The Necessary US Role in Fixing Baghdad-Kurdistan Energy Dispute

By Michael Knights, for the Washington Institute for Near East Policy. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

The Necessary U.S. Role in Fixing the Baghdad-Kurdistan Energy Dispute

On February 15, 2022, Iraq's Federal Supreme Court ruled that the 2007 oil and gas law for the Kurdistan Region was unconstitutional, requiring a review of numerous production sharing contracts and oil sales agreements.

If the case prevents oil exports via Iraqi Kurdistan, then the world market will almost immediately lose 500,000 barrels per day, triggering higher oil prices, expanded windfalls for Russia and Iran, the collapse of Iraqi Kurdistan's economy, and a dangerous turn in Baghdad's ties with Erbil and with Ankara.

In this timely Policy Note, Iraq expert Michael Knights calls for the United States to act with other concerned states to resolve the Baghdad-Erbil energy crisis. In doing so, he categorizes the sub-issues of FSC implementation on a spectrum from higher to lower consensus, and explains both sides' views in an unvarnished, direct manner.

A targeted intervention by the United States and its partners, the author argues, could guide the dispute toward a long-overdue resolution that greatly aids U.S. interests and the global effort to find a substitute for Russian and Iranian oil and gas.

Click here to read the full report.

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KRG PM ‘deeply troubled’ by attacks on Khor Mor Oilfield

From the Kurdistan Regional Government:

Like citizens across the Kurdistan, I have been deeply troubled by the repeated terror attacks on our people and public infrastructure in recent months. The cowards behind the attacks have resorted to terror tactics because they have lost the court of public opinion in the rest of the country.

Rather than focus on the future, and economic integration to lift all of the country, lawless groups have resorted to rocket attacks on our villages and civilians.

I have spoken by phone with key political partners in the Kurdistan Region and Iraq, and our friends abroad. During my call with Prime Minister Mustafa Kadhimi, I emphasized the need for joint Peshmerga and Iraqi security forces to fill any remaining vacuum in the disputed territories used by lawless groups to recklessly destabilize the whole of the country.

I explained to the Prime Minister that the attacks threaten the country's electricity provision and the investment climate for all the country, and I have urged him to take public, practical measures to rein in the groups.

I have also directed both Ministers of Peshmerga Affairs and Interior to take all measures necessary to protect critical public infrastructure and oil and gas installations. As part of the plan, we have agreed to reinforce the area with additional forces. More measures will be reviewed in the coming days.

Last night, I also spoke with White House Coordinator for the Middle East and North Africa Brett McGurk. Our American friends, and every investor must remain committed; we cannot give into fear. Over the next few days, I will urge our international friends and partners, and the UN Security Council to renew efforts with Erbil and Baghdad and explore ways for us both to protect against more terror attack.

The KRG deeply values and will defend and protect investments in its oil and gas sector and all public infrastructure. I have made it clear that an attack anywhere on Kurdistan is an attack on all of Kurdistan and its peoples.

In this moment of national concern, I urge our people to stay resolute. This is a blatant attack on our infrastructure, and part of a concerted effort to deter us from our strategic plans and reform agenda. Our resilience will not be shaken.

Masrour Barzani

Prime Minister of Kurdistan Regional Government

(Source: KRG)

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KRG to set up two New Oil Companies

By John Lee.

The Kurdistan Regional Government (KRG) is reportedly setting up two new companies to manage its energy resources.

A new Kurdistan Regional Oil Company (KROC) is to specialise in oil exploration, and the Kurdistan Oil Marketing Organization (KOMO) will concern itself with marketing of the oil.

The development comes as Erbil and Baghdad continue to vie for control of the oil industry in Iraqi Kurdistan.

More here and here.

(Sources: Reuters, Shafaaq)

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First National Conference to Address Early Marriage in Iraq

The United Nations Population Fund (UNFPA), and the Council of Ministers Secretariat (COMSEC), in partnership with the Women Empowerment Department (WED), and support from the United Kingdom, Sweden, France and Canada, organised a two-day conference to address early marriage in Iraq.

The conference, which took place on 11-12 June, recognised the alarming situation with early marriage which has increased from %21.7 to %25.5 for the past ten years in Iraq.

The event brought together government entities, local authorities, religious and tribal leaders, civil society organisations, young people, academia, and representatives of the international and donor community to discuss the root causes of early marriage, its impact and solutions to address it.

Representatives of the government of Iraq and the government of the Kurdistan Region of Iraq, ambassadors, tribal and religious leaders, academia and experts shared profound evidence on the devastating consequences of early marriage on the socio-economic progress, psychological and physical health of young girls and boys, families, communities and society at large.

