Petrel calls for Reform of Iraqi Oil Contracts

By John Lee.

Petrel Resources has said that Iraq's Ministry of Oil should negotiate Production Sharing Agreements to replace the existing service contracts, as, "this would better align the interests of the parties, and create more wealth, value-added in downstream industries like refined products and petrochemicals, infrastructure and employment for Iraq."

In its unaudited interim statement for the six months ended 30 June 2022, the company mentions that an updated development proposal for the Merjan oil field has been submitted to the Ministry, but adds that it "requires an operating Iraqi Government in order to proceed".

It adds that its Iraqi Director, Riadh Ani, has resigned in order to enter public service.

More here.

The company claims to have an interest in Iraq's Block 6 in the Western Desert, subject to ratification.

(Source: Petrel Resources)

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Iraq Promotes Liquified Gas for Vehicles

By John Lee.

The Undersecretary for Liquidation and Distribution Affairs at Iraq's Ministry of Oil, Hamid Younis, has said that the shift towards the use of liquified gas for vehicles is a strategic project for Iraq, which promotes sustainable development and supports the national economy, and is supported by the government and the Ministry.

He added that a number of decisions and instructions have been issued that support projects for the use of liquified gas in vehicles.

He made the comments at the opening of a model workshop to install liquified gas systems in vehicles in Taji, north of Baghdad.

(Source: Ministry of Oil)

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SOMO warns Int’l Companies not to buy Oil from KRG

By John Lee.

Iraq's State Oil Marketing Organization (SOMO) has announced that it had taken "marketing measures" and informed all international companies not to buy crude oil from the Kurdistan Region of Iraq (KRI).

SOMO Director, Alaa Al-Yasiri, also told the state-run Iraqi News Agency (INA):

"The Federal Court issued a decision stipulating the invalidity of all contracts concluded by the Kurdistan Regional Government regarding the extraction and export of crude oil.

"The regional government sells oil at lower prices than the central government, and according to news published by Reuters, the region sells oil at discounts ranging from 16-20 dollars per barrel, despite the fact that the sale takes place in the same region and with the same quality of oil."

He added that the KRG exported around 420,000 barrels per day last year, decreasing to about 355,000 bpd this year.

(Source: INA)

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Court rules Iraqi National Oil Company (INOC) Unconstitutional

By John Lee.

Iraq's Federal Supreme Court has invalidated the Cabinet decision to set up the Iraqi National Oil Company (INOC).

According to a statement from the Court, Paragraphs 2 and 3 of Cabinet Decision No. 109 of 2020, and Decision No. 211 of 2021, are in breach of the constitution.

The full judgement, in Arabic, can be downloaded here, with Arabic summaries here, here and here.

A summary of the judgement in English, from the Court website, is shown below:

Federal Supreme Court Rules Invalidity of Paragraphs (2) and (3) of Cabinet Decision No. (109) of 2020 and the Decision (211) of 2021 and its repeal are related to the completion of the steps of establishing the National Oil Company and the assignment of [the Minister of Oil (Ihsan Abdul-Jabbar) to head it.]

   The Court shall consider:

1-    Whereas, public funds have inviolability following all the divine laws and affirmed that the Holy Quran in a number of its noble verses and Article (27 / 1st) of the Constitution stipulates that this and that their protection is the duty of every citizen, so all institutions and employees therein must maintain the sanctity of those funds and that the initiation of a lawsuit to protect them is consistent with what is stated in Article (20 / 1st) of the Bylaw of the Court, which obliges that the interest is a state, direct and influential in the legal status or Financial or social and because it is in the interest of the people to pay the damage caused to public funds and this is considered to be in their interest.

2-    To annul the number of essential articles of the National Oil Company Law No. (4) of 2018 cannot proceed with the formation of the company.

3-    The statement that articles of other laws should be replaced by articles that have been declared unconstitutional is contrary to the binding and consistent nature of the decisions of the Federal Supreme Court, and must take into account the will and competence of the legislator to legislate other articles to replace the articles that have been declared unconstitutional, and to say otherwise means that the legislative authority is deprived of a part of its constitutional competences.

