Kurdistan responds to Baghdad: A political statement detached from facts
Earlier today, the Federal Ministry of Oil called on KRG to adhere to the Constitution, court rulings, and the Budget Law by delivering oil to federal authorities. It warned that ongoing non-compliance 'causes major financial losses to Iraq and damages Iraq's international reputation,' citing alleged 'smuggling' from the Region and vowing legal action.
In a detailed press release issued on Thursday, the KRG's Ministry of Natural Resources described the federal ministry's remarks as 'a political statement that is far removed from objective facts,' and held the federal government responsible for policies that have led to economic harm, halted exports, and undermined constitutional principles.
"You are the ones who blatantly and continuously violate the constitution and have stood as an obstacle to passing the Federal Oil and Gas Law for many years," the ministry declared, directly challenging Baghdad's narrative.
Oil Smuggling and Export Halt
The Kurdish Ministry rejected accusations of oil smuggling, calling them a deflection from corruption and smuggling operations occurring 'in other parts of Iraq,' and accusing federal authorities of 'mixing oil and serving the interests of others instead of serving Iraq and its people.'
Contrary to Baghdad's assertions, the KRG stated that it was not responsible for the halt in oil exports. Instead, the ministry pointed to a legal dispute initiated by the Federal Ministry of Oil itself against the Turkish Ministry of Energy, which resulted in the suspension of exports on March 25, 2023—causing what it described as losses 'exceeding $25B.'
Although a new agreement to resume exports was reached just days later on April 4, 2023, Kurdish officials say federal budgetary conditions made it financially unfeasible for companies to operate.
'The budget law stipulated a production cost of $6 per barrel, prompting most producing companies to cease production under this restriction,' the ministry said.
Despite this, the Region delivered over 11.8 million barrels of oil to a refinery working on behalf of the Ministry of Oil. However, 'not a single dinar was paid' for these quantities, prompting companies to halt further deliveries.
Disputed Legal and Constitutional Grounds
The Kurdish ministry emphasized that Iraq's ongoing oil disputes stem from the federal government's failure to 'respect' constitutional rights and to enact the long-delayed Federal Oil and Gas Law.
While noting that a joint committee was formed at the beginning of the current federal government to draft the law, the ministry cited "noticeable delay and procrastination" by Baghdad, suggesting an absence of political will to resolve the issue.
Referring to the Kurdistan Region's own Oil and Gas Law No. 22 of 2007, the ministry defended its contracts with international oil companies, claiming that the legality of these contracts has been implicitly affirmed by global investment.
'Had there been any real legal issue with these contracts, globally reputable companies would not have invested billions of dollars in the Region,' the statement noted.
Federalism and Cooperation
The ministry also reiterated the Region's commitment to constitutional federalism, emphasizing that it has consistently shown readiness to compromise and cooperate, including by agreeing to sell its oil through SOMO, deposit revenues in the state treasury, appoint a consulting firm, and open an escrow account.
'This renders your Ministry's claims about the futility of previous negotiations with the Region completely baseless,' the ministry stated, citing a 'flexibility and willingness to cooperate' that, it said, Baghdad has failed to reciprocate.
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