Ankara loses Paris lawsuit and the Kurdistan Region's oil expert is suspended

Economy 04:02 PM - 2023-03-25

Screenshot of Argus report.

The Iraqi government has achieved another legal card against the independence of the export of oil from the Kurdistan Region in addition to Iraq's federal court ruling from February 2022 that declared the Kurdistan Regional Government's (KRG) oil and gas legislation "unconstitutional". The federal court also invalidated the KRG's contracts with foreign oil firms.

Ankara officially informed Baghdad at midnight on March 25, 2023, that the International Court of Arbitration had ruled in its favor in Ankara's long-standing case over Kurdish crude oil exports, the British Argus reported describing it as yet another blow to the Kurdistan Region.

According to the Argus report, Turkey will not allow crude shipments from Iraq's Kurdistan region to leave its coastal port of Ceyhan without the consent of the federal government in Baghdad.

The Iraqi government has two very strong cards against the KRG

Bahjat Ahmed, who holds a master's degree in Iraqi oil contracts, told PUKMEDIA: "The Iraqi government has two very important cards to suspend oil exports from the Kurdistan Region, and both cards are legal and reliable."

"Withholding oil exports from the Kurdistan Region to the port of Ceyhan will cause a financial crisis worse than the one in 2014, and if the KRG does not reach an agreement with the Iraqi government, the April salaries will not be paid," Ahmed said.

The case has been ongoing for nine years

The case has been pending at the International Chamber of Commerce's International Court of Arbitration in Paris for nearly nine years and is centered on Iraq's claim that Turkey violated a 1973 pipeline transit agreement by allowing crude exports from Iraq's Kurdistan Region without Baghdad's consent.

The dispute dates back to 2014, when the Kurdistan Regional Government (KRG), independent of Baghdad, connected its oil fields to the Turkish border crossing at Fishkhabour, tapping into the existing Iraq-Turkey Pipeline. The pipeline previously delivered crude from Iraq's northern Kirkuk oilfield to Turkey's port of Ceyhan.

Paris court ruling will further tighten the noose on Erbil

The Kurdistan Region depends on crude oil exports through Turkey and the Paris court ruling will further tighten the noose on Erbil, weakening its hand in negotiations with Baghdad over an authoritative legal framework for the country's oil sector. The government of Prime Minister Mohammed Shia al-Sudani and the KRG have held several rounds of talks to try and reach a solution.

Baghdad is well equipped Since then, Baghdad has attempted to seize control of Kurdistan's energy resources. According to the country's oil ministry, US companies are liquidating and exiting tenders and contracts in Kurdistan in order to comply with the federal supreme court's decision. 

Furthermore, major trading firm Trafigura severed ties with the KRG at the end of January, exacerbating the Kurdistan Region's problems and complicating its ability to market its crude.

 

PUKMEDIA