A recent court ruling in Baghdad may signal the end of a two-year embargo on oil exports from Iraq's Kurdistan region. The ruling reverses previous decisions that sought to invalidate oil contracts between foreign firms and the KRI government.
It is coming up to two years since oil exports from the semi-autonomous Kurdistan region of Iraq (KRI) through the Iraq -Turkey Pipeline (ITP) were halted by the Federal Government of Iraq (FGI). Billions of dollars in export revenues have been lost by both sides, in addition to the many foreign oil firms working in the region. However, according to local news sources, on 18 December the Karkh Court of Appeals in Baghdad reversed previous rulings favouring the FGI's Oil Ministry.
These had sought to permanently invalidate foreign firms' oil exploration and development contracts directly with the KRI government based in Erbil. So does this mean that the costly, long-running embargo on oil exports is about to end? The genesis of the current dispute does not begin in March 2023 when the ban was imposed by the FGI in Baghdad or in February 2022 when the Baghdad-based Federal Supreme Court of Iraq deemed such contracts unconstitutional -- it began instead on 23 April 2013. On that date, the regional parliament of the semi-autonomous Kurdistan region of Iraq (KRG) passed a bill that would allow it to independently export crude oil from fields located in the region if the FGI failed to pay the KRI its share of oil revenues and exploration costs. A corollary bill to create an oil exploration and production company separate from the FGI and a sovereign wealth fund to take in all energy revenue was approved at the same time by the KRG's cabinet under then-Prime Minister and now President Nechirvan Barzani. At that point, the KRI was producing around 350,000 barrels of oil per day (bpd) with the rest of Iraq's output standing at around 3.3 million bpd and planned to increase this to 1 million bpd by the end of 2015. In short, it was intended by the KRG in Erbil to give the KRI complete financial independence from the FGI in Baghdad as a precursor to total political independence shortly thereafter, as analysed in my latest book on the new global oil market order
KURDISTAN IRAQ OIL EXPORT EMBARGO COURT RULING
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