Iraq holds Kurdish gov’t legally responsible for continued oil smuggling

Iraq’s Oil Ministry said today it holds the Kurdish Regional Government (KRG) legally responsible for the continued smuggling of oil from the Kurdish region outside the country, Reuters reports.

The ministry reserves the right to take all legal measures in the matter, it added.

Control over oil and gas has long been a source of tension between Baghdad and Erbil.

Iraq is under pressure from the Organisation of the Petroleum Exporting Countries (OPEC) to cut output to compensate for having produced more than its agreed volume. OPEC counts oil flows from Kurdistan as part of Iraq’s quota.

In a ruling issued in 2022, Iraq’s federal court deemed an oil and gas law regulating the oil industry in Iraqi Kurdistan unconstitutional and demanded that Kurdish authorities hand over their crude oil supplies.

The ministry said the KRG’s failure to comply with the law has hurt both oil exports and public revenue, forcing Baghdad to cut output from other fields to meet OPEC quotas.

The ministry added that it had urged the KRG to hand over crude produced from its fields, warning that failure to do so could result in significant financial losses and harm the country’s international reputation and oil commitments.

Negotiations to resume Kurdish oil exports via the Iraq-Turkiye oil pipeline, which once handled about 0.5 per cent of global oil supply, have stalled over payment terms and contract details.