Iraq warns of legal KRG oil deal action

BAGHDAD - Reuters

The central Iraqi government says it possesses the sole right to export crude, accusing the KRG authority. REUTERS photo

Iraq has the right to take legal action against oil companies exporting crude without dealing with the central government, including confiscating cargo and suing sellers, buyers and transporters, the Iraqi state-run SOMO oil company said yesterday.

The SOMO statement made no reference to a specific company but was released after Anglo-Turkish Genel Energy said Iraq’s autonomous Kurdistan Regional Government (KRG) had given the company permission to deliver crude directly by truck to Turkey.

Baghdad says only the central government has authority to export crude and sign oil deals, but the KRG says the Constitution allows it to be party to contracts.

It has signed with major oil companies such as Exxon Mobil, angering Iraqi officials who deem the Kurdish agreements unconstitutional.

“The Iraqi Ministry of Oil and SOMO shall reserve the right to take all legal actions against any company or entity that deals with bodies other than SOMO in addition to the confiscation of cargo smuggled across borders as well as suing sellers, purchasers and transporters,” it said.

Crude reserves are at the heart of a wider dispute over territory, oil fields and political autonomy between Baghdad and the KRG capital of Arbil in the country’s north.

Genel Energy said on Jan. 9 that exports via trucks from the Anglo-Turkish company’s Taq Taq oil field in Kurdistan could reach 20,000 barrels per day in a few weeks, after starting with relatively small amounts.

The move to truck oil directly to Turkey came after KRG exports were halted through the Baghdad-controlled Iraq-Turkey pipeline due to a dispute over central government payments to oil companies working in northern Iraq under the KRG.

Baghdad has made one payment to companies, but Iraqi officials said last month they would not pay oil firms a second portion because the KRG had failed to reach agreed production under a deal made in September.

The KRG is now negotiating for a pipeline to connect northern Iraqi oil fields directly with Turkey, which would be a major step for the autonomous region to break its reliance on Baghdad’s pipeline for export of its crude.

Turkey and Iraq have already been at odds over political matters as Iraq has publicly urged Turkey to hand over fugitive Iraqi Vice President Tareq al-Hashemi, who has been sentenced to death in Baghdad on charges of running a death squad.

Iraq had cancelled an oil exploration license in November last year for Turkey’s state-run TPAO without citing a concrete excuse.