Kurdistan Defies Iraq's Federal Court Ruling On Oil Resources

Kurdistan and the federal government of Iraq continue their feud over who will oversee oil production in the semi-autonomous Iraqi region, with Kurdistan rejecting this weekend a ruling from Iraq's federal supreme court to hand over control over oil production.  

In February, the Supreme Court of the Federal Government of Iraq ruled that sales of oil and gas by Kurdistan, independent of the central government in Baghdad, are unconstitutional and that the Kurdistan Regional Government (KRG) must hand over all oil production to the Federal Government of Iraq. The court also ruled that the Ministry of Oil has the right to: "Follow up on the invalidity of oil contracts concluded by the Kurdistan Regional Government with foreign parties, countries and companies regarding oil exploration, extraction, export and sale."

Kurdistan's Prime Minister Masrour Barzani assured the international oil companies in March that "we remain committed to the contracts that have been signed with my government. The contracts are in line with our oil and gas law and the Iraqi Constitution and they are a bedrock of our shared future."

In a statement this weekend carried by Reuters, KRG said that its oil law is not unconstitutional as the federal Iraqi Supreme Court ruled earlier this year. 

"The actions of the Kurdistan Regional Government (KRG) in relation to oil and gas operations are in accordance with the Iraqi constitution of 2005. The provisions of the oil and gas law issued by the parliament of the Kurdistan region in 2007 do not violate those of the Iraqi Constitution," Kurdistan's judicial council said.

This week, Iraq and Kurdistan were set to resume talks on the oil law dispute, Middle East business intelligence MEED reported.

The oil dispute comes just when Iraq—one of the few OPEC+ members believed to have some spare capacity—is set to boost its oil production as of July.

Iraq, OPEC's second-largest producer, said last week that following the OPEC+ meeting, Iraqi oil production will reach 4.580 million barrels per day (bpd) in July, which is the country's target output for next month.

"Production increase will be at a rate of 70,000 bpd," oil ministry spokesman Aasem Jehad said on Friday.

By Tsvetana Paraskova for Oilprice.com

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