Baghdad tells oil producers to share contracts before meeting
ERBIL, Kurdistan Region - The Iraqi government has informed international oil companies (IOCs) operating in the Kurdistan Region that they must disclose their contracts with Erbil in order to attend Sunday’s much-anticipated meeting in Baghdad about resuming Kurdish oil exports, a source told Rudaw on Friday. The ultimatum could put the talks in jeopardy.
Iraq’s ministry of oil “has made it a precondition that IOCs must provide a copy of our PSCs [production sharing contracts] in order for us to attend Sunday's meeting in Baghdad. This is illogical because the MOO [ministry of oil] filed cases against the very same contracts they are now requesting,” a senior official from one of the oil companies working in the Kurdistan Region told Rudaw late Friday.
“There is legal jeopardy for us to share our contract with existing court ruling against the same contracts in Baghdad,” added the source, who spoke on the condition of anonymity due to the sensitivity of the subject.
“They must withdraw the cases or give us legal guarantees and then we can share. Right now they have constructed a legal jeopardy for all the IOCs,” the source said.
The goal of the meeting on Sunday between the Iraqi and Kurdish governments and the oil producers was to resolve all obstacles that have prevented resuming exports of Kurdistan Region’s oil since they were halted by a court order in March last year. A Paris-based arbitration court ruled in favor of Baghdad that Ankara had breached a 1973 pipeline agreement by allowing Erbil to begin independent oil exports in 2014.
Despite numerous meetings between Erbil, Baghdad and Ankara, the oil exports have yet to resume. Iraq’s oil ministry has blamed the IOCs for Erbil and Baghdad’s failure to reach an agreement.
Kamal Mohammed, acting minister of Kurdistan Regional Government’s (KRG) natural resources ministry, said on Thursday that his ministry and the IOCs are meeting with the federal oil ministry on Sunday.
“Delegations from the natural resources ministry and the oil companies will visit Baghdad. We expect the Region’s oil exports to be resumed soon,” he said.
The federal oil ministry said late last month that it had invited the KRG’s natural resources ministry and the IOCs for a meeting to be held “as soon as possible for the purpose of discussing the issue and reaching an agreement to accelerate the restart of production and resume the export of oil through the Turkish Ceyhan port and according to the quantities specified in the budget law.”
In March, the ministry said that in accordance with the federal budget, the average cost for producing one barrel of oil is $6.90, while the IOCs operating in the Kurdistan Region are asking for three times that amount as well as repayment of billions of dollars of debts that are “unknown to the federal government.”
The oil companies said in March that the KRG owed them over $1 billion for September 2022 to March 2023. The piled up debts mainly come as many of the contracts with the IOCs signed in the early stages of the KRG’s independent oil sales were signed with prepayment schemes.
Mohammed said on Thursday that the oil companies operating in the Kurdistan Region “have invested large amounts of money in the Region’s oil fields and Baghdad should take this into consideration.”
“The main obstacle before the resumption of Kurdistan Region’s oil is that the Iraqi oil ministry says the production cost is too much. The reason behind that is that the companies invested in the oil sector. However, Iraq spends trillions of dinar annually in the oil sector. Therefore, the management of the oil sector in Iraq and the Kurdistan Region are different: the sector is general in Iraq while it is private in the Region,” he explained.
Rudaw English reached out to Myles Caggins, spokesperson for the Association of the Petroleum Industry of Kurdistan (APIKUR), an association of oil companies working in the Kurdistan Region, for comment but he was not immediately available.
Omar Moradi contributed to this article.
Iraq’s ministry of oil “has made it a precondition that IOCs must provide a copy of our PSCs [production sharing contracts] in order for us to attend Sunday's meeting in Baghdad. This is illogical because the MOO [ministry of oil] filed cases against the very same contracts they are now requesting,” a senior official from one of the oil companies working in the Kurdistan Region told Rudaw late Friday.
“There is legal jeopardy for us to share our contract with existing court ruling against the same contracts in Baghdad,” added the source, who spoke on the condition of anonymity due to the sensitivity of the subject.
“They must withdraw the cases or give us legal guarantees and then we can share. Right now they have constructed a legal jeopardy for all the IOCs,” the source said.
The goal of the meeting on Sunday between the Iraqi and Kurdish governments and the oil producers was to resolve all obstacles that have prevented resuming exports of Kurdistan Region’s oil since they were halted by a court order in March last year. A Paris-based arbitration court ruled in favor of Baghdad that Ankara had breached a 1973 pipeline agreement by allowing Erbil to begin independent oil exports in 2014.
Despite numerous meetings between Erbil, Baghdad and Ankara, the oil exports have yet to resume. Iraq’s oil ministry has blamed the IOCs for Erbil and Baghdad’s failure to reach an agreement.
Kamal Mohammed, acting minister of Kurdistan Regional Government’s (KRG) natural resources ministry, said on Thursday that his ministry and the IOCs are meeting with the federal oil ministry on Sunday.
“Delegations from the natural resources ministry and the oil companies will visit Baghdad. We expect the Region’s oil exports to be resumed soon,” he said.
The federal oil ministry said late last month that it had invited the KRG’s natural resources ministry and the IOCs for a meeting to be held “as soon as possible for the purpose of discussing the issue and reaching an agreement to accelerate the restart of production and resume the export of oil through the Turkish Ceyhan port and according to the quantities specified in the budget law.”
In March, the ministry said that in accordance with the federal budget, the average cost for producing one barrel of oil is $6.90, while the IOCs operating in the Kurdistan Region are asking for three times that amount as well as repayment of billions of dollars of debts that are “unknown to the federal government.”
The oil companies said in March that the KRG owed them over $1 billion for September 2022 to March 2023. The piled up debts mainly come as many of the contracts with the IOCs signed in the early stages of the KRG’s independent oil sales were signed with prepayment schemes.
Mohammed said on Thursday that the oil companies operating in the Kurdistan Region “have invested large amounts of money in the Region’s oil fields and Baghdad should take this into consideration.”
“The main obstacle before the resumption of Kurdistan Region’s oil is that the Iraqi oil ministry says the production cost is too much. The reason behind that is that the companies invested in the oil sector. However, Iraq spends trillions of dinar annually in the oil sector. Therefore, the management of the oil sector in Iraq and the Kurdistan Region are different: the sector is general in Iraq while it is private in the Region,” he explained.
Rudaw English reached out to Myles Caggins, spokesperson for the Association of the Petroleum Industry of Kurdistan (APIKUR), an association of oil companies working in the Kurdistan Region, for comment but he was not immediately available.
Omar Moradi contributed to this article.