ERBIL, Kurdistan Region - An Iraqi court has reportedly rejected an appeal from the federal oil ministry seeking to invalidate several oil contracts between the Kurdistan Regional Government (KRG) and international oil companies (IOCs). “Rulings by the Karkh Court of Appeals in Baghdad, issued on Dec. 18, which appear to put an end to a legal campaign waged by the federal Oil Ministry against nine oil companies with upstream contracts in Kurdistan,” Iraq Oil Report, an outlet specialized on reporting on Iraq’s energy sector, said on Sunday, claiming that they have seen copies of the ruling, which are not available publicly. The article details that the Iraqi oil ministry first filed lawsuits in May 2022, aiming to annul the contracts on the grounds that they were unconstitutional, citing a February 2022 ruling from Iraq’s federal supreme court. The KRG had successfully appealed those decisions in August and September, with the appeals court ruling that the federal supreme court’s decision could not retroactively apply to contracts established prior to the ruling. The latest attempt by the oil ministry to challenge the earlier decisions was dismissed by the Karkh court on Wednesday, according to the report. When it began its independent oil sector, the KRG signed production-sharing contracts with international oil companies. Under this model, the oil companies cover the entire cost of production while the KRG receives the lion’s share of the profits from successful projects. Baghdad has repeatedly said that these contracts violate the constitution and must be amended to match the service contracts that the federal government prefers before exports can resume. Another dispute between Baghdad and Erbil was the oil production and transportation cost. Earlier in the month, the Iraqi government approved a proposal to amend articles from the federal budget to authorize compensation to companies operating in the Kurdistan Region for oil production and transportation costs, setting the rate at $16 per barrel. Iraq’s three-year federal budget bill, passed in June 2023, had set the rate for one barrel of oil at $6.90 and IOCs have requested three times that amount. Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been suspended since March 2023 after a ruling by a Paris-based arbitration court ruled in favor of Baghdad over Ankara, saying the latter had breached a 1973 pipeline agreement by allowing Erbil to export oil independently since 2014. Kurdistan Region Prime Minister Masrour Barzani said on Saturday that the halt has cost them $20 billion. Fuad Hussein, Iraq's foreign minister, told Rudaw in November that Kurdish oil exports could resume in weeks.
