Iraqi government vows to send the hydrocarbon bill to the parliament

The Iraqi federal government and the Kurdistan Regional Government (KRG) are negotiating to draft out the long-suspended hydrocarbon law. 

The Iraqi government on Wednesday decided to form a specialised committee tasked with crafting the long-suspended hydrocarbon law for the country in coordination with officials in the northern Kurdish region.

Iraq's prime minister Mohammed Shia al-Sudani headed a meeting to discuss Iraq's oil and gas draft law. Heads of parliamentary blocs, ministers of foreign affairs, oil and industry, an advisor to the minister of the natural resources of the KRG, and several legal advisers attended the meeting, according to a statement by Sudani's media office.

 The attendees discussed the framework by legal and technical committees on articles and items in the draft law, insisting that the final copy of the bill be finished to be sent back to the Iraqi cabinet for passing and sent to the parliament according to the Iraqi constitution, the office clarified.

"Sudani affirmed that the hydrocarbon bill is one of the key laws that had been suspended for many years and needs to be passed soon," reads part of the statement. "Because it will contribute in further utilising the country's natural resources, and it would be a factor for resolving many suspended issues [with the Kurdistan region]."

KRG finds itself in a very tough position during the federal hydrocarbons law negotiations, and Baghdad seems to be taking advantage of this vulnerability. The draft bill proposes that the Iraqi oil ministry will own and manage all oil fields and pipelines in the country... pic.twitter.com/R7kyddsQmU

— Renwar Najm (@RenwarNajm) August 2, 2023

Sudani, from Iraq's Shia community, took office on 13 October following months of infighting between pro-Iran factions and Iraqi nationalist Shia cleric Moqtada Sadr.

Sudani vowed to pass Iraq's hydrocarbon bill by his cabinet and then send it to the Iraqi parliament to make it a law. The bill has been stalled since 2007 due to political disagreements among the Shia, Sunni, and Kurdish communities - Iraq's three main segments. 

Sudani has the backing of the Coalition for the Administration of the State, an alliance of powerful pro-Iran Shia factions, Sunni factions and two main Kurdish parties, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK).

Sudani ordered the formation of a ministerial committee tasked with supervising technical dialogue between Iraq's oil ministry and the KRG's Ministry of Natural Resources. Another duty of the committee is to invite governors from oil-producing provinces of Basra, Maisan, Kirkuk, and Dhi Qar, as well as directors of national oil companies, to participate in the discussions on the bill.

"There are provinces that have not invested their resources until now, which is a negative issue towards development efforts in all aspects," Sudani said. "The hydrocarbon bill is part of our cabinet's agenda, approved by the Council of Representatives. Constitutional principles, including the fair distribution of the oil resources and utilising it for developing the country's economy, will be considered in the bill."

Previous copies of the bill stipulated that oil and gas extraction would fall under the jurisdiction of Iraq's federal government, but the Kurdish authorities rejected this notion.

However, the KRG is in a weak position since it can no longer export its oil independently without Baghdad. The current KRG cabinet headed by PM Masrour Barzani is a caretaker and lacks the legitimacy to sign decisive laws. In addition, the region is in legal limbo after Iraq's Supreme Federal Court annulled the Kurdistan region's parliament late in May. Fresh parliamentary elections are expected to be held early next year. Thus, ratifying Iraq's hydrocarbon bill might be delayed until after the upcoming general elections in the region.    

The KRG has signed contracts with multiple international oil companies to explore, dig, produce, and export oil and gas without the federal government's permission in Baghdad. 

Iraqi Kurdistan started exporting its oil independently to Turkey without the federal government's consent in Baghdad in 2014.
Ankara had stopped handling 450,000 bpd of exports from Iraq's north on 25 March after an international tribunal ruled in a nine-year-old dispute that Baghdad was right to insist on overseeing all Iraqi oil exports. 

The tribunal run by the International Chamber of Commerce (ICC) ordered Turkey to pay Baghdad damages of US$1.5 billion for allowing the Kurdistan Regional Government (KRG) to export oil between 2014 and 2018 without the Iraqi government's consent. 
The Iraqi Federal Supreme Court, the highest court in the country, in mid-February, declared the Kurdistan region's oil and gas law as void.

The law was passed by the region's parliament in 2007 and regulates Iraqi Kurdistan's oil and gas sector. The court also described all contracts signed between the KRG and international oil companies for extraction and importing oil and gas from the region as 'illegal'.