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Erbil-Baghdad Rivalry Colors All Oil and Gas Contracts, Iraqi MP Says

Oil installation

The Erbil-Baghdad rivalry will impact any future oil contract the Kurdistan Regional Government (KRG) signs with multinational fossil fuel companies, according to an Iraqi MP who spoke to Rudaw.

MP Arez Abdulla, who sits on Baghdad’s oil and gas committee, says the Iraqi government often pressures Kurdistan into making concessions that are unfavorable to Erbil.

“Due to the disputes between Erbil and Baghdad, the KRG sometimes goes along with conditions put forward by foreign oil firms, but if the issues are solved, the Kurdistan Region can much easier impose its conditions on the companies,” Abdulla said on Friday.

Baghdad’s policy towards oil companies that do not consult with the federal government before working with the KRG has long been direct blacklisting. In 2012, Iraq banned Chevron Corp. from pursuing new projects in the country after the U.S.-based firm signed a deal with Erbil, the capital of the semi-autonomous region of Kurdistan.

“If countries like Russia and the US have economic conditions in Kurdistan, they will indeed have a stronger presence in the Kurdistan Region and protect it,” the lawmaker said, referring to the KRG’s growing ambitions to become independent from Iraq.

Lately, Kurdistan seems to be stuck in a bit of legal trouble. A lawsuit by Dana Gas seeks $26.5 billion in reparations from the KRG for postponed oil and gas projects.

Related: OPEC’s Conundrum: Higher Prices Or Market Share

A November 2015 ruling by a U.K. arbitration court decided Dana and its partners the victors of a $2 billion settlement for delayed payments from Kurdistan. The delays have hurt corporate bottom lines and prevented timely repayment of sizeable energy sector loans, the consortium, named Pearl, argues.

The legal body also substantiated additional accusations of purposeful tampering with Pearl’s work on fields in Kurdistan, though damages have yet to be awarded.

By Zainab Calcuttawala for Oilprice.com

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  • Naomi on June 02 2017 said:
    President Trump is supplying tanks, artillery, helicopters, and other heavy weapons to the Kurds. Baghdad received the same supplies. Baghdad gave their supplies to ISIS and ran. Do not expect the Kurds to behave like Arabs. President Trump can depend upon Kurds to be loyal.

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