Iraqi top court ruling against Kurdistan Region oil, gas a 'symptom' of political crisis

ERBIL, Kurdistan Region - The ruling of the Iraqi top court deeming the Kurdistan Region’s oil and gas law as unconstitutional is a “symptom” of the current political instability in Iraq, a former energy official at the US Department of Energy told Rudaw on Monday, adding that this is being largely fueled by Iran.

The decision by Iraq’s Federal Court in February to strike down the legal basis of the Region’s oil and gas sector is “a symptom of the political division and chaos in Baghdad that is largely being driven by Iran,” Matthew Zais, HKN Energy’s Vice President of Government Affairs, told Rudaw’s Nwenar Fatih in an interview aired on Thursday. 

Zais has also previously served as the Principal Deputy Assistant Secretary of International Affairs for the US Department of Energy.

The US company HKN Energy operates in Duhok province and has had a $4 billion economic impact in the Region. It has a 75 percent local workforce that it aims to increase to 90 percent in the next five years. 

The former US official added that Iran was seeking to negatively impact the Kurdistan Region’s economy by targeting its main revenue-generating sector - the oil and gas sector – through the ruling of the Iraqi court. Iran enjoys close ties and influence over Iraqi politics but there is no proof of direct Iranian influence on the court’s decision. 

The ruling is “part of a larger judicial coup that Iran waged inside of Iraq,” Zais added, referring to previous rulings by the top court suspending Hoshyar Zebari, the Kurdistan Democratic Party’s (KDP) candidate for the Iraqi presidency, also in February. 

The effects of the court’s ruling are yet to bring about dramatic changes to the Kurdistan Region’s oil and gas sector. Last month, Iraq’s oil ministry claimed that three major US energy firms - Schlumberger, Baker Hughes, and Halliburton – have confirmed to the ministry that they will no longer tender for new projects in the Kurdistan Region.

When asked about the operations of HKN Energy in the Region, Zais reassured that despite the ruling being disruptive for oil companies, their operations “remain unaffected.”

Iraqi Oil Minister Ihsan Abdul Jabbar in June backed the implementation of the federal court’s decision on the Kurdistan Region’s oil and gas law, stating that Iraq should have a standard method of managing the country’s wealth. 

Jabbar in July told AP that his ministry intends to give international oil companies (IOCs) who have signed deals with the Kurdistan Regional Government (KRG) a cautionary note. 

“We will give them a soft message: ‘You are working in the smuggling of oil.’ If they are a respectful company they will listen to us,” the oil minister firmly stated, marking the strongest remarks yet by a senior government official since the issuing of the federal court decision. 

Zais stated that Iraq is currently engulfed in much more pressing issues than implementing the court ruling and taking further action against the Region’s oil and gas sector. 

Iraq is confronting a deepening political crisis, with calls from influential Shiite leader Muqtada al-Sadr for the dissolution of the parliament and holding of snap parliamentary elections, while his supporters continue sit-in protests in Baghdad’s fortified Green Zone. Elections were held in October but political parties are yet to form a new government. 

In order to achieve a political solution to the ongoing dispute between Erbil and Baghdad, Zais emphasized the need for more European and American engagement. 

The US State Department earlier in August urged Erbil and Baghdad to cooperate in dealing with disputes to safeguard investments. 

“Any dispute between Baghdad and Erbil has the potential to set back those interests and the interest that we do share with the people of Iraq and Kurdish people as well,” State Department spokesperson Ned Price told Rudaw’s Roj Eli Zalla.