BAGHDAD —
Iraq’s oil wealth is rekindling tensions between federal authorities and the
autonomous Kurdish region, in a fight that could compromise the lifeline industry
and keep investors away, analysts say.
اضافة اعلان
The
long-simmering dispute came to a head in February — at a time of political
deadlock in
Baghdad — when the federal supreme court ordered Kurdistan to hand
over oil extracted from its territories to the federal authorities.
Then earlier
this month, a commercial court in the Iraqi capital annulled contracts between
the Kurds and foreign firms, after the oil ministry in Baghdad filed a judicial
complaint.
Authorities in
the Kurdistan capital Erbil have cried foul, accusing Baghdad of heaping
“unjust pressure” on them and announcing their own legal action.
Iraq, the second
largest producer in the Organization of the Petroleum Exporting Countries, sits
on enormous oil reserves, and revenues from the sector feed 90 percent of the
federal government budget.
It exports an
average of 3.3 million barrels of crude oil per day (bpd), while production in
Kurdistan amounts to just over 450,000 bpd.
The February
ruling stated that a 2007 law adopted by Erbil to regulate oil and gas was
unconstitutional.
But analysts say
politics play a major role in the dispute in Iraq, whose political barons have
failed to reach agreement on choosing a president and a prime minister since
October legislative elections.
“When it comes
to oil, each side uses their respective powers as carrots and sticks depending
on the political atmosphere of the day,” said Bilal Wahab of The Washington
Institute for Near East Policy.
“At times when
there was political accord, the courts were rather quiet. When there was
political discord, however, the reverse was true,” he told AFP.
‘Reputation being damaged’
The nullification of oil contracts between the Kurds and four
international oil companies (IOCs) from Canada, Britain, Norway and the
United States at the start of July has inflamed the fight.
“For Baghdad to
be chasing IOCs out of Iraqi Kurdistan does not serve to show Iraq as a major
producer welcoming of foreign investment,” cautioned Yesar Al-Maleki, an
analyst at the Middle East Economic Survey.
In retaliation,
the
Kurdish regional authorities in June initiated judicial proceedings against
the federal government.
One lawsuit
targets Oil Minister Ihsan Ismail, accused by the Kurds of trying to
“intimidate” foreign firms operating in the Kurdistan region of northern Iraq.
The Kurdish
autonomous government has accused Baghdad of taking “illegal” and “politically
motivated” actions.
For Wahab,
Kurdish and federal government officials fail to appreciate “how much they are
damaging the overall reputation of Iraq’s energy industry”.
“Questioning the
sanctity of contracts ... adds legal risk to a slew of other regulatory and
governance risks that ail the Iraqi energy industry,” he added.
The dispute, he
said, “repels much-needed foreign investment”.
Oil revenues are
critical for Iraq, a country faced with widespread corruption but also mired in
a financial crisis and in need of funds to rebuild infrastructure after decades
of conflict.
‘Compromise’?
Despite the legal actions, Kurdistan says it is open to a negotiated
solution.
It is working on
setting up two companies specialized in oil exploration and marketing that
would coordinate with Baghdad, a spokesperson for the Erbil government said.
Baghdad’s oil
ministry, meanwhile, marked a small victory after oil giants Baker Hughes,
Halliburton and Schlumberger committed not to initiate new projects in
Kurdistan.
The ministry
says the companies are also working to “liquidate and close” existing
contracts.
Baghdad has
fought to regain control of output from lucrative oil fields in Kurdistan since
the autonomous region began marketing oil independently more than a decade ago.
The two had
struck a deal under which the Kurdish region would deliver 250,000 barrels per
day to Baghdad, in return for a share of federal funds to pay the salaries of
Kurdish civil servants. But
Erbil never delivered the oil and has complained
the funds were late.
In recent weeks,
tensions have risen further after a series of unclaimed rocket attacks
targeting oil and gas installations in Kurdistan.
Experts say the
assaults aim to put pressure on the Kurdistan Democratic Party (KDP), the
largest in Kurdistan.
The KDP is
allied to Shiite leader
Moqtada Sadr, whose bloc won 73 seats in the October
polls, making it the largest faction in the 329-seat parliament.
The party is
eyeing the Iraqi presidency for one of its members, although traditionally the
job has been held by a member of the rival Patriotic Union of Kurdistan.
“The timeline of
events evidently shows that this whole crisis started because the KDP took the
side of the Sadrist movement ... opposing the Iran-backed Shiite Coordination
Framework,” Maleki said.
He expects a
“compromise” will be reached to resolve the oil dispute because “Iraq is a
country of compromise”.
“Until then, the
supreme court ruling will hang like the sword of Damocles over the Kurdish
regional government,” he said.
Read more Region and World
Jordan News
.jpg)
.jpg)
