Future Uncertain for Baghdad-Erbil Oil Deal

Article 112 of the Iraqi Constitution grants the central government the right to jointly manage with provincial and regional governments the “present fields.” The term “present fields” is interpreted by Kurds as those that were in operation when the constitution was written in 2005. The vast majority of Iraqi Kurdistan’s oil fields were explored and developed after that date.

Even though the KRG has had a difficult time selling its oil on the international market due to threats of legal action by the Iraqi government and strong opposition from the United States, it has adamantly refused to let the Iraqi national oil marketing company, SOMO, control oil exports from the Kurdistan region proper, which constitutes the three provinces of Erbil, Sulaimaniyah and Dahuk, in addition to smaller areas of Ninevah, Diyala and Kirkuk provinces.

In light of such past opposition, it remains highly questionable whether and under what terms the KRG will agree to place all the oil it controls — which now includes Kirkuk and other contested territories — at the disposal of the Iraqi government, as Abdul-Mahdi’s statement envisioned.

Without a solid agreement over SOMO’s role in Kurdish oil exports, it will quite likely be difficult for the Iraqi government to maintain the current deal due to heavy pressure from non-Kurdish circles in Baghdad.

“I don’t believe the Kurdistan region will export its own oil through SOMO,” Jawdat, the Kurdish lawmaker, said.zx“““““

But Jawdat said another solution could be possible in the form of the KRG selling its oil and keeping the Iraqi government in the loop on its production and export activities. In that case, he said the KRG will still have to send the revenues to the federal government’s coffers in Baghdad to be redistributed nationally.

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