Tension escalates.. Kurdistan region denies its forces' seizure of Iraqi oil fields - Energy

The Kurdistan Regional Government denied what the Iraqi North Oil Company announced that the Kurdish armed forces had seized two oil fields owned by the Iraqi company, Khaleej Hassan and Dawood Gorg, in Kirkuk.

A statement of the regional government commented on the statement of the Iraqi company, saying that the armed forces had not seized the two fields, according to what was reported by the S&P Global Platts platform.

The Iraqi North Oil Company had announced earlier that the Kurdish forces had seized the two fields, accompanied by a technical team, to benefit from their production for the benefit of the Kurdistan Regional Government. The company held the semi-independent government responsible for this “unconstitutional” act, as it described.

The two fields are in dispute

Iraq’s state-owned North Oil Company has operated the Khaleej Hassan field in Kirkuk, since Baghdad seized control of the main oil-producing region from the Kurdistan Regional Government in 2017.

Kurdistan
An oil field in Kurdistan

Despite the overall improvement in the security situation since Kirkuk was under the control of the terrorist organization ISIS, the insurgent group remains active in the area, attacking the area frequently.

The statement of the spokesman of the Kurdistan Regional Government considered that the aim of the statement of the North Oil Company is to discredit the region.

He said, “This campaign is purely political and has no legal basis…and such allegations are absolutely incorrect, and aim to sow discord and incite against the region’s oil rights.”

Additional Tensions

According to the S&P Global report, this incident could increase tensions in relations between Erbil and Baghdad, which is seeking to control the Kurdish energy sector as part of the implementation of the February 15 Federal Supreme Court ruling, which called for the handover of KRG assets. Kurdistan Oil and Gas to the Federal Government.

The KRG developed its own oil and gas sector independently of Baghdad, based on a 2007 law, and began exporting crude oil independently via Turkey in 2014, a law that Iraq’s Supreme Court called unconstitutional.

After nearly 75 days of talks, Baghdad and Erbil failed to reach an agreement on managing the Kurdish energy sector, so the Federal Oil Ministry and the Iraq National Oil Company will implement the court’s ruling, the Iraqi oil minister announced May 7.

Iraqi Ministry of Oil
Iraqi Oil Minister Ihsan Abdul-Jabbar Ismail – Photo from the Iraqi News Agency

Kurdistan Prime Minister Masrour Barzani responded in a press conference on May 12 that the region’s contracts were constitutional, which the Iraqi National Oil Company rejected, saying that only the Iraqi federal government could formulate oil and gas development policy and manage related activity.

Kurdistan oil production

The Kurdistan region’s oil production has been declining for years, hampering its ability to pay international oil companies operating in the region.

In April, the region produced about 474,000 barrels per day of crude oil, out of Iraq’s total production of 4.430 million barrels per day, according to federal data from the state oil marketing company SOMO.

This amount is less than a peak of about 600,000 barrels per day in late 2017, before the federal government regained many of the oil fields in the Kirkuk region, from which the Kurdistan Regional Government claimed to have expelled ISIS.

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