A new challenge for the oil sector in Iraq... and "no results" for Baghdad's dialogue with the Kurdistan region - Energy

The oil sector in Iraq is facing a new turn after the ministry announced, today, Saturday, May 7, the trend towards implementing the Federal Court’s decision, issued in mid-February, regarding the unconstitutionality of the oil and gas law of the Kurdistan Regional Government.

The Minister of Oil, Ihsan Abdul-Jabbar, stressed the failure of talks with officials in the region, after nearly two and a half months of rule, noting that Baghdad’s goal is – only – to regulate Iraq’s oil activity with the aim of turning it into an actual commercial activity and not controlling the activity of the sector. .

Abdul-Jabbar stressed that the relations between the center and the Kurdistan region were affected by historical experiences, and led to cracks between the two sides.

Decision implementation challenges

The Minister of Oil, Ihsan Abdul-Jabbar, explained – during the fourth session of the opinion board meeting – the trend towards implementing the court’s decision confirming the responsibility of the Iraqi National Oil Company for managing the energy file at the internal level, in addition to the ministry’s management of it externally and internationally in coordination with the Ministry of Finance.

Iraqi Oil Exports - Iraqi Oil Minister
Iraqi Oil Minister Ihsan Abdul-Jabbar – archive

Abdul Jabbar expected the Ministry of Oil to face major challenges during the coming period, calling on the ministry and the board of directors of the National Oil Company to prepare to meet the challenges of the decision’s entry into force.

He wondered about the legal basis that allows a part of the country to export some energy materials that record shortages in other parts, stressing that the oil industry is the country’s main resource, and separating it from political interference is important to protect the economic system from collapse.

He said that dealing with duplicity within the borders of the same state is not fair, stressing the importance of the state’s public treasury becoming a home for oil production revenues from all regions of Iraq.

Managing the oil sector in Iraq

The Minister of Oil, Ihsan Abdul-Jabbar, explained that the main objective of the ministry and the National Oil Company is to establish a federal state capable of fully managing its oil activity with a scientific background that achieves the highest returns, with the most sustainable and lowest cost.

He affirmed respect for the constitutional authorities in the Kurdistan region, pointing out that the ministry had previously submitted proposals to the region’s authorities on a clear work system that fits with the foundations of the oil industry in Iraq.

Abdul-Jabbar added that managing the energy file is based on the basis of commercial activity, not control over the sector, noting that after 75 days of talks between Baghdad and the regional authorities on building bridges of confidence, the oil sector in Iraq did not achieve the required result.

The Minister of Oil in Iraq considered that the futility of the talks pushes towards the implementation of the Federal Court’s decision, stressing at the same time that the start of implementation of the decision does not indicate the end of the dialogue with the authorities of the region.

He welcomed the re-submission of sector officials in the region to discuss the affairs regulating the work of the oil sector in Iraq, according to a statement by the ministry published on its Facebook page.

Iraq's production of crude oil - February 2022

The unconstitutionality of Kurdistan’s oil activity

On February 15, the Federal Supreme Court ruled that the 2007 Kurdistan Regional Government’s Oil and Gas Law was unconstitutional, and considered it unconstitutional.

The ruling of the Federal Court also included the delivery of the Kurdistan Region’s oil production to the government in Baghdad, according to what the BBC newspaper reported at the time.

The court ruling dealt with enabling the Iraqi Ministry of Oil to use its powers with regard to oil exploration, extraction and export, and called for the ministry to hand over the oil production extracted by the Ministry of Natural Resources of the regional government.

In the same context, Abdul-Jabbar announced, last month, his ministry’s adherence to the principles of managing the region’s oil file; Including the review of contracts concluded by the region with countries and companies to introduce amendments and improvements.

This comes in addition to the establishment of an oil company – based in Erbil – owned by the federal authority and charged with managing the entire oil activity, based on the powers and criteria set by the National Oil Company and the Federal Ministry of Oil.

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