Iraq threatens to blacklist IOCs working in Kurdistan region  

Iraq threatens to blacklist IOCs working in Kurdistan region  
The natural resources ministry in the Iraqi Kurdistan region files a lawsuit against Iraq’s oil ministry after its threat to blacklist International Oil Companies (IOCs) working in the region.
4 min read
16 June, 2022
A view of the Erbil oil refinery, one of the most significant plants where the crude oil is processed and refined in the Kurdish Regional Government (KRG), Erbil on 17 November 2016. [Getty]

The Iraqi oil ministry has given three months period for IOCs working in the northern Kurdistan region to terminate their oil and gas contracts signed with the Kurdistan Regional Government (KRG), otherwise, they will be blacklisted, according to a document seen by The New Arab and confirmed as authentic by a former Iraqi lawmaker. 

Iraq's Supreme Federal Court ruled in February that Kurdistan's Oil and Gas Law No. 22 passed by the Kurdistan parliament in 2007 to regulate its oil and gas industry is unconstitutional. The court then ordered the Iraqi government to take measures and force the Kurdish authorities to hand over their crude supplies to the Iraqi federal government. 

The KRG ministry of natural resources Monday in a statement described the decision by Iraq's Supreme Federal Court on 15 February as "politically motivated" and said that the court's ruling was not aligned with the Iraqi constitution.

The ministry stated that multiple oil companies working in the region, including DNO, western Zagros, Gulf Keystone, Genel Energy, and Shamaran received a letter on 19 May summoning them to appear at the Commercial Court in Baghdad on 5 June. 

According to the statement on 5 June, the KRG minister of natural resources filed a civilian legal case against the Iraqi oil minister, Ihsan Abdul-Jabbar for "sending emails to the IOCs to threaten them." 

"The Iraqi oil ministry has been threatening and sending provocative emails to the IOCs working in the Kurdistan region for a long period according to the region's oil and gas law. Those actions are indeed a legal breach towards the rights of those companies," Bewar Khansi, advisor to the KRG Prime Minister for energy affairs and an expert in oil and gas told TNA in a phone interview. 

"Thus, the KRG ministry of natural resources filed a legal case in a court in Erbil against the Iraqi oil minister as well as the director-general in the ministry for trespassing the Iraqi laws that stipulate legal cases should be filed in the same place where the events happen. The Erbil court has ruled that the legal case in the Commercial Court in Baghdad against the IOCs should be halted and transferred to be seen by courts in the Kurdistan region," Khansi added.  

iraqi oil ministry-doc
A copy of the document by the Iraqi oil ministry was posted by Kurdish social media users.

He also called on the Iraqi parliament to investigate the issues between Baghdad and Erbil and to note that the Iraqi caretaker government of PM Mustafa al-Kadhimi "does not have the authority to complicate the issues in this complex political period in Iraq."   

The document was dated 7 June and signed by Karim Khatab Jaafer deputy of the Iraqi oil minister for extraction affairs. The Iraqi official ordered the Iraqi National Oil Company that within the measures taken for the implementation of the decision by the supreme court, the company should inform all IOCs working in Iraq to present a legal commitment that they would not work in the Kurdistan region's oil and gas sector in violation of the provisions of the supreme court's decision.

"For those IOCs that already have signed contracts with the KRG, they should terminate them within three months from being informed. In case the companies did not commit to the content of this document, they would be blacklisted and doing business with them will be banned," reads the document. 

 Ghalib Mohammed Ali, a former Iraqi lawmaker and former member of the energy committee of the Iraqi parliament, confirmed the authenticity of the document and told TNA in a phone call that "if the IOCs that are working in the Kurdistan region do not implement those measures by the Iraqi oil ministry, then they would be blacklisted and consequently cannot work in any projects in Iraq."

"Kar Group and Qaiwan Group, two Kurdish companies that have many projects in Iraq, accordingly can no longer work in areas under the control of the Iraqi government," Ali added. 

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He clarified that although the document is locally binding in Iraq, the Iraqi oil ministry can file legal cases against the IOCs in their original countries. 

"These measures by Iraq could make the KRG ministry of natural resources unable to work with the IOCs and then export the Kurdish oil easily to the international markets unless the KRG fully commits to the measures of the Iraqi oil ministry," Ali clarified. "I think the IOCs eventually will not take a major risk with their projects in Iraq for the sake of continuing working with the KRG. For example, British Petroleum (BP), which produces one million and half of the oil per day in Iraq, would not risk that for the sake of working in the Kurdistan region."

TNA contacted Asim Jihad, the spokesperson of the Iraqi oil ministry, but he was not immediately available to comment.