UNFPA Representative of Iraq, Dr Rita Columbia, said:

"Tribal communities and young people affected by early marriage have asked us to raise our voice and advocate more for women and girls' rights and empowerment and take a step forward in addressing early marriage in Iraq, including the Kurdistan Region. This event shows the criticality of reducing early marriage to fulfill the rights of girls and women, and accelerate achievement of SDGs in Iraq."

The conference participants discussed and elaborated recommendations that will be taken by the Women Empowerment Directorate under the leadership of the Secretary-General of the COMSEC to support the local authorities to reduce and prevent early marriage in Iraq.

The Early Marriage is #NotNormal also includes a social media campaign and a partnership with Rakuten's Viber to promote the end of early marriage.

UNFPA, the United Nations Population Fund, delivers a world where every pregnancy is wanted, every childbirth is safe and every young person's potential is fulfilled.

(Sources: Relief Web, UN)

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KRG files Civil suit against Baghdad Minister of Oil

By John Lee.

The Minister of Natural Resources of the Kurdistan Regional Government (KRG) has filed a civil suit against the Baghdad Minister of Oil, accusing him of sending emails and letters with the intention of intimidating international oil companies (IOCs) and interfering with the contractual rights of the IOCs and the KRG.

The KRG has also filed a criminal complaint against a Director General in the Baghdad Ministry of Oil for allegedly abusing his power and position by intimidating and harassing the IOCs working in the Kurdistan Region of Iraq.

This follows a series of summonses issued to the IOCs by a court in Baghdad, relating to their operations in Kurdistan Region.

Full statement from the KRG:

On 19 May 2022, a commercial court sitting in Al Karkh, Baghdad, acted at the request of the Minister of Oil in Baghdad and purported to issue summonses to international oil companies (IOCs) operating within the Kurdistan Region of Iraq. Those IOCs - which include Addax, DNO, Genel, Gulf Keystone, HKN, Shamaran, and WesternZagros - operate in the Kurdistan Region in accordance with the Kurdistan Region's Oil and Gas Law (No. 22 of 2007), which was issued by the Kurdistan Regional Government in accordance with its powers under the Constitution of Iraq.

These court summonses are the latest in a series of illegal actions taken by the Minister of Oil and his staff under the current caretaker government in Baghdad. These illegal actions are apparently based upon a ruling by a court in Baghdad that calls itself the "Federal Supreme Court". This so-called "Federal Supreme Court" issued a politically motivated decision on 15 February 2022, which purported to declare the 2007 Oil and Gas Law void.

No court in Baghdad has the authority to make such a declaration. On 28 February 2022, the President of the Kurdistan Region, together with the presidents of the legislative, executive, and judicial branches of the Kurdistan Regional Government, issued a statement rejecting the 15 February decision. On 4 June 2022, the Judicial Council, the highest judicial institution in the Kurdistan Region, issued a statement upholding the validity of the 2007 Oil and Gas Law. The Council noted that Article 92(2) of the Constitution of Iraq requires that the Iraqi Council of Representatives pass a law to establish an Iraqi Federal Supreme Court. No such law has ever been enacted. Iraq, therefore, does not have a constitutionally established Federal Supreme Court. The court that issued the 15 February 2022 opinion purporting to invalidate the 2007 Oil and Gas Law has no constitutional authority to do so. On the contrary, the issuance of the 2007 Oil and Gas Law was entirely authorised under the Constitution of Iraq. As such, legally, the Oil and Gas Law remains in full force.

On 2 June 2022, the Kurdistan Regional Government filed a criminal complaint against a Director General in the Baghdad Ministry of Oil for abusing his power and position by intimidating and harassing the IOCs working in the Kurdistan Region of Iraq. In the view of the Kurdistan Regional Government, emails and letters sent to the IOCs undertaking work in the Kurdistan Region by that Director General were sent with the intention of intimidating the IOCs and interfering with the contractual rights of the IOCs and the Kurdistan Regional Government. The contracts entered into between the IOCs and the Kurdistan Regional Government are entirely in accordance with the 2007 Oil and Gas Law.

On 5 June 2022, the Erbil Court of Investigation ruled that the lawsuits filed in the Al Karkh commercial court against the IOCs must be brought to the Erbil Court to be examined as evidence in this criminal complaint. The Erbil Court also ruled that any lawsuits in the Al Karkh court must be delayed for this purpose, and that named criminal defendants, including the Baghdad Minister of Oil, must attend the criminal hearing in Erbil on 22 June 2022. Iraqi law (Article 26 of Criminal Procedural Law No. 23 of the year 1979) requires that civil proceedings cannot take place while a related criminal investigation is underway. In addition, Article 38 of Civil Procedural Law No. 83 of the year 1969 states that any civil proceeding against the IOCs must take place in the Kurdistan Region, where the IOCs are registered and operate.

