Iraqi Oil Ministry files lawsuit against Kurdish region over unilaterally signed energy deals

Semi-autonomous region has signed multibillion-dollar agreements with US companies HKN Energy and WesternZagros to develop gasfields

A pipeline at the Tawke oil field in Iraqi Kurdistan. Reuters

Iraq's Oil Ministry has filed a lawsuit against the semi-autonomous Kurdish region for signing energy deals with foreign companies without its consent, an official told The National.

Last week, Kurdistan’s Ministry of Natural Resources unilaterally signed two energy deals with US companies to develop natural gas resources. The combined estimated value for the agreements with the HKN Energy-led joint venture and WesternZagros is “tens of billions of US dollars”, the region said in a statement.

HKN Energy and partner Onex Group will develop the Miran gasfield through their newly formed joint venture, Miran Energy. Meanwhile, WesternZagros signed a deal to acquire the resource-rich Topkhana block. No more details have been announced about the terms of the two deals.

The Iraqi Oil Ministry said the move was "a clear violation to the Iraqi law".

"Oil wealth belongs to all Iraqi citizens and any investment decisions should be made through the federal government," it added.

On Monday, an official at the ministry said a lawsuit had been filed at a Baghdad court against the Iraqi Kurdish region.

The control over the development of natural resources has been one of the thorniest issues since the 2003 US-led invasion that toppled Saddam Hussein and helped the Kurds gain official semi-autonomy.

The Kurds argue that the country’s constitution allows them to sign deals bypassing Baghdad, while the federal authorities maintain this is illegal. That struggle has forced Baghdad at some points to withhold Kurdistan's share in the budget, plunging the region into a series of economic hardships.

In early 2022, the Kurdish region's oil sector suffered a major blow when the Federal Supreme Court ruled that the regional law regulating the industry was unconstitutional. The court demanded it hand over all oil sector activities to Baghdad – including exports.

A year later, an 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 control of the energy resources to Baghdad.