The Kurdistan Regional Government (KRG) announced $110 billion in deals with U.S. firms HKN Energy and WesternZagros on Tuesday, prompting immediate rejection from Baghdad’s oil ministry, which declared the agreements "null and void."
Prime Minister Masrour Barzani announced the deals in a speech in Washington, a day after they were flagged by an adviser on social media.
"The regional government is fully committed to developing the energy sector, especially as our reforms represent a significant step towards securing round-the-clock electricity supplies for all residents ...We also hope to contribute to providing electricity to other areas in Iraq," Barzani said, according to a statement released by the Kurdistan government.
The deals involve the development of the Miran and Topkhana-Kurdamir gas fields in the northern Iraqi city of Sulaimaniya.
"These contracts are null and void. Natural resources belong to all Iraqis, and any agreement to invest in them must be made through the federal government, not in defiance of the law and the constitution," Iraq's oil ministry said.
Control over oil and gas has long been a source of tension between Baghdad and Erbil.
In a ruling issued in 2022, Iraq's federal court deemed an oil and gas law regulating the oil industry in Iraqi Kurdistan unconstitutional and demanded that Kurdish authorities hand over their crude oil supplies.
The Kurdish region's Ministry of Natural Resources issued a statement in response to the Iraqi oil ministry asserting its right and authority to sign energy deals.
"These deals are based on contracts signed many years ago, which have also been upheld as legal and valid by Iraqi courts... The recent change has been in the operating companies, in accordance with the legal and contractual framework of the existing agreements," it said.
An oil ministry official said agreement signings in Washington were conducted without Baghdad's previous knowledge.
"Signing energy agreements without consulting with the central government will further complicate relations between Baghdad and Irbil and will impact efforts to resume the export of Kurdistan regional oil," said a senior oil ministry official, speaking on the condition of anonymity.
The exports were halted by Türkiye in March 2023 following an arbitration ruling by the International Chamber of Commerce (ICC). The ICC ordered Ankara to pay Baghdad damages of $1.5 billion over what it said were unauthorized exports by the KRG between 2014 and 2018.
Türkiye, on the other hand, said the body had recognized most of Ankara's demands.
In October 2023, Türkiye said the pipeline was ready for operations and that it was up to Iraq to resume flows. The federal and regional governments in Iraq have been negotiating ever since over the production and transport costs payable to the region and its commercial partners.
Flows go through a KRG pipeline to Fish-Khabur on the northern Iraqi border, where the oil enters Türkiye and is pumped to the port of Ceyhan.
A resumption is expected to ease economic pressure in the KRG, where the halt has led to salary delays for public sector workers and cuts to essential services.
Negotiations to resume Kurdish oil exports via the Iraq-Türkiye oil pipeline, which once handled about 0.5% of global oil supply, have stalled over payment terms and contract details.
Foreign energy companies have demanded clarification on repayment of debts accumulated between 2022 and 2023 and have and have sought contract guarantees, according to Iraqi and KRG officials.