Furthermore, on 5 June 2022 the Minister of Natural Resources of the Kurdistan Regional Government filed a civil suit against the Baghdad Minister of Oil. In the view of the Kurdistan Regional Government, the Minister is liable under applicable civil law provisions for sending emails and letters with the intention of intimidating the IOCs and interfering with the contractual rights of the IOCs and the Kurdistan Regional Government.

(Source: KRG Ministry of Natural Resources)

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PM announces new Ministry of Electricity and Alternative Energy

By John Lee.

The Iraqi Prime Minister has announced that the Ministry of Electricity is to be renamed the "Ministry of Electricity and Alternative Energy".

At a press conference in Baghdad, Mustafa al-Kadhimi (pictured) said it is unreasonable to build gas power stations when there is not enough gas available, so the new ministry will actively seek alternative power sources.

In the past, he said, power stations were built, "in an absurd manner, without planning and without knowledge."

He also referred to the country's electrical interconnection projects with the Gulf states, Saudi Arabia, Turkey, Jordan and Egypt, which will provide power until Iraq reaches self-sufficiency.

Addressing the annual shortage of electricity during the very hot summer season, he said that last year's production of 21,000 MW will not be achieved this year, due to the reduction in gas supply from Iran.

(Source: Govt of Iraq)

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KRG Judicial Council disputes Supreme Court ruling over Oil

By John Lee.

The Judicial Council of Kurdistan Region of Iraq has issued a statement saying that the provisions of its oil law (Law No. 22, 2007) do not violate the Iraqi Constitution and therefore should be recognized as "standing laws".

The statement follows months of dispute between Baghdad and Erbil regarding control of the energy resources in Iraqi Kurdistan, with Iraq's Federal Supreme Court ruling in February that sales of oil and gas by the Kurdistan Regional Government (KRG), independently of the central government in Baghdad, were unconstitutional.

Full statement from KRG:

"The Kurdistan Regional Government's tenure on the issue of oil and gas exploration on its territory is in accordance with the 2005 Iraqi Constitution. The provisions of Law No. 22, 2007, issued by the Kurdistan Regional Parliament, do not violate the Iraqi Constitution and therefore should be recognized as standing laws.

"The oil and gas sector do not fall under the exclusive purview of the Federal Government of Iraq as stated in Article 110 of the Iraqi Constitution, underpinned by Article 112 of the Iraqi Constitution which states the Federal Government is to manage oil and gas exploration of discovered fields, in conjunction with regional governments and oil-producing provinces. Of that, revenues are supposed to be distributed equally among the population of Iraq.

"Article 112 refers to existing oil wells and fields prior to the ratification of the Constitution in 2005. As such, oil fields discovered in the Kurdistan Region since 2005 fall under the jurisdiction of the Kurdistan Region and the Kurdistan Regional Government. Accordingly, the texts of the Kurdistan Regional Government's Oil and Gas Law No. 22, 2007, remain in line with the provisions of the Iraqi Constitution.

"Article 92(2) of the Constitution of Iraq requires that the Iraqi Council of Representatives pass a law to establish an Iraqi Federal Supreme Court. No such law has to date been enacted. Iraq, therefore, does not have a constitutionally established Federal Supreme Court. As such, the court that issued the 15 February 2022 opinion purporting to invalidate the Oil and Gas Law (No.22 of 2007) lacks the constitutional authority to do so and, consequentially, the Oil and Gas Law remains in full force as per the Iraqi Constitution."

Click here to view document from Judicial Council.

(Source: KRG)

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IOCs in Iraq need Oil Wealth to Trickle Down

From Amwaj Media. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Why foreign oil companies in Iraq need oil wealth to trickle down

Iraq's oil wealth is among the greatest on the planet.

Total proven crude reserves are estimated at 150 billion barrels, and daily output is over 4.6 million barrels-making it the fifth-largest producer in the world.

But much of this wealth does not trickle down, and that is perhaps paradoxically particularly the case in the oil-rich south.

The full report can be viewed here (registration required).

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Iran Reduces Gas Supply to Iraq, as Iraq Misses Payment

By John Lee.

Iran has reduced its gas supply to Iraq by 5 million cubic meters per day, causing a reduction in electricity production, according to a statement on Wednesday from Iraq's Ministry of Electricity.

The Iranian government had demanded payment of debts relating to gas supply, which AFP says totals $1.6 billion and dates from 2020, by the end of May. 

The Ministry blames the non-payment on the delay in approving the general budget, and "the search for an alternative solution to the Food Security Law."

Iraq exported a record $11.436-billion worth of oil in May.

(Sources: Ministry of Electricity, AFP)

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Dispute over Iraqi Kurdistan’s Energy Resources ramps up

By Haider Ibrahim for Al Monitor. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.

Dispute over Iraqi Kurdistan's energy resources ramps up

The Iraqi Ministry of Oil has announced plans to establish a new oil company for the Kurdistan Region.

Click here to read the full article.

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