Iraq bans Erbil-based Kar Group from operating Kirkuk oil fields

ERBIL, Kurdistan Region – The Iraqi parliament has banned Erbil-based oil and gas Kar Group from operating oil fields in Kirkuk, a move slammed by KRG Prime Minister Nechirvan Barzani.

With a majority vote on Monday, parliament passed the motion banning Kar Group and assigned state-owned North Oil Company to take over oil production in the province and export it through the Iraqi marketing company (SOMO).

The decision is binding on the Iraqi oil ministry.

Kar Group had failed to reach an agreement with Iraqi authorities over the operation of the oil fields that were under Kurdish control following the rise of ISIS in 2014 until mid-October when the disputed or Kurdistani areas came under Baghdad’s control.

The Kurdish company withdrew its staff and locked their facilities in the oilfields when Iraqi forces, supported by Iranian-backed Hashd al-Shaabi paramilitaries, drove the Peshmerga out of the area in response to Kurdistan’s independence vote.

The parliament also mandated an investigation into exports from the formerly KRG-controlled oil fields and bank accounts that received revenues from oil sales. The legislature tasked various parliamentary committees, including energy and finances, with the inquiry.

Barzani told reporters on Monday that it was not necessary for the Iraqi parliament to target a private company.

Kar was not immediately available for comment.

KRG revenues have been slashed by about half since the loss of Kirkuk, further worsening the Region’s financial crisis caused by Iraqi budget cuts since early 2014, low oil prices, and the war against ISIS.

Erbil and Baghdad are yet to enter talks over issues like oil exports and the KRG’s budget share that could help the Region to recover from its financial crisis.

Iraq’s Oil Minister Jabbar al-Luaibi said over the weekend that they will start to export Kirkuk’s oil via truck to Iran before the end of January.

His Iranian counterpart, Bijan Namdar Zangeneh, told Rudaw last year that the two sides may construct a pipeline from Kirkuk to Iran’s western province of Kermanshah in the future.

Iraq may export as much as 60,000 bpd to Iran, both countries have stated.