Matthew Zais, HKN Energy’s Vice President of Government Affairs, spoke to Rudaw's Mohammed Sheikh Fatih in March 2023. Photo: Rudaw
ERBIL, Kurdistan Region - A significant compromise is needed from both Baghdad and Erbil to reach an oil and gas deal, a former energy official at the US Energy Department told Rudaw earlier this month, expressing optimism that such a deal will attract greater investment into the country.
“There has to be some realistic expectations on the level of control that Iraq is going to be able to exert on the Kurdistan oil and gas sector, given that it has been established for 15 years with its own contract model, and I think that Erbil is going to have to compromise on some issues with Baghdad,” Matthew Zais, HKN Energy’s Vice President of Government Affairs, told Rudaw’s Mohammed Sheikh Fatih in an interview.
“There has to be significant compromises on both sides,” he added.
Zais has also previously served as the Principal Deputy Assistant Secretary of International Affairs for the US Department of Energy.
“I think we are cautiously optimistic that Baghdad and Erbil can reach an agreement, hopefully first on a budget, which will alleviate the pressures that some of us are experiencing in the IOCs [international oil companies] with a lack of budget, and obviously hopefully that there could be an oil and gas law between Baghdad and Erbil,” Zais said.
The US company HKN Energy operates in Duhok province’s Sarsang block, where it holds a 62 percent share, and boasts of a 75 percent local workforce. It is the largest US investor in the Kurdistan Region and produces 10 percent of the Region’s total oil.
A potential agreement between the Iraqi federal government and the Kurdistan Regional Government (KRG) “should attract more investment” from American companies because such companies seek certainty “to clear the clouds away from the current environment” in order to invest, according to Zais.
Erbil and Baghdad have seen tensions rise recently following an Iraqi top court ruling against the payment of the Kurdistan Region’s financial entitlements, claiming it violates the 2021 Iraqi Budget Law. The ruling followed another major blow to the Region in a similar verdict against its ability to administer its oil and gas, with the top court finding the Region’s gas law to be “unconstitutional.”
Both decisions have been vehemently condemned by Kurdish authorities, with Prime Minister Masrour Barzani labeling the court itself “unconstitutional.”
Zais called the rulings “politically motivated” and assured that they do not impact the operations of HKN energy but only seek to deter investment from Iraq.
Speaking of the implications that arise when Erbil and Baghdad’s relationship deteriorates, Zais warned against the Region’s oil and gas sector losing balance.
“The oil and gas sector in the Kurdistan Region is the engine of the economy. If it gets out of balance, it has to get back in balance, otherwise the pain of getting out of balance is too high for everyone,” he stressed.
Kurdish government delegations have traveled to Baghdad on several occasions to reach a common ground with the Iraqi government, however none of the visit shave had a solid outcome.
“There has to be some realistic expectations on the level of control that Iraq is going to be able to exert on the Kurdistan oil and gas sector, given that it has been established for 15 years with its own contract model, and I think that Erbil is going to have to compromise on some issues with Baghdad,” Matthew Zais, HKN Energy’s Vice President of Government Affairs, told Rudaw’s Mohammed Sheikh Fatih in an interview.
“There has to be significant compromises on both sides,” he added.
Zais has also previously served as the Principal Deputy Assistant Secretary of International Affairs for the US Department of Energy.
“I think we are cautiously optimistic that Baghdad and Erbil can reach an agreement, hopefully first on a budget, which will alleviate the pressures that some of us are experiencing in the IOCs [international oil companies] with a lack of budget, and obviously hopefully that there could be an oil and gas law between Baghdad and Erbil,” Zais said.
The US company HKN Energy operates in Duhok province’s Sarsang block, where it holds a 62 percent share, and boasts of a 75 percent local workforce. It is the largest US investor in the Kurdistan Region and produces 10 percent of the Region’s total oil.
A potential agreement between the Iraqi federal government and the Kurdistan Regional Government (KRG) “should attract more investment” from American companies because such companies seek certainty “to clear the clouds away from the current environment” in order to invest, according to Zais.
Erbil and Baghdad have seen tensions rise recently following an Iraqi top court ruling against the payment of the Kurdistan Region’s financial entitlements, claiming it violates the 2021 Iraqi Budget Law. The ruling followed another major blow to the Region in a similar verdict against its ability to administer its oil and gas, with the top court finding the Region’s gas law to be “unconstitutional.”
Both decisions have been vehemently condemned by Kurdish authorities, with Prime Minister Masrour Barzani labeling the court itself “unconstitutional.”
Zais called the rulings “politically motivated” and assured that they do not impact the operations of HKN energy but only seek to deter investment from Iraq.
Speaking of the implications that arise when Erbil and Baghdad’s relationship deteriorates, Zais warned against the Region’s oil and gas sector losing balance.
“The oil and gas sector in the Kurdistan Region is the engine of the economy. If it gets out of balance, it has to get back in balance, otherwise the pain of getting out of balance is too high for everyone,” he stressed.
Kurdish government delegations have traveled to Baghdad on several occasions to reach a common ground with the Iraqi government, however none of the visit shave had a solid outcome.
Comments
Rudaw moderates all comments submitted on our website. We welcome comments which are relevant to the article and encourage further discussion about the issues that matter to you. We also welcome constructive criticism about Rudaw.
To be approved for publication, however, your comments must meet our community guidelines.
We will not tolerate the following: profanity, threats, personal attacks, vulgarity, abuse (such as sexism, racism, homophobia or xenophobia), or commercial or personal promotion.
Comments that do not meet our guidelines will be rejected. Comments are not edited – they are either approved or rejected.
Post a comment