is expected to be decided by the same court, as a senior official in the oil sector in Baghdad warned in an interview with Agence France-Presse, preferring to remain anonymous.  

Yasar Al-Maliki, an economist in the Middle East Economic Survey MEES, considers that "when Baghdad expels foreign oil companies from Iraqi Kurdistan, this does not give Iraq the image of an important oil producer, which welcomes foreign investment."  

The Kurdistan region wants to open the door to negotiations in order to preserve its independence in the field of oil. And he is working to establish two companies concerned with oil exploration and marketing, working in partnership with Baghdad, and this proposal was presented to the federal government, according to a spokesman for the local government in Erbil.  

However, in early June, the region initiated two judicial moves, one of which targets Oil Minister Ihsan Ismail, whom Erbil accuses of trying to “intimidate” foreign companies operating in Kurdistan, according to a statement.  

Bilal Wahhab believes that the two parties do not realize to what extent they "damage the public reputation of the Iraqi energy sector."  

He adds that "the status of the sanctity of contracts is under question...adds legal risks to other organizational and governance risks that Iraq suffers from," adding that the dispute between the two parties "repels foreign investments that Iraq badly needs."  

In a victory for Baghdad, Schlumberger, Baker Hughes, and Halliburton announced that they would not "apply for new projects in the Kurdistan region in compliance with the decision of the Federal Court." It added that it "is now in the process of liquidating and closing the existing tenders and contracts."  

Settlement  

Relations between Baghdad and the Kurdistan region, which has been autonomous since 1991, are witnessing constant fluctuation.  

Theoretically, the Kurdistan region was supposed to deliver 250,000 barrels of oil per day to be exported from Baghdad, in return for a share of the general budget paid as salaries for government employees and other expenses. But Erbil never delivered the oil, and payments from Baghdad were not regular  

In recent weeks, missile attacks, not claimed by any party, targeted oil or gas sites in the region. Experts see this as an attempt to put more pressure on the Kurdistan Democratic Party, which is in power in Erbil, given that the dispute over the oil file is closely linked to the political crisis.  

The Kurdistan Democratic Party seeks to obtain the presidency of the republic, which is usually held by its political opponents from the Patriotic Union of Kurdistan.  

Yasar al-Maliki explains that "the sequence of events shows that this crisis began when the Kurdistan Democratic Party brought the Sadrist movement closer to confronting the coordinating framework," referring to an alliance that brings together several Shiite parties.  

But "Iraq is a country based on compromises," according to al-Maliki.  

In order to end the oil dispute with Erbil, al-Maliki believes that the best solution is a "political agreement" that guarantees Baghdad's adoption of a "flexible" law regulating the management of the oil file.  

The expert adds that "pending this, the decision of the Federal Supreme Court will remain as a sword for Kurdistan."  

  


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Added 07/19/2022 - 11:35 AM
Update 07/19/2022 - 3:42 PM
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French report: Political agreement and flexible law to solve oil crisis between Baghdad and Erbil
2531.jpg
Economy News - Baghdad

A press report on Tuesday highlighted the nature of oil disputes between the federal government and the Kurdistan Region, as political skirmishes between the two sides intensified.

The report, published by AFP and followed by Economy News, reads:

"Oil and its revenues have returned to be a matter of contention between the Federal Government and the Kurdistan Region, while these current tensions resulting from endless political skirmishes threaten to weaken the desire of foreign investors to go to Iraq.

Since the beginning of the year, relations between the Autonomous Region of Kurdistan and Baghdad have been strained in the judiciary.

Erbil believes that the central government is seeking to get its hands on the region's oil wealth, while Baghdad demands that it have its say in managing the oil resources extracted from Kurdistan.

Iraq is the second largest oil country in the Organization of Petroleum Exporting Countries (OPEC), exporting an average of 3.3 million barrels of crude oil per day. Kurdistan produces more than 450,000 barrels a day.

This disagreement between the parties cannot be understood without a return to the political crisis that has paralysed Iraq since the legislative elections in October 2021. Political leaders in the region, as in Baghdad, are unable to agree on the name of a new Head of Government and a President of the Republic.

"For the oil file, each side uses carrot and stick style, depending on the prevailing political atmosphere," said Bilal Wahab of the Washington Institute for Near East Policy.

"When there was a political agreement, the courts remained silent. The opposite happened when the differences began."

In February, the Federal Supreme Court in Baghdad ordered the Kurdistan Region to hand over oil produced on its territory to the central government, giving Baghdad the right to review and cancel oil contracts with the region.

The Federal Court ruled that a law passed in Kurdistan in 2007 to regulate the oil and gas sector was unconstitutional.

Since then, the Iraqi Government has been trying to implement this resolution.

