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Iraq Bans Kurdish Firm From Operating Kirkuk Oil Fields

drilling rig

After Iraq’s federal forces recaptured the oil fields in Kirkuk in October, the Iraqi Parliament voted on Monday to ban Kurdish engineering company Kar Group from operating Kirkuk’s oil fields.

Baghdad—which never recognized the legitimacy of the Kurdistan region’s referendum at end-September—moved in October to take control over the oil-rich area around Kirkuk.

In mid-October, Iraqi government forces seized the oil fields around Kirkuk, which had been under Kurdish control since 2014. The military maneuver knocked some 350,000 bpd of crude oil production offline, and led to oil prices spiking on concerns of unstable supply from the region.

The Iraq-Kurdistan conflict was the first of a series of geopolitical events in the Middle East (the other being the Saudi purge) that pushed Brent oil prices above $60 a barrel toward the end of October.

Now Iraqi lawmakers say that Kar Group is refusing to collaborate with Iraqi state-held North Oil Company (NOC) and hand the Khurmala oil field over to federal government control, according to Reuters. The Kurds, on the other hand, claim that the Khurmala oil field is within the boundaries of the Kurdistan region.

The Iraqi Parliament also authorized today NOC to take over oil production and exports at the Khurmala oil field, which could raise Iraq’s production and exports.

Related: Europe Becomes Victim of Russia’s Newest Oil Strategy

The ban on Kar Group is the latest of restrictions that Baghdad has imposed on Kurdistan in retaliation to the September referendum. Iraq has also banned direct international flights to and from Kurdistan.

Iraq’s Parliament also asked the central bank to track cash deposits at foreign banks from sales of Kurdish oil.

According to an S&P Global Platts survey from Monday, Iraq—OPEC’s second-largest producer behind Saudi Arabia—pumped 4.41 million bpd in December, the highest level in three months, as it increased exports from the south to offset production and export losses in the north. Iraq’s contribution to the OPEC cuts is to keep production at 4.351 million bpd or below.

By Tsvetana Paraskova for Oilprice.com

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