Signs of a breakthrough between Baghdad and Erbil to end the differences over the oil file

Signs of a breakthrough between Baghdad and Erbil to end the differences over the oil file

2-21-2023

BAGHDAD – The Iraqi federal government and the Kurdistan Regional Government agreed on Sunday to form a joint committee to draft a federal oil and gas law, in an indication of signs of a breakthrough between Baghdad and Erbil to turn the page on the most complex pending issues for years.

This came a few hours after Iraqi Prime Minister Muhammad Shia al-Sudani said in a press conference he held on the sidelines of his participation in the 59th Munich Security Conference, “We have come a long way in overcoming the obstacles between Baghdad and Erbil, and we will finish this year the legislation of the oil and gas law.”

On Sunday, a high-level delegation from the Kurdistan Regional Government arrived in the Iraqi capital, Baghdad, in order to complete negotiations on the legislation of the oil and gas law, which has been postponed for years due to political differences over it, in addition to discussing the proportion of the region within the 2023 budget.

A statement by the Media and Information Department in the regional government stated that “the delegation of the Kurdistan Regional Government met in Baghdad, on Sunday the nineteenth of February 2023, with the delegation of the federal government – ​​the Ministry of Oil, and it was decided during the meeting to form a joint committee to prepare and draft the federal oil and gas law.”

The oil and gas law is one of the most important reasons for the differences between Baghdad and Erbil, and over the course of previous governments and parliamentary sessions, the political blocs did not agree on a final version of this law.

The Kurdish political forces did not want to approve the oil and gas law, taking advantage of a constitutional clause that gives the region’s constitutions the exclusive powers of the government, which it enacted according to its own law.

However, after the decision of the Federal Court, the region needs a legal cover to conclude agreements with international companies that began to fear investing in oil and gas in the Kurdistan region, especially after the armed groups targeted the sites of the “Dana Gas” company in conjunction with the Federal Court’s decision on the illegality of the region’s law, and its call To subjugate the oil wealth to the federal government according to Articles 110 and 111 of the Constitution.

Political circles believe that the oil and gas law is one of the most prominent laws that would resolve the crisis between Baghdad and Erbil, especially after the recent moves that preceded and followed the formation of the Sudanese government and the exchange of visits between the two sides.

The leader of the Kurdistan Democratic Party, Wafaa Muhammad Karim, confirmed, in a press statement, that “the political parties, as well as the federal government and the regional government, insist on enacting the oil and gas law during the next stage in order to resolve the outstanding differences between Baghdad and Erbil.”

Karim added, “The oil and gas law will solve all the oil and financial problems between Baghdad and Erbil. This law will regulate the relationship between the two parties in accordance with the Iraqi constitution, and dialogues in this regard are continuing and will remain continuous and continuous during the coming days.”

However, a member of the Kurdistan Parliament, Jihad Hassan, confirmed in press statements that the meeting witnessed several disagreements between the two government delegations on several points, “represented in the failure to reach a specific formula regarding the delivery of financial revenues and oil revenues from Kurdistan, and whether it (oil) will be handed over to the Oil Marketing Company (SOMO). Or is it delivered as money?”

He added, “The other points of contention are the lack of agreement on the specific percentage of the budget, as the Kurdistan government requests 14 percent, while the political blocs insist on 12 percent for Kurdistan, which is not sufficient in sympathy with the obligations owed by the Kurdistan government.”

The oil and gas law in Iraq, which has been awaiting legislation in the current parliament since 2005, stipulates that the responsibility for managing the country’s oil fields must be entrusted to a national oil company, and it is supervised by a federal council specialized in this matter.

However, since 2003, Baghdad and Erbil, the capital of the Kurdistan region of Iraq, have disagreed on the issue of managing the region’s oil fields, as Baghdad says that the region does not authorize the real oil export sums, and does not hand those sums over to it, while Kurdistan says that exports from the oil fields in its territory must be subject to To manage them, whether in terms of granting licenses for new exploration, managing existing fields, controlling production and exporting to the destinations you choose, or contracting for purchase and development.

The law will be a radical solution to the dispute over oil wealth between Baghdad and Erbil, and even organize all energy files throughout Iraq.

Iraq, the second largest oil producer in the Organization of Petroleum Exporting Countries (OPEC), has huge reserves of black gold, which represents 90 percent of its revenues, but the Iraqi Oil Ministry published an analysis last May that said that the regional government had committed “legal and procedural irregularities” in Selling oil caused huge losses.

The Iraqi government relies heavily on the price of a barrel of oil and oil revenues in its budget, in a country facing economic difficulties and in need of several infrastructure projects after years of war.

The outstanding files between Baghdad and Erbil are among the most prominent problems faced by the successive Iraqi governments, and among the most important of those files that need dialogue and common understandings are the salaries of the employees of the Kurdistan region of Iraq, security coordination in the disputed areas, and agreement on a mechanism for exporting oil from the fields of the region.

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