The semi-autonomous Kurdish region of Iraq has unilaterally signed two energy deals with US companies to develop natural gas resources − a move that has angered Baghdad, which has been trying to control the region’s oil and gas industry.
Kurdistan Region Prime Minister Masrour Barzani oversaw the signing on Monday, during a visit to Washington aimed at bolstering economic and military co-operation with the US.
The combined estimated value for the agreements with HKN Energy-led joint venture and WesternZagros is at “tens of billions of US dollars”, a statement said. No more details have been announced on the terms of the two deals.
In a separate statement, HKN Energy and partner Onex Group said they will develop the Miran gasfield through their newly formed joint venture, Miran Energy.
The field “could hold an estimated 8 trillion standard cubic feet of recoverable natural gas”, it added. Its development could generate more than $40 billion in long-term value, said the statement.
The agreement marks “a significant milestone not only for our companies, but for the energy future of the region”, said Russell Freeman, chief executive of HKN Energy. He described the project as “one of the region’s most strategic gas resources”.
Meanwhile, WesternZagros − the US privately owned exploration and production company operating in the region − announced its acquisition of the resource-rich Topkhana block.
“The combined Topkhana-Kurdamir block holds a resource potential of up to 5 trillion standard cubic feet and 900 million barrels of recoverable natural gas and crude oil respectively,” it said in a statement. This is “expected to generate an estimated $70 billion of revenue over the life of the project”.
The gas production is planned for domestic supply in the region, with potential to meet demand for other parts of Iraq and the wider region, HKN Energy and WesternZagros said.
In a statement, the Iraqi Federal Ministry of Oil rejected the deals, saying the move is "a clear violation to the Iraqi law". The ministry said "oil wealth belongs to all Iraqi citizens and any investment decisions should be made through the federal government".
Since the 2003 US-led invasion that toppled Saddam Hussein and helped the Kurds gain official semi-autonomy, the Kurdistan Regional Government has been at loggerheads with the federal government over issues, including energy deals the regional government signed unilaterally, and its share of the federal budget.
The Kurdish region's oil sector suffered a major blow in early 2022 when the Federal Supreme Court ruled that the region's law regulating the industry was unconstitutional. The court demanded it hand over all of the oil sector’s activities to Baghdad – including exports.
A 2023 arbitration ruling forced the region's exports through Turkey to halt, cutting off a major source of revenue for Erbil, the capital of the Kurdish region, and leaving it struggling to fulfil salary payments.
Since then, no progress has been made to resume oil exports or hand over the industry to Baghdad.
The Oil Ministry said the "invalidity of these contracts" was based on the constitution of the Republic of Iraq and rulings of the Federal Court.
In response to Baghdad, the Kurdish region's Ministry of Natural Resources defended the deals, arguing that the constitution gives it the right and authority to sign energy deals.
It said the two deals "are based on contracts signed many years ago...the recent change has been in the operating companies, in accordance with the legal and contractual framework of the existing agreements".
