Iraq’s federal government holds the Kurdistan Regional Government (KRG) legally responsible for continued oil smuggling operations from Kurdistan outside Iraq, the Iraqi Oil Ministry said on Thursday.
The ministry “reserves the right to continue to take all legal actions in this regard,” it added in a press release, in which it called on the Kurdistan Region Government once again to comply with the Iraqi Constitution, the Decisions of the Federal Court and the other relevant laws, including the General Budget Law. All these laws and court rulings on constitutional matters since 2022 have obliged the regional government of the semi-autonomous region to deliver the oil produced from the fields in Kurdistan to the Ministry of Oil, which is solely responsible for exporting the oil and receiving revenues.
Kurdistan continues to defy these obligations. This has hurt Iraq’s oil revenues – which are the main budget revenues for OPEC’s second-largest oil producer – as well as the federal government being forced to reduce output from other fields as part of its commitment to the OPEC+ agreements, the Oil Ministry said.
The federal government in Baghdad and the regional Kurdish government in Erbil have been at odds for years about who should be responsible for the oil exports and the subsequent revenue distribution.
The federal authorities say Baghdad should have sole discretion in handling oil exports and oil revenues.
Amid the dispute, Baghdad said last month that while the federal government of Iraq welcomes cooperation with U.S. energy firms, direct deals with the Kurdistan region violate the Iraqi constitution and need to go through the federal authorities with federal approval.
In May, Kurdistan signed major energy agreements with U.S. firms that could generate a value of $110 billion.
The recent signing of these substantial energy agreements between the KRG and American companies raises questions about the legal and political implications, given the ongoing disputes between Baghdad and Erbil over oil control.
By Tsvetana Paraskova for Oilprice.com
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