Also, the Court shall consider:

1-    The failure to find ways to preserve public funds, which belong to all the people, by the bodies legally mandated to do so is a violation of the provisions of Article (27/1st) of the Constitution, and failure to achieve this leads to the absence of social justice and the absence of national belonging to the State.

2-    The failure to maintain public funds leads to the failure of the State to carry out its constitutional duties following the provisions of Articles (29-36) of the Constitution.

It also shall consider:

1-    The Constitution of the Republic of Iraq of 2005 is the result of the will of the people following the provisions of Article (144), which stipulates that (This Constitution shall come into force after the approval of the people thereon in a general referendum) and the constitution was not drafted for the benefit of any political party, sect or nationality, but was drafted for all Iraqis without discrimination.

2-    The purpose of organizing the federal authorities and all independent bodies is to abide by the Constitution in all its articles and not to depart from it, and that this obliges all federal authorities to work for the people and that non-compliance with the Constitution represents a departure from the will of the people.

(Source: Federal Supreme Court)

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US Consul says Existing KRG Oil Contracts must be respected

By John Lee.

The US's newly-appointed Consul General in Erbil has said that existing contracts between international oil companies (IOCs) and the Kurdistan Regional Government (KRG) must be respected.

Consul Irvin Hicks Jr. made the comment following a meeting with the KRG's Minister of Natural Resources, Kamal Muhammed Salih, on Wednesday.

In a statement issued on the consulate's Facebook page, the Consul said:

"We support the KRG's dialogue with the Government of Iraq on hydrocarbons and agree existing oil contracts must be respected."

Baghdad has challenged the legitimacy of the KRG's oil contracts.

(Source: US Consulate in Erbil)

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KRG Condemns SOMO Threats to Buyers of Kurdish Crude Oil

From the Kurdistan Regional Government:

The Kurdistan Regional Government strongly condemns the letter issued on 23 August 2022, by Iraq's State Oil Marketing Organization (SOMO) that threatens legal action against buyers and traders of crude oil produced in the Kurdistan Region.

SOMO's letter is nothing more than another drip in a stream of disinformation published by federally-owned state organisation as part of a political fight, a fight which sadly includes an attempt by certain parties in Baghdad to undermine the Federal Constitution of Iraq. The letter is also intended to undermine the continuing good-faith dialogue between the Kurdistan Regional Government and the Federal Government. That dialogue seeks to agree on a plan for the future management of Iraq's energy resources and revenues in line with the Federal Constitution.

SOMO's letter relies on a politically motivated opinion by a panel of lawyers pretending to be the "Federal Supreme Court of Iraq".

But there is no Federal Supreme Court and there is no binding decision. This is because the Federal Supreme Court has not yet been formed in accordance with the Federal Constitution. The panel in Baghdad therefore is not the Federal Superme Court and the opinions of the panel of pretenders carry no legal weight in Iraq or elsewhere. To suggest otherwise, as SOMO and others in Baghdad do, is to further a deception. It is a deception that undermines the Federal Constitution and threatens the republic. This political assault on the Federal Constitution is motivated by a desire to return Iraq to the centralisation of unconstrained power from a horrific past era.

Article 92(2) of the Constitution requires that the Iraqi Council of Representatives enact a law - by a two-thirds majority - to determine the workings of the Federal Supreme Court. No such law has been enacted. Iraq therefore does not have a constitutionally established Federal Supreme Court. The panel of lawyers that issued the 15 February 2022 opinion has no constitutional authority to do so.

The Kurdistan Regional Government has neither acquiesced nor stood aside. On 15 February 2022, the day of the so-called Federal Supreme Court decision, the Government issued a statement describing the decision as unjust, unconstitutional, and illegitimate.

On 28 February 2022, a joint statement was issued from Kurdistan Region Presidency, from the Kurdistan Region Parliament, and from the Judicial Council of the Kurdistan Region of Iraq. The statement was supported by KRG's Prime Minister. The statement described the so-called Federal Supreme Court decision as unconstitutional and called for the establishment of a legitimate Federal Supreme Court in accordance with Article 92 of the Constitution. Similar statements followed in March.

