KRG to respond to Baghdad's oil proposal by end of week

The Kurdistan Regional Government (KRG) will respond by the end of this week to Baghdad's proposed restructuring of their oil and gas relationship, council of ministers chief of staff Omed Sabah said.

The two have been in a stand-off since Iraq's supreme federal court in February ruled the KRG oil and gas law unconstitutional, compelling Erbil to hand over all production from its fields to Baghdad. The Iraqi oil ministry last month proposed starting a new oil company in the semi-autonomous region, and yesterday raised the stakes by saying it will implement the court ruling because attempts to engage Erbil have "come to nothing."

The supreme court ruling also granted the federal oil ministry full powers over oil exploration, extraction and export in the region, and declared invalid all contracts signed by the KRG with overseas entities on oil exploration, extraction and exports.

The KRG has always rejected the court ruling, which its prime minister Masrour Barzani labelled "unconstitutional and blatantly political," but Sabah said it is discussing the ministry's proposal.

It "will continue joint work and co-operation [with Baghdad], and the talks will continue," Sabah said, with a response "by the end of this week and within the [KRG] constitution's framework."

But Sabah criticised the Iraqi government for double standards.

"While the Iraqi government is very keen to implement the unfair decision of the Iraqi Federal Supreme Court's decision over the oil and gas dossier, it neglected the same court's decision in 2019 over committing the Iraqi government to implement Article 140 to solve the issue of the disputed areas between Erbil and Baghdad," he said. Article 140 states the fate of disputed territories should be determined through a referendum.

Kurdistan contributes around 450,000 b/d to Iraq's crude output, which Argus assessed in March at 4.25mn b/d. KRG crude accounts for the vast bulk of Kirkuk Blend exported through the Turkish port of Ceyhan - Argus estimates Kirkuk Blend exports in March averaged 419,000 b/d, of which 368,000 b/d was marketed by the KRG and just 51,000 b/d by Baghdad.

By Bachar Halabi