Page 9 - MEOG Week 24 2022

MEOG POLICY & SECURITY MEOG

Iraq threatens Kurdistan

IOCs, ends KRG payments

IRAQ THE Iraqi Ministry of Oil (MoO) this week based in Erbil, and inferred it would be a subsid-
outlined the terms of its threat to blacklist IOCs iary of the recently reconstituted INOC.
operating in the semi-autonomous Kurdistan
region, while Baghdad has said its monthly pay- Finance
ments to Erbil will stop. Relations between Baghdad and Erbil have
IOCs developing oil and gas fields under shown signs of improvement, but last week,
direct contracts with the Kurdistan Regional Iraqi Finance Minister Ali Allawi said that the
Government (KRG) received a letter from Has- central government would put a halt to monthly
san Muhammad Hassan, director general of payments in lieu of the KRG’s share of a budget
Basra Oil Co. (BOC), a subsidiary of the Iraqi under a deal that was never formalised.
National Oil Co. (INOC), telling them to cease He said that while Baghdad has been main-
activities in the region and terminate their pro- taining monthly payments of IQD200bn
duction-sharing agreements (PSAs). According ($138mn) – the latest coming in May – these will
to documents seen by Iraq Oil Report, Hassan not continue.
said that these companies have been given 90 These comments are at odds with a statement
days to comply and must pledge not to work in made last week by Iraqi Prime Minister Mustafa
the Kurdistan region. Al-Kadhimi, who said that 90% of the outstand-
Perhaps unsurprisingly, none of the incum- ing issues between Baghdad and the KRG had
bent operators have put their heads above the been resolved.
parapet to comment, however, the share prices “The remaining 10% of the problems will be
of IOCs including DNO, Genel Energy and Gulf solved soon […] What is needed now is for the
Keystone Petroleum have fallen by 8-9% in the federal government and the KRG to sit together
last week or so. to build trust and goodwill and search for solu-
News of the ultimatum follows the February tions,” he said.
ruling by Iraq’s Supreme Court that the KRG Both officials’ comments came just days
should deliver the “entire production of oilfields before Shi’ite cleric Moqtada Al-Sadr, whose
in Kurdistan” to the state oil marketer Somo. It Sadrist Party won the most seats in October’s
added that all the KRG’s contracts with interna- election (73), requested a mass resignation. The
tional oil companies (IOCs) and foreign govern- move appears to be an attempt to force a break-
ments covering exploration, production, exports through after eight months of deadlock.
and sales were invalid and that details should be Despite emerging as the winner, Sadr has
provided to the MoO in Baghdad for auditing. been frustrated in his efforts to form a govern-
The latest figures from Somo show that Kurd- ment. In late March, he launched a new parlia-
ish oil output averaged 460,000 barrels per day mentary bloc as he sought to secure a coalition
during May. with groups unified by their desire to reduce
The region routinely exports around Iranian influence.
360,000-370,000 bpd of crude independently However, ballots intended to be held in Feb-
from Baghdad using a pipeline which links to ruary and then March could not proceed because
the Turkish section of the Kirkuk-Ceyhan pipe- MPs failed to turn up in sufficient numbers.
line via metering stations at the border town of Meanwhile, Ali Moussawi, a former Shi’ite
Fishkhabour. lawmaker and a political researcher at Baghdad
Independent oil sales have been a major issue University, was quoted by Reuters as saying:
for relations between Baghdad and Erbil and “Sadr reached to the point that he accepted the
have proved thorny enough an issue to prevent bitter reality that it’s nearly impossible to form
billions of dollars in budget share being trans- a government away from the Iranian-backed
ferred to the latter. groups.”
In March, the MoO sent a letter to the KRG The current caretaker government contin-
informing Erbil of its intention to set up a new ues to hold office, but its powers are limited and
state oil firm to manage the Kurdish energy sec- until a new government is formed, it is unlikely
tor, to which all oil and gas activities must be that there will be much progress towards a new
transferred. budget nor a breakthrough on the thorny issue
The ministry suggested that the new firm of Kurdish oil. For now, it seems the IOCs oper-
should be called Kurdistan Oil Co. (KOC) and ating there will seek to remain under the radar.™

Week 24 15•June•2022 www. NEWSBASE .com P9