Baghdad – IA
The Ministry of Oil issued a clarification regarding the cessation of exports from the Kurdistan region
The Ministry stated in a statement received by the (INA), today, Monday, that it “saw a statement issued by a party calling itself the Kurdistan Oil Industry Association (Picor) on 3/23/2024, and the statement included a distortion of the facts and a number of fallacies.” “.
She added, “In this regard, we would like to clarify the following…
1. The cessation of oil exports through the Iraqi-Turkish pipeline in March 2023 was due to a Turkish decision resulting from the issuance of an international arbitration decision by the Paris Chamber of Commerce in favor of Iraq. The export did not stop – not for a single day – as a result of an Iraqi federal decision. After more than six months and important negotiations led by this ministry with the Turkish side, the two parties reached the restart of the pipeline and the treatment of the technical problems that resulted from its closure, in the shortest possible time. The federal government is the most affected by the cessation of exports for reasons related to sovereign oil policy and others.
2. One of the most important reasons for the cessation of exports currently is the reluctance of foreign companies operating in the Kurdistan region of Iraq to officially hand over their production to the regional government to be exported in accordance with the federal general budget law in force. This includes companies joining the association mentioned above. It is possible to resume exports in a short period if they These companies deliver oil produced from fields located in the region in accordance with the law.
3. The federal government and this ministry have previously made diligent efforts to overcome all obstacles to resume exports, as is evident from the content of a large number of books, official correspondence, meetings and relevant decisions over a whole year, the last of which was our letter No. (480) on 3/18/2024. Which included the necessity of delivering the oil actually produced in the region for the purpose of exporting it. This ministry still insists on resuming exports through the Iraqi-Turkish pipeline as soon as possible, while adhering to the provisions of the constitution and the law.
4. The official communications issued by this ministry, including our aforementioned letter, included references to OPEC reports and international secondary sources approved by them, which confirm the presence of oil production in the region in quantities amounting to (200-225 thousand barrels per day), without the knowledge or knowledge of… Approval of this ministry. Failure to adhere to the general oil policy approved by the federal government puts Iraq’s reputation and its international obligations at risk, and holds the parties responsible for violations liable for all legal consequences.
5. The alleged contracts between the oil companies operating in the region and the Ministry of Natural Resources in the region were not approved by the federal government nor the Federal Ministry of Oil at all, because they lack a sound constitutional and legal basis. This has been the position of successive federal governments and the Ministry of Oil for more than a decade. It is consistent with the decision of the Federal Supreme Court No. (59/Federal/2012 and Consolidated No. 110/Federal/2019) on 2/15/2022. There is no longer room for discussion after the Federal Court issued its final decision that is binding on all authorities, other than adherence to the decision.
6. This Ministry has previously requested from the Kurdistan Regional Government and the oil companies operating in it complete copies of all the contracts mentioned above for the purpose of studying them and arriving at new contracts in accordance with the Constitution, the law, and the best policies followed by this Ministry with major international companies, but the required contracts have not been delivered to anyone. Now, how can it be permissible to demand that this ministry abide by contracts that it has not seen and does not recognize, which are in principle contrary to clear and binding judicial decisions?
7. Federal General Budget Law No. (13) of 2023 was issued, and entered into force on 1/1/2023, and (Article 12/Second/C) included a provision for calculating production and transportation costs equal to the rate paid by this ministry in its contracts. The average cost of production is ($6.9 per barrel), while companies operating in the region are demanding three times this amount (excluding the exaggerated transportation fees as well) as one of a set of conditions for resuming the delivery of produced oil. What called on the House of Representatives to adopt the Oil Ministry’s rate was that neither the House nor any other federal entity was informed of the contracts, as mentioned earlier. The costs claimed by the companies include what they call the repayment of previous debts amounting to billions of dollars, which are amounts unknown to the federal government and are not consistent with the contexts of borrowing in accordance with the Constitution and applicable laws.
8. It has been repeatedly clarified that this ministry cannot violate the budget law and other applicable laws, in addition to indicating that there is a significant exaggeration in the costs mentioned in the previous paragraph. This ministry has previously officially confirmed the immediate resumption of exports in accordance with the law through the Iraqi-Turkish pipeline, while negotiating in parallel to reach a comprehensive, consensual solution in a way that achieves the public interest. However, companies continue to abstain only after submitting in advance to its conditions that violate the law, and this cannot be accepted under any circumstances.
9. The Iraqi government has previously received at the highest levels representatives of oil companies operating in the region as a gesture of good faith with the aim of finding acceptable legal solutions. This ministry has also previously invited those companies to negotiating meetings for the purpose of finding fair solutions, and has initiated ongoing judicial procedures against the aforementioned companies for the purpose of Giving room for consensual solutions, but the companies’ position remained without flexibility or change.
10. The aforementioned association statement included blatant interference in Iraqi internal and external sovereign affairs that have nothing to do with the work of companies. This records an additional violation against the aforementioned association and the companies it represents, and is not consistent with the principles of good faith and the principles of foreign investment work.
11. The Federal Ministry of Oil, under the guidance of the government, is committed to making all possible efforts to resolve the differences and resume exports through the Iraqi-Turkish pipeline in a manner consistent with the constitution and the law. Foreign companies wishing to work in Iraq must respect the country’s sovereignty, laws, and judicial decisions, and adapt their conditions accordingly, instead of interfering in sovereign affairs related to Iraq’s foreign policy.