By John Lee.
The Kurdistan Regional Government (KRG) and Iraq's federal government have entered into a new dispute over the legitimacy of two major energy agreements signed with American companies.
On 19th May, Kurdistan's Prime Minister Masrour Barzani oversaw the signing of two agreements at the U.S. Chamber of Commerce in Washington, D.C., which the KRG claims represent "tens of billions of US dollars" in value. The deals were concluded between the KRG's Ministry of Natural Resources and American energy firms HKN Energy and WesternZagros.
HKN Energy, in partnership with ONEX Group, announced the formation of a joint venture called Miran Energy to develop the Miran gas field. According to their statement, the field could hold an estimated 8 trillion standard cubic feet of recoverable natural gas and potentially generate over $40 billion in long-term value.
In a separate agreement, WesternZagros secured rights to the Topkhana block, which, combined with their existing Kurdamir block, reportedly holds a resource potential of up to 5 trillion standard cubic feet of natural gas and 900 million barrels of crude oil. WesternZagros estimates the phased development could generate approximately $70 billion in revenue over the project's lifetime.
The agreements quickly drew condemnation from Baghdad. In a statement released on 20th May, Iraq's Federal Ministry of Oil rejected the KRG's actions, describing them as violations of decisions issued by the Federal Court of Cassation (FCC). The ministry cited a specific ruling in case number 59/Federal 2012 (and its consolidated case 110/Federal 2019), which it claims renders contracts concluded after the court's decision "illegitimate."
"Oil wealth is considered the property of all Iraqi people, and any measures for its investment must be conducted through the federal government," the ministry stated, declaring the contracts "null" based on the Iraqi Constitution and Federal Court decisions.
The KRG, however, defended the agreements, stating they are "based on existing contracts with new US investment and new operating companies." In its response issued on 20th May, the KRG's Ministry of Natural Resources claimed that the contracts in question were "signed many years ago" and have been "upheld as legal and valid by Iraqi courts."
The KRG emphasised that both American companies have operated in the Kurdistan Region for years and are already among the region's primary oil producers. It further stated that the agreements aim to increase domestic natural gas production to meet power generation needs and deliver "uninterrupted electricity services across all parts of Iraq."
This dispute represents the latest chapter in the long-standing tensions between Erbil and Baghdad over control of the Kurdistan Region's natural resources, particularly as the KRG continues to assert what it describes as its "constitutional rights and authorities as a federal entity under the permanent Constitution of Iraq."
Statement from the federal Ministry of Oil in Baghdad (translated):
Clarification from the Ministry of Oil
Some news outlets have circulated reports from the Kurdistan Regional Government (KRG) concerning "new energy agreements valued at tens of billions of dollars."
The Federal Ministry of Oil wishes to clarify its rejection of the procedures undertaken by the Ministry of Natural Resources in the Kurdistan Regional Government for the investment of the Miran field and the Topkhana-Kurdamir field in Sulaymaniyah Governorate. These procedures violate decisions issued by the Federal Court of Cassation, which deemed contracts concluded after the issuance of the Federal Supreme Court's decision in case number 59 / Federal 2012 (and its consolidated case 110 / Federal 2019) as illegitimate.
The Ministry emphasises that despite Iraq's need to maximize gas investment and meet domestic demand for operating power generation plants across the country, the KRG's actions explicitly contravene Iraqi law. Oil wealth is considered the property of all Iraqi people, and any measures for its investment must be conducted through the federal government.
Accordingly, the Ministry affirms the nullity of these contracts based on the Iraqi Constitution and the decisions of the Federal Court.
Statement from the Kurdistan Regional Government (KRG):
Clarification from the Ministry of Natural Resources
While the Kurdistan Regional Government continues to emphasize all its constitutional rights and authorities as a federal entity under the permanent Constitution of Iraq, which clearly recognizes the Region's rights and authorities, we reaffirm that the two deals signed by our Ministry with the American companies HKN and WesternZagros are based on existing contracts with new US investment and new operating companies.
These deals are based on contracts signed many years ago, which have also been upheld as legal and valid by Iraqi courts. There is no legal dispute concerning them. The recent change has been in the operating companies, in accordance with the legal and contractual framework of the existing agreements.
Both American companies have been active in the Kurdistan Region for many years and are among the Region's primary oil producers. They are not new investors.
The aim of these agreements is to increase domestic natural gas production to meet the fuel needs of power generation stations, with the goal of delivering uninterrupted electricity services across all parts of Iraq.
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