(Of course the author is wrong in this opinion. Yes there is still a need. This is not me saying this, instead it is the constitution of the countless articles we have read over the years, especially more recent ones. The Oil and Gas Law referendum is REQUIRED by the Iraqi constitution and they can not just disregard it, if they want to. They must pass the law in parliament.)
Political conflicts are escalating in Iraq, casting a shadow over the two-decade-old oil and gas law, disrupting efforts to regulate the exploitation of oil wealth and its distribution between the region and the central government.
In this context, the member of the Patriotic Union of Kurdistan, Ghiath Al-Surji, explained today, Wednesday, the reasons for not legislating the oil and gas law, noting that the need to legislate such a law has disappeared, especially after the issuance of judicial decisions regarding the oil and exports file.
Since the first session of the Iraqi Council of Representatives in 2005, the draft oil and gas law has remained in the drawers, as disagreements prevent its approval in its final form. Despite the passage of more than two decades since the fall of the former Iraqi regime in 2003, the most important law concerning the restructuring of the Iraqi economy has not actually seen the light of day, and the concerned parties, whether the federal government, the Kurdistan Regional Government, or the oil-producing provinces, have not reached a final agreement.
Al-Surji said in a statement followed by “Al-Alam Al-Jadeed”, “The region was waiting for the legislation of the oil and gas law to resolve all the problems related to this wealth between Baghdad and Erbil, but today the situation is different after the issuance of a judicial decision by the Paris Court to stop the export of oil from Kurdistan to Türkiye.”
He added, “The international judicial decision, in addition to the Federal Court decision, stipulated that the oil would be owned by everyone, meaning that the authority over this wealth would be in the hands of the federal government in Baghdad.”
He explained that “the judicial decision two years ago obliged the region not to export oil to Turkey and made the authority over it under the supervision of Baghdad, so the issue of oil and gas and the legislation of the law related to it will be unnecessary, especially since the judicial decision made the oil revenues under the authority and supervision of Baghdad.”
This disruption raises fears of continued disputes that threaten the stability of the Iraqi economy and keep the oil wealth file in the circle of political tensions.
On November 18, the acting Minister of Natural Resources in the Kurdistan Regional Government, Kamal Mohammed, set the beginning of next year as the date for resuming oil exports from Kurdistan via the Turkish port of Ceyhan.
On November 15, MP Ali Al-Mashkoor, a member of the Parliamentary Oil and Gas Committee, attributed the delay in approving the Oil and Gas Law to points of contention behind which the Kurdistan Region stands.
On November 5, the Iraqi Council of Ministers approved a proposal to amend Article (12/Second/C) of the Triennial Budget Law No. (13 of 2023), which stipulates the delivery of oil from the Kurdistan Region of Iraq to the state-owned Oil Marketing Company (SOMO).
It is noteworthy that the Oil and Gas Law has undergone 11 amendments and has never reached Parliament.
(This statement is NOT true. I have an article telling us that the Oil and Gas law did its first reading in parliament and kicked back to the Al-Sadani’s cabinet for revisions. This is where it now lies awaiting agreements on those changes so they can resend back to parliament for a second reading.)
Iraq’s oil and gas law, which has been awaiting legislation since 2005, stipulates that responsibility for managing the country’s oil fields should be vested in a national oil company, overseen by a federal council specializing in this matter.
The Kurdistan Oil Law stipulates that the Ministry of Oil in the region or whoever it authorizes shall assume responsibility for organizing and supervising oil operations as well as all activities related to them, including marketing oil, as well as negotiating and concluding agreements and implementing all licenses, including oil contracts concluded by the regional government. The Iraqi government also has the right to participate in the management of fields discovered before 2005, but fields discovered after that are subject to the regional government.
On February 21, the Federal Supreme Court ruled that the federal government would be responsible for paying the salaries of Erbil government civil servants, with the amount paid at source in Baghdad deducted from the KRG’s share, and the KRG must submit monthly accounts detailing each salary paid. This is effectively a stricter reset of the original “budget payments for oil revenues” deal agreed between the KRG and the federal government in November 2014.
There are no government statistics on oil exported from the Kurdistan Region, but the Iraqi Oil Ministry published an analysis in May 2023, saying the regional government had committed “legal and procedural violations” in selling oil that caused significant losses.
The financial returns of the regional government constitute no more than 80 percent on average after deducting the production costs (the cost of producing a barrel of oil), while the financial returns of the first and second licensing rounds (held by Baghdad) constitute from 94.5 percent to 96.5 percent, and the cost of production is equivalent to (4) times the production costs in the licensing rounds of the federal Ministry of Oil. According to the Ministry of Oil
Iraq exports an average of 3.3 million barrels of crude oil per day, and black gold constitutes more than 90 percent of the Iraqi treasury’s resources.
In August 2023, the government formed a committee to draft the oil and gas law and present it to the government for voting and then passing it to the House of Representatives. The committee included the Minister of Oil, the Minister of Natural Resources in the Kurdistan Region, the Director General of SOMO, and senior staff in the Federal Ministry of Oil, in addition to the producing governorates such as Basra, Dhi Qar, Maysan, and Kirkuk.
For years, the points of contention between Baghdad and Erbil have not been resolved, but Al-Sudani recently revealed that an agreement had been reached with Erbil on these points, in addition to including in his ministerial program the resolution of these items, most notably the enactment of the Oil and Gas Law and the implementation of Article 140 regarding the disputed areas.
In mid-February 2022, the Federal Court issued a decision declaring the Kurdistan Region’s oil and gas law unconstitutional, and prevented it from exporting oil for its own benefit, with the export to be through Baghdad exclusively, based on a lawsuit filed by the federal Ministry of Oil.
