Iraq’s federal court has ordered the Iraqi Kurdistan government to deliver all of the oil it produces to Baghdad, dismissing an oil and gas law regulating the oil industry in the autonomous region as unconstitutional.
The court’s decision, issued on Tuesday, stated that the Kurdish Regional Government (KRG) must hand over all crude from the region and neighboring areas directly to the federal government in Baghdad, Reuters reported.
The KRG has been developing oil and gas resources independently of the Baghdad government. It has created its own oil law that established how the region would administer the resources.
The Tuesday ruling said KRG’s oil contracts with oil companies, foreign parties, and states, which include exploration, extraction, export, and sales agreements, are invalid.
It also stated that Iraq’s oil ministry must be allowed to audit all agreements concluded by the KRG with oil and gas companies.
Kurdish leader Masoud Barzani criticized the ruling as a “purely political” decision aimed to antagonize the KRG.
“We hope that the governments of Iraq and the Kurdistan region will be able to overcome the obstacles and agree on the oil and gas file,” Barzani, the leader of the ruling Kurdistan Democratic Party, said.
The Iraqi government and the KRG have been in a long-standing dispute over Baghdad’s share of Kurdish petrol, with the Iraqi government demanding full control of the region’s crude for years.
Under a deal between the two sides, the Kurdish region delivers 250,000 of its more than 400,000 barrels of daily oil output to Baghdad, in return for its share of the federal budget.
A day earlier, Reuters reported that a $27-billion deal between France’s Total and Iraq had stalled amid disputes over terms and risks being scrapped by the country’s new government.
Following Iraq’s parliamentary election, the deal now needs approval from a new Iraqi government, including the Arab country’s new oil and finance ministers.
Meanwhile, the Iraqi parliament canceled a vote last week for a new head of state as it lacked the necessary two-thirds quorum to hold a session, further prolonging the formation of the new government in Baghdad.