"Reputation"

At the invitation of the Oil Ministry, a Baghdad court in early July annulled four contracts between the Kurdistan Region and Canadian, American, British and Norwegian companies.

The cancellation is also likely to affect three other foreign companies, the decision of which is expected to be decided by the same court, a senior oil official in Baghdad warned in an interview with AFP, preferring to remain anonymous.

"When Baghdad expels foreign oil companies from Iraqi Kurdistan, it does not give Iraq the image of an important oil-producing country, which welcomes foreign investment," said Middle East Economic Survey MEES economist Left Al-Maliki.

The Kurdistan Region wants to open the door to negotiations in order to maintain its oil independence. He is working to establish two oil exploration and marketing companies, working in partnership with Baghdad, and the proposal has been presented to the federal government, according to a local government spokesman in Erbil.

But in early June, the region launched two judicial moves, one targeting Oil Minister Ihsan Ismail, whom Erbil accuses of trying to "intimidate" foreign companies operating in Kurdistan, according to a statement.

Bilal Wahab said the two sides do not realize to what extent they "harm the public reputation of iraq's energy sector".

"The inviolability of contracts is questionable." It adds legal risks to other regulatory and governance risks to Iraq," he said, adding that the dispute between the two parties "alienates foreign investments that Iraq desperately needs."

In a victory for Baghdad, Schlumberger, Baker Hughes and Halliburton halliburton announced that they would not "submit new projects in the Kurdistan region in compliance with the Federal Court's decision." "It is now in the process of liquidating and closing existing tenders and contracts," she said.

Settlement

Relations between Baghdad and the autonomous Kurdistan region since 1991 have been constantly volatile.

In theory, the Kurdistan Region was supposed to deliver 250,000 barrels of oil a day to be exported from Baghdad, in exchange for a share of the general budget paid as salaries to government officials and other expenses. But Erbil never delivered oil, and payments from Baghdad were not regular.

In recent weeks, rocket attacks, which have not been adopted by anyone, have targeted oil or gas sites in the territory. Experts say this is an attempt to put more pressure on the KDP, which is in power in Erbil, as the oil dispute is closely linked to the political crisis.

The KDP is seeking the presidency, which is usually held by its political opponents from the Patriotic Union of Kurdistan (PUK).

"The sequence of events shows that this crisis began when the KDP approached the Sadrist movement, confronting the coordination framework," al-Maliki's left explains, referring to an alliance of several Shiite parties.

But "Iraq is a country based on compromises," al-Maliki said.

In order to end the oil dispute with Erbil, Maliki said the best solution is a "political agreement" that ensures that Baghdad adopts a "flexible" law governing the management of the oil file.

"Pending this, the Decision of the Federal Supreme Court will remain a sword for Kurdistan," the expert adds.

  


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Add 2022/07/19 - 11:35 AM
Updated 2022/07/19 - 7:38 PM
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BARZANI GOES TO BAGHDAD: TROUBLE IN THE KURDISH OIL AND GAS SECTOR

JULY 18, 2022
COMMENTARY - War on the Rocks
 
 
iraqi oil field

 

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.

 

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

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The oil fields of Kurdistan are in the possession of Baghdad.. How will Erbil respond?

The KRG is awaiting the formation of the new Iraqi government in order to negotiate with it the legislation of the 2007 Oil and Gas Law to resolve the differences between the two sides

The operations of extracting oil from the Kirkuk field began in an organized manner in 1934 - Reuters
Baghdad and Erbil disputes threaten to weaken the desire of foreign investors to go to Iraq (Reuters)
22/7/2022
 

BAGHDAD - Disagreements and tensions between the Iraqi government and the Kurdistan Regional Government over the mechanism of exporting crude oil from the fields in the region have again exacerbated tension between the two sides, and threatened to weaken the desire of foreign investors to go to Iraq.

These disputes began when the Federal Court in Baghdad issued a decision in mid-February, stating that the oil and gas law in the region was unconstitutional, and prevented him from exporting oil in his favour. Rather, the export must be through Baghdad based on a lawsuit filed by the Iraqi Oil Ministry. Among the decisions of the Federal Court to deduct oil export amounts from the region's percentage in the budget in the event that Kurdistan is not committed to implementing the decision.

 

In light of this, the American "Schlumberger", the largest global company in the field of oil field services, and "Halliburton Energy Services" company, and "Baker Hughes Company", the largest oil field services company, decided In the world, withdrawing from work in the Kurdistan region in compliance with the decision of the Federal Court in Baghdad.

