In this article, we will talk about the Iraq Wataniya bitumen, Iraq’s oil, and
the issues that may occur in Iraq, which may affect the market to some extent. Now, let’s analyze the market thoroughly. As a matter of fact, the
Kurdistan Region is federal in northern Iraq with a predominantly
Kurdish population and is governed by the Kurdistan Regional Government (KRG). To be more specific, the KRG and the central government of Iraq have
always faced differences over sovereignty
(especially in the oil and gas sector), which has fueled conflicts between the two sides.
Oil issues of the Kurdistan Regional Government and the Iraq Wataniya bitumen
Generally speaking, the KRG has disputed the Northern Iraqi Oil
Company’s development plan to increase production at the Kirkuk
field in northern Iraq near the Kurdistan Regional Government (KRG). Officials in the region insist they must carry development programs in the field out
with the cooperation and approval of the Kurdistan Regional Government. In general, the Iraqi Ministry of Petroleum insists that the Iraqi national
government and must sign all hydrocarbon contracts in the Iraqi territory
all oil produced in the KRG must be through the Iraqi State Oil
Marketing Organization (SOMO).
Meanwhile, the Kurdistan Regional Government (KRG) passed its hydrocarbon
law in 2007 in the absence of a national law governing investment in Iraq’s oil
and gas sector. In fact, the oil dispute between the Iraqi central government
and the Iraqi Kurdistan region has been going on for years. Moreover,
the problems on both sides include control over oil fields,
the borders of the Kurdistan Region, and each side’s share of oil revenues.
The government and the Iraq Wataniya bitumen
The Iraqi Kurdistan Regional Government claims that according to the
Iraqi federal constitution, the right to extract and export oil from the
region belongs to this government. The Iraqi Kurdistan Region has also
signed agreements with some foreign companies in the field of the oil
industry, which has led to opposition from the Iraqi central government.
Besides, the Kurdistan Regional Government (KRG) has signed an agreement
with ExxonMobil to drill and co-production in six oil fields with the
Iraqi Kurdistan Region, some of which are in disputed border areas,
which led to disputes with the government in late 2011.
According to Reuters, on January 27 after the signing of an oil
exploration agreement between ExxonMobil and the Iraqi Kurdistan
Region, which provoked opposition from Baghdad, the Iraqi central
government announced to the company that it should choose
between canceling the contract with the Kurdish region and staying in Iraq.
Iraq Wataniya bitumen and the oil companies
Mr. Laibi: “Other international oil companies that have signed oil contracts
with the Iraqi Kurdistan region are facing a similar scenario, and we
have informed them,” the Iraqi oil minister said. Furthermore, ExxonMobil
had previously extended its contracts with the Iraqi Kurdistan Region
and withdraw from the $2 billion projects to develop the West
Century-2 oil field on Iraqi soil.
The Iraqi central government has also asked the Turkish National
Petroleum Corporation (TPAO – Türkiye Petrolleri Anonim Ortaklığı) to take
part in Block 9, which has been awarded points, due to what we have
called a dispute over Turkey’s involvement in the KRG energy projects. According to AFP, on January 28, a consortium led by Kuwait Energy in cooperation
with the Emirati Company Dragon Oil and TPAO won the right to explore
and develop the Iraqi oil block in the fourth round of Iraqi oil and gas tenders.
Kuwait Energy owns 1%, Dragon Oil and TPAO each own a 5% stake in the
block’s development consortium, but after the Iraqi cabinet pulled a
Turkish company out of the bloc, Baghdad withdrew from Kuwait Energy. In other words, he wanted to replace this Turkish company. Since 2011, the
KRG has signed a series of other contracts with major companies such as
Chevron, Gazprom and Total. Under Iraqi law, international oil
companies involved in Iraqi oil projects must not sign oil contracts with the
Iraqi Kurdistan Regional Government without the approval of the
central government in Baghdad; otherwise, they are violators.
Iraq Wataniya bitumen and the contracts
It’s also good to know that Baghdad wants to sign technical service contracts
with international oil companies instead of sharing profits and says the
Iraqi central government must approve all agreements and contracts in
the Kurdish region. Moreover, Iraqi government officials have repeatedly
called for the cancellation of the Exxon oil agreement with the Kurdish region.
However, they related another oil dispute of the Kurdistan Regional
Government to the export of crude oil produced in the Kurdistan Region,
which dates back to before the disputes related to the regional oil contracts.
While the KRG agreed to send 175,000 barrels per day of crude oil
SO , into the northern Iraqi oil export pipeline, the KRG began reducing
its share of the agreement with the Iraqi central government in late 2011.
Importantly, the dispute over the distribution of oil revenues between the
But , Iraqi central government and the Iraqi Kurdistan region culminated in early 2012.
The Iraqi Kurdistan Region cut off oil exports from Kurdistan in April this year
after the central government failed to pay a $1.5 billion budget.
As the result, they suspended participation in the Kurdistan Region in April 2012 but
resumed in August.
As the last point, the direct export of oil through the KRG is another
contentious issue with the Iraqi central government, which initially began
with the export of 15,000 barrels per day of gas condensate and 20,000
barrels per day of crude oil to Turkey.