Federal Court again postpones ruling on KRG oil exports
ERBIL, Kurdistan Region – Iraq’s Supreme Federal Court has again postponed a ruling on the Kurdistan Regional Government (KRG)’s independent oil exports, citing a lack of central government legislation on the regulation of trade and revenues.
The court has postponed the ruling until August 14, 2018.
In a session on Wednesday, June 27, the court reviewed a lawsuit brought by Iraq’s Ministry of Oil against the KRG’s Ministry of Natural Resources to “implement and apply what is in the rulings of the constitution and relevant law,” to the KRG to hand over its oil to the federal government.
The representative for the Iraqi minister of oil accuses the KRG of exporting crude oil without the assent of the federal government and failing to hand over the oil it produces.
When the KRG announced in 2014 it would sell oil independently, the then-Iraqi administration of Nouri al-Maliki decided to cut the central government budget for the Kurdistan Region.
Under Iraq’s controversial 2018 budged bill, the Kurdistan Region is required to sell its oil through the state oil marketing company SOMO.
The Supreme Court has ruled the oil export question is a constitutional dispute between the federal government and the regional government.
The court had previously decided to involve the Iraqi Prime Minister and the Iraqi Minister of Finance (both positions held by Haider al-Abadi) and KRG Prime Minister Nechirvan Barzani as third parties to examine the constitutional case.
The court received an answer from Abadi laying out central government’s constitutional claims to the oil. It did not receive an answer from the KRG prime minister, however.
“Following examinations of the response, it [the court] found that it didn’t focus on the necessary points to conclude the lawsuit because the plaintiff backs the lawsuit with referencing the Article 111 and 112 of the constitution,” Ayas al-Samouk, the spokesperson for the federal court, said in a statement.
“Oil and gas are owned by all the people of Iraq in all the regions and governorates,” reads Article 111 of the Iraqi constitution.
Section one of Article 112 meanwhile stipulates the management of oil and gas extracted from “present fields” with the producing governorates and regional governments, “provided that it distributes its revenues in a fair manner,” allotting some to the damaged places in the country during the former regime to ensure balanced development across the country, “and this shall be regulated by a law.”
“The federal government, with the producing regional and governorate governments, shall together formulate the necessary strategic policies to develop the oil and gas wealth in a way that achieves the highest benefit to the Iraqi people using the most advanced techniques of the market principles and encouraging investment,” reads section 2 of Article 112.
“The Federal Court found that the Article 111 of the constitution provided the general rule for the oil and gas resources, and the Article 112 stipulates how the ruling of Article 111 is implemented, which is to be based on a law that will be passed by the Council of Representatives, and the relevant law is yet to be passed,” Samouk said.
“Based on this, the Supreme Federal Court asked the parties of the lawsuit and third parties explicating that to be able to settle the dispute between the Ministry of Oil and the Ministry of Natural Resources in the Region,” Samouk added.
Abadi has repeatedly demanded the oil exported by the Kurdistan Region must be handed over. Currently the Kurdistan Region gets half of its revenue from oil sales, and the rest from a monthly fund of more than $200 million and domestic revenues.
While the constitution is vague even on existing oil fields, it does not address the issue of newly discovered fields in the Kurdistan Region.
The court has postponed the ruling until August 14, 2018.
In a session on Wednesday, June 27, the court reviewed a lawsuit brought by Iraq’s Ministry of Oil against the KRG’s Ministry of Natural Resources to “implement and apply what is in the rulings of the constitution and relevant law,” to the KRG to hand over its oil to the federal government.
The representative for the Iraqi minister of oil accuses the KRG of exporting crude oil without the assent of the federal government and failing to hand over the oil it produces.
When the KRG announced in 2014 it would sell oil independently, the then-Iraqi administration of Nouri al-Maliki decided to cut the central government budget for the Kurdistan Region.
Under Iraq’s controversial 2018 budged bill, the Kurdistan Region is required to sell its oil through the state oil marketing company SOMO.
The Supreme Court has ruled the oil export question is a constitutional dispute between the federal government and the regional government.
The court had previously decided to involve the Iraqi Prime Minister and the Iraqi Minister of Finance (both positions held by Haider al-Abadi) and KRG Prime Minister Nechirvan Barzani as third parties to examine the constitutional case.
The court received an answer from Abadi laying out central government’s constitutional claims to the oil. It did not receive an answer from the KRG prime minister, however.
“Following examinations of the response, it [the court] found that it didn’t focus on the necessary points to conclude the lawsuit because the plaintiff backs the lawsuit with referencing the Article 111 and 112 of the constitution,” Ayas al-Samouk, the spokesperson for the federal court, said in a statement.
“Oil and gas are owned by all the people of Iraq in all the regions and governorates,” reads Article 111 of the Iraqi constitution.
Section one of Article 112 meanwhile stipulates the management of oil and gas extracted from “present fields” with the producing governorates and regional governments, “provided that it distributes its revenues in a fair manner,” allotting some to the damaged places in the country during the former regime to ensure balanced development across the country, “and this shall be regulated by a law.”
“The federal government, with the producing regional and governorate governments, shall together formulate the necessary strategic policies to develop the oil and gas wealth in a way that achieves the highest benefit to the Iraqi people using the most advanced techniques of the market principles and encouraging investment,” reads section 2 of Article 112.
“The Federal Court found that the Article 111 of the constitution provided the general rule for the oil and gas resources, and the Article 112 stipulates how the ruling of Article 111 is implemented, which is to be based on a law that will be passed by the Council of Representatives, and the relevant law is yet to be passed,” Samouk said.
The Supreme Court wants to first investigate the terms of Article 111, including oil and gas extraction, selling, and allotment of revenues, and whether there is a law other than Article 112, or whether there is an agreement between the two governments or whether there are instructions.
“Based on this, the Supreme Federal Court asked the parties of the lawsuit and third parties explicating that to be able to settle the dispute between the Ministry of Oil and the Ministry of Natural Resources in the Region,” Samouk added.
Abadi has repeatedly demanded the oil exported by the Kurdistan Region must be handed over. Currently the Kurdistan Region gets half of its revenue from oil sales, and the rest from a monthly fund of more than $200 million and domestic revenues.
While the constitution is vague even on existing oil fields, it does not address the issue of newly discovered fields in the Kurdistan Region.