Al-Marsoumi reveals the work of foreign oil companies withdrawing from the Kurdistan region with new names (Al-Jazeera Net)
Al-Marsoumi confirmed that the foreign oil companies withdrawing from the Kurdistan region are working under new names (Al-Jazeera)

Baghdad position

And the Iraqi Oil Ministry issued a clarification in this regard, which was reviewed by Al Jazeera Net, saying that "the three companies are among the sober international companies in the field of oil services, and according to their official addresses to the ministry, they confirmed not to submit to new projects in the region in compliance with the decision of the Federal Court and the directives of the committee formed in the ministry."

According to the clarification, "these companies are in the process of liquidating and closing existing tenders and contracts," confirming that they do not own a commercial entity or other companies operating in the region, whether with their trademark or for others or on their behalf, and in a manner that does not violate the decision of the Federal Court or intersect with the Ministry's directives.

The economic academic Dr. Nabil Al-Marsoumi revealed the fact that foreign oil companies have effectively withdrawn from the region, and he told Al-Jazeera Net that according to reliable information from a private source closely related to the work of oil service companies, all oil service companies are still operating in the region, but with new names.

Al-Marsoumi revealed that "the companies have changed their names, for example, Schlumberger is currently working in Kurdistan under the name "LOT" (IOt), which is one of its divisions, while Halliburton operates under the name "boots and coots", which is also one of its divisions. .

Al-Marsoumi added, quoting the source, that Schlumberger's last letter to the Oil Ministry is to cover up its work in the region under another name to avoid the sanctions that the ministry intends to impose on oil companies operating in Kurdistan.

The Caliph considers the decision of the Federal Court as important as the decision to nationalize Iraqi oil in the seventies of the last century (Al-Jazeera Net)
The Caliph considered that the decision of the Federal Court is important, similar to the decision to nationalize Iraqi oil in the seventies of the last century (Al-Jazeera)

The importance of the decision

The academic in oil and energy affairs, Dr. Bilal Al-Khalifa, stresses the importance of the Federal Court's decision, which is no less important than the nationalization of oil at the beginning of the seventies of the last century.

In his interview with Al-Jazeera Net, Al-Khalifa said that the decisions of the Federal Court have become binding according to Article 94 of the Iraqi Constitution, and it is not possible to delay, not apply or reject it, otherwise those who rejected the decision will be arrested according to Article 329 of Penal Code No. 111 of 1969 in force.

The academic points out that "there are international companies other than the ones that announced the withdrawal have remained silent, including the Russian Rosneft, and the Emirati Dana Gas," noting that in the event that they do not withdraw, Baghdad will implement the decision of the Federal Court in dealing with them.

The Caliph expects that “these companies will deal with Baghdad to amend the contracts previously concluded to ensure that they remain in the central and southern regions of Iraq because they accepted the decision of the Federal Court, and they may remain to work in the region, but with the approval and condition of dealing with Baghdad and not with Erbil.”

Arshad Taha reveals the mechanism of Erbil's movement around Baghdad's latest decision, and considers it a violation of the Iraqi constitution (Al Jazeera Net)
Taha believes that the Federal Court's decision is contrary to the Iraqi constitution (Al-Jazeera)

Erbil stand

In turn, the economic advisor to the presidency of the Kurdistan Regional Parliament, Dr. Arshad Taha, believes that Baghdad should have legislated the 2007 oil and gas law that is on the shelves of the Iraqi parliament to draw up the common oil policy, instead of issuing the last decision, which was considered to be in violation of the Iraqi constitution.

Speaking to Al Jazeera Net, Taha attributed the reasons for Erbil's export of oil without referring to Baghdad to the Iraqi government's abstention from sending the region's share of the federal budget since 2014, indicating that "the export of oil was to cover the salaries of Kurdish employees and retirees and public services."

On the Kurdish position and the new steps of the Federal Court's decision, Taha revealed that "the regional government is waiting for the formation of the new Iraqi government in order to negotiate with it, which must put in its priorities the legislation of the oil and gas law of 2007 to resolve the differences between the two sides."

Al-Moussawi rejects the accusation of the popular crowd of bombing the Kurdish oil fields (Al Jazeera Net)
Zainab Al-Moussawi: Baghdad will be able to provide the region's share of the federal budget through its control over its oil production (Al-Jazeera)

new port

Zainab Juma'a al-Moussawi, representative of the coordination framework that includes prominent Shiite forces with the exception of the Sadrist movement, stresses the importance of the federal government's control over the region's oil export, "which she considered a new outlet that would supplement and maximize Iraq's revenues instead of going to the benefit of the Erbil government, which is unable to secure salaries for the region's employees.

Zainab al-Moussawi added in her interview with Al-Jazeera Net that "Baghdad will be able to provide the region's share of the federal financial budget, including the salaries of its employees, by controlling Kurdish oil production."

Source Al Jazeera
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