The Kurdistan Regional Government responds to accusations by the Iraqi Ministry of Oil.
The Ministry of Natural Resources in the Kurdistan Region considered, on Thursday, the federal Ministry of Oil’s accusations against the region of oil smuggling as “a blatant attempt to divert attention from widespread smuggling and corruption in other parts of Iraq,” describing the Iraqi Ministry of Finance’s suspension of funding for salaries of public sector employees and workers in the region as a “blatant violation.”
In a lengthy statement, the Ministry of Natural Resources responded to these accusations by saying, “The federal Ministry of Oil issued a political statement that is far removed from objective facts, and through it insists on holding the Kurdistan Region responsible for accumulated failures that are, essentially, the result of (central) policies that did not take into account the foundations of true partnership upon which federal Iraq was built.”
The response statement addressed the Ministry of Oil, saying, “You are the ones who flagrantly and continuously violate the constitution, and have been a stumbling block to the passage of the federal oil and gas law for many years, a law that represents the cornerstone for resolving all oil-related issues. Instead, you persist in clinging to the system of legislation of the former regime, which are outdated, centralized Ba’athist laws, especially the 1976 law, which clearly and explicitly contradicts the principles of the federal system and the articles of the current constitution.”
The Ministry of Resources continued its response, saying, “You did not stop there. You have also cut off the salaries and livelihoods of the region’s citizens, in a blatant violation of their most basic human rights. You are practicing a systematic policy of starvation against them in an effort to implement your discriminatory, unconstitutional plans. This is one of your most egregious violations.”
The statement described the accusations of oil smuggling from the region as “a blatant attempt to divert attention from the widespread smuggling and corruption in other parts of Iraq,” adding, “You are the ones who smuggle oil from the south and commit all forms of corruption in full view of everyone, as attested to by local and international reports that expose the extent of waste and corruption. You are the ones who mix oil and serve the interests of others instead of serving Iraq and its people, with unfortunate policies that have damaged the reputation of Iraqi oil globally.”
The Ministry of Natural Resources noted in its statement that “the Kurdistan Region has fulfilled all its obligations, despite the other party’s failure to fulfill its constitutional responsibilities and duties.”
The statement addressed the Oil Ministry, saying, “Blaming the region for OPEC’s surplus is your fault, because you are selling other people’s oil in the name of Iraqi oil. The region’s constitutional right to produce is double what it is now, but the region, out of concern for the country’s public interest, is not even producing half of this amount due.” It added, “We have delivered to you more than 11 million barrels of oil, and you have not sent a single dinar in return to the Kurdistan Region, in clear violation of agreements and financial obligations.”
The statement continued, “As for what was stated in your last statement, we clarify the following facts in an unambiguous manner:
1- The regional government is not the party responsible for the halt in oil exports. Rather, this came as a result of the lawsuit filed by the Federal Ministry of Oil against the Turkish Ministry of Energy, which resulted in the halt in exports on March 25, 2023, costing the federal government, the region, and companies losses of more than $25 billion.
2- Within a few days, specifically on April 4, 2023, an agreement was reached with the Ministry of Oil to resume the export process. However, the budget law stipulated a specific amount for the cost of production (which is six dollars per barrel), which prompted most producing companies to refrain from production under this specification.
3- Based on the request of the Ministry of Oil, quantities of the region’s oil were delivered to one of the refineries working for the Ministry of Oil, for a period exceeding five months. The total amount delivered amounted to (11,826,218) barrels. Despite this commitment on the part of the region, not a single dinar was paid for this quantity, and as a result, the producing companies refrained from delivering their production to the Ministry of Oil.
4- At the outset of the formation of the current federal government, a joint committee was formed to prepare a draft federal oil and gas law, and several meetings were held for this purpose. However, these efforts have not yet yielded any results, and there is a clear slowness and delay on the part of the federal government in following up on this extremely important issue, which represents the key to a real solution to the outstanding disputes between the two governments.
5- Since the system of government in Iraq is a federal system, and it is the constitutional right of the region to have its own legislation that regulates its affairs, the Ministry of Natural Resources in the Kurdistan Region concluded its contracts with international oil companies based on Oil and Gas Law No. 22 of 2007. If there was a real legal problem in these contracts, then international companies with a prestigious reputation would not have invested billions of dollars in the region without legal basis.
6- Iraq has a constitution. If its provisions were implemented in letter and spirit, far from selectivity and narrow interests in application and interpretation, the general situation in the country, and the oil file in particular, would not have reached this level of complexity and crisis.
7- The Kurdistan Regional Government has fully fulfilled its obligations regarding efforts to resume exports, as it agreed to: sell oil produced in the region through the State Oil Marketing Organization (SOMO), deposit all sales revenues into the state treasury, appoint a consulting company, and open an escrow account in the name of the companies.
8- The oil companies operating in the region are required to do the following: (Adhere to the contracts in terms of the economic model, the commercial terms in the contract, and not to touch the contracts as they have taken their legal course in federal and international courts).
The Ministry of Resources concluded its statement by saying, “The (temporary) agreement to resume oil exports, and the subsequent meetings and gatherings, represent conclusive evidence of the Kurdistan Region’s flexibility and willingness to cooperate, rendering your ministry’s claims that previous talks with the region were futile and baseless.”
Earlier Thursday morning, the Iraqi Ministry of Oil issued a statement stressing the “necessity for the Kurdistan Regional Government to abide by the constitution, Federal Court decisions, and applicable laws, including the general budget law, which obligates the regional government to hand over oil produced from its fields to the federal Ministry of Oil for export and to replenish the public treasury with its revenues.” The statement added that “the ministry had previously sent official letters and delegations to the regional government on a persistent and continuous basis to achieve this, but to no avail.”
She stressed the “need to immediately commence oil deliveries, in accordance with the text of the amended budget law that was enacted in agreement with the regional government, and the need for the regional government not to shirk its obligations.”
According to a statement from the Ministry of Oil, “The continued failure to deliver oil is causing major financial losses to Iraq and is harming Iraq’s international reputation and its oil commitments. The KRG’s failure to abide by the constitution and the law has led to a loss to Iraqi oil exports and the public treasury twice: the first is the failure to receive and export the oil produced in the region and benefit from its revenues, and the second loss is the federal Ministry of Oil being forced to reduce production from the remaining oil fields outside the region in compliance with Iraq’s OPEC quota, which counts production from fields located in the region as part of Iraq’s quota, regardless of the violations indicated.”
The Iraqi Oil Ministry accused Kurdistan of continuing to “smuggle oil from the region outside Iraq,” holding the “regional government fully legally responsible for this,” and that it “reserves the right to continue taking all legal measures in this regard.”
Shafaq.com