On 4 June 2022, the Judicial Council of the Kurdistan Region of Iraq issued a further statement setting out that Iraq does not have a constitutionally established Federal Supreme Court, that the body that issued the 15 February 2022 decision had no authority to do so, that the management of all of the oil and gas fields of the Kurdistan Region fell within the exclusive jurisdiction of the Government, and that Kurdistan Oil and Gas Law was fully in accordance with the provisions of the Federal Constitution. The Judicial Council is an independent body made up of leading jurists in the Kurdistan Region.

On 5 June 2022, the Kurdistan Regional Government started proceedings before the courts of the Kurdistan Region against Federal Minister of Oil. It seeks a comprehensive declaration of the constitutionality of the Kurdistan Oil and Gas Law and related matters and of the illegitimacy of opinion of the panel pretending to be the Federal Supreme Court.

Neither SOMO nor any other spokesman in Baghdad has even attempted to justify the legitimacy of the so called Federal Supreme Court. This is because the Federal Supreme Court is obviously illegitimate. This inconvenience is understood in Iraq, but perhaps less understood outside of Iraq. Given the fatal weaknesses in Baghdad's institutions, and the fatal weakness in Baghdad's arguments, Baghdad's strategy is to fabricate a story to create market uncertainty outside of Iraq in respect of the Kurdistan Region. The statements and threats from Baghdad should be understood as such and should be dismissed. The truth is found clearly and unequivocally in the Federal Constitution and the hope of the Iraqi people that Iraq remains a truly federal republic.
The rights of the Kurdistan Region to develop and produce hydrocarbon resources within the boundaries of the Region continues as provided by the Federal Constitution and Kurdistan law. Oil produced in the Kurdistan Region continues to be produced, to be shipped, to be sold, to be refined, and to be consumed. Investment interest remains and production is expected to increase.

The Kurdistan Regional Government remains fully committed to the process of mediation and dialogue to resolve outstanding differences with the Federal Government on the management of oil and gas in Iraq. Those differences, like any other differences of opinion, must be resolved in accordance with the Federal Constitution and the constitutional rights of the people of the Kurdistan Region and all of Iraq. Until that time, the Kurdistan Regional Government will continue to take vigorous steps to defend those rights.

(Source: KRG)

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Will Oil Dispute with Baghdad shift Dynamics in Kurdistan?

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

Will oil dispute with Baghdad shift dynamics within Iraqi Kurdistan?

In Iraq, the federal government and the authorities in the Kurdistan region are locked in a serious and multipronged dispute over the country's oil and natural gas resources.

The drama is playing out both in the courtroom and via attacks on sites associated with the energy industry.

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

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Vinson and Elkins to advise Iraq on Arbitration with Turkey

By John Lee.

Iraq's Ministry of Oil has engaged the Texas-based law firm Vinson and Elkins as a legal advisor in the US.

Partner James Lloyd Loftis will meet with representatives of the Department of State, at their request, regarding a pending arbitration proceeding between Iraq and the Republic of Turkey.

The Ministry will pay Mr Loftus a fee of $900 per hour for his advice in this matter.

During the period beginning 60 days prior to the date of the registrant's obligation to register under US's Foreign Agents Registration Act (FARA), the firm received more than $2.1 million from the Ministry for non-registrable legal services.

The firm has advised Baghdad on other matters in the past.

(Source: FARA)

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Deep Data: GCC Electricity and Iraq’s Reliance on Iran

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

Deep Data: GCC Electricity and Iraq's Reliance on Iran

In connection with the recent Arab summit in Jeddah, Iraq and Saudi Arabia are forging ahead with efforts to connect their electricity grids.

The plan revolves around a new power line between the two neighbors with a capacity of 1 gigawatt (GW). Separately, Iraq and the Gulf Interconnection Authority (GCCIA) are advancing a scheme to power southern Iraq.

While Iraq has long been under pressure from the US and some Arab states to reduce reliance on energy imports from Iran, informed sources in Baghdad characterize the shifts underway as a win-win for all sides-pointing to burgeoning domestic demand in Iran, and the possibilities offered by a new regional electricity market.

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

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