The Battle for Iraqi Oil: Can There Ever be a Winner?

Meanwhile the policy that Iraq’s central government in Baghdad is pursuing, with regard to the Kurdish region, is not particularly realistic. It’s outdated and it is hard to understand why Baghdad hasn’t yet worked out that the Kurds will not let them dictate Kurdish oil policy or control Kurdish oil revenue.

Comments made by Abdul Mahdi al-Ameedi, head of the federal Ministry of Oil’s contracts and licensing department, in the online industry portal, the Iraqi Oil Forum, indicate Baghdad’s current opinions on the matter.

Asked if production sharing contracts, or PSCs as they are also known, were problematic, he replied that: “the state considers that production-sharing contracts are illegal and unconstitutional since the Iraqi constitution stipulates that oil and gas in Iraq is the property of the Iraqi people. Since a PSC gives foreign companies the right to a portion of the production under the form of profit oil, they are considered in contravention [of] the current constitution.”

Judging by al-Ameedi’s comments, Baghdad seems to be doing what it can to make PSCs that Iraqi Kurdistan signed, look illegitimate. Not because they think PSCs are a bad idea or because they are less value for money for Iraq. Rather, they are bringing the Iraqi Constitution into it as a way of putting political pressure on Iraqi Kurdistan, to try and prevent the Kurds from moving any closer to making disputed territories like Kirkuk part of their own semi-autonomous region and to try and reduce the percentage of the Iraqi federal budget that the Kurdish region currently receives.

Baghdad has realised that trying to take charge of the oil in some of the disputed territories – those areas that the Kurdish say belong to Iraqi Kurdistan but which Baghdad consider part of Iraq proper – is also beyond its reach.

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