The oil and gas law is an open crisis between Baghdad and Erbil

The oil and gas law is an open crisis between Baghdad and Erbil

10-15-2023

As each date approaches for an agreement between the central government in Baghdad and the Kurdistan Regional Government, the dispute is renewed over new details that reveal the absence of desire to reach a final settlement, as each party wants to control the oil and gas file, either under the title of the government’s right or the flexibility of the system of regions.

Baghdad – Iraqi parliamentary sources said that negotiations between Baghdad and Erbil on issuing a new oil and gas law failed again, which was reflected within the parliamentary Oil and Gas Committee, which acknowledged that it was unable to resolve the controversial issues between the two parties.

The ongoing reality since 2005 indicates that the crisis will remain an open wound between the central government and the regional government, because each party views oil and gas revenues from its own perspective.

Observers say that while the central government adopts a position that says that all revenues from natural resources in Iraq must be subject to its control, on sovereign grounds, the Kurdistan Regional Government adopts a position that says that the federal system gives the regional government the right to control those revenues, with the possibility of accepting the principle of supervision. Central.

Member of the Parliamentary Oil and Gas Committee, Zainab Al-Moussawi, said, “Legislation of the oil and gas law is proceeding slowly as a result of controversial points, the most important of which is the management of the Kurdistan region’s oil fields and the financial revenues generated from selling oil and exporting abroad.”

She added, “There is a second controversial point that indicates that the management of national wealth, including those in the Kurdistan region, is by the federal government,” and that “the management of federal financial revenues and the export of Kurdish oil abroad through the National Oil Company (SOMO) are also controversial points.” Which Erbil objects to.”

Although Al-Moussawi said, “The dialogues between Baghdad and Erbil are still continuing to overcome differences and approve the law that will draw the map of oil in Iraq again.”

However, observers’ expectations indicate that the path available for these dialogues is temporary settlements, related in part to facilitating the disbursement of employees’ salaries in the region, without resolving the fundamental issues related to sovereignty over oil revenues, the limits of central supervision over them, and whether the federal system grants the regional government It grants them independent rights to manage local wealth, just as it grants them independent rights to manage other local affairs.

There is a widespread belief in Baghdad that granting Erbil sovereign rights over oil will strengthen separatist tendencies and provide the Kurdistan Regional Government with resources disproportionate to the region’s share of the state’s general budget. While a number of governorates possess oil resources, resource revenues are distributed among all governorates, which should include the three governorates of the region.

Kurdish officials reject the accusation that controlling the region’s oil resources represents a prelude to renewed separatist calls, and they believe that the federal system, although it grants the central government some rights, does not grant it all rights, as is the case now.

The central government wants the draft Iraqi oil and gas law to regulate the oil and gas sector through one national company, with imports deposited in one account.

In February of last year, the Federal Court in Baghdad ordered the region to hand over the oil produced on its lands to Baghdad, and to cancel the contracts it signed with foreign companies. The matter reached the point where the judiciary in Baghdad invalidated contracts with many foreign companies, especially American and Canadian companies.

A temporary agreement signed between Baghdad and Erbil in early April stipulates that Kurdistan oil sales will be made through the Iraqi Oil Marketing Company “SOMO,” while revenues generated from the region’s fields will be deposited in a bank account with the Central Bank of Iraq or one of the banks approved by the Central Bank of Iraq.

The Kurds reject the accusation that controlling the region’s oil resources represents a prelude to renewed separatist calls.

The head of the Media and Information Department of the Kurdistan Regional Government, Jutiar Adel, says that the draft law “must reflect the principle of true partnership, and include mechanisms for the optimal use of Iraq’s natural resources, and the necessity of guaranteeing the rights of all parties fairly and preventing the demise of one party at the expense of another party.”

The aspect of the debate between the two parties revolves around a word contained in Article 112 of the Iraqi Constitution, which was issued in the year 2005. The article states: “The federal government shall manage the oil and gas extracted from the current fields with the governments of the producing regions and governorates, provided that it distributes its imports in a fair manner commensurate with the population distribution.” With a share allocated to the affected areas that were deprived by the previous regime.”

According to a decision issued by the Kurdistan Region Judicial Council on May 30, 2022, the paragraph concerns “current” fields, which makes the fields of the Kurdistan Region not included in it, because they appeared several years later and were exploited under a special law issued by the region’s parliament in the year 2007. This is while Observers wonder, “If new oil fields appear in other regions of Iraq, does this mean that they will not be covered by this article of the constitution?”

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