Iraq aims to establish new oil company in Kurdistan region

Iraq aims to establish new oil company in Kurdistan region: ministry

Iraq aims to establish a new oil company in the northern Kurdish region, months after a federal court ruling deemed the legal foundations of the Kurdistan region's oil and gas sector unconstitutional

Energy

1 min read

�� Staff & Agencies

21 May, 2022

A worker monitors pressure levels at the Kar Refinery in Erbil, Iraq

A February federal court ruling that declared the legal foundations of the Kurdistan region's oil and gas sector unconstitutional [Getty]

aims to establish a new oil company in the , the oil ministry said on Saturday.

The aim of the new company will be to enter into new service contracts with oil firms currently operating there under the Kurdistan Regional Government (KRG), according to a statement.

Oil minister Ihsan Ismael said on May 7 that the ministry would start implementing a February federal court ruling that declared the legal foundations of the unconstitutional.

Iraq then wrote to international oil firms operating in the semi-autonomous region requesting they sign new contracts with state-owned marketer SOMO rather than the Kurdistan Regional Government (KRG).

The letters marked the first direct contact between the ministry and oil firms operating in the Kurdistan region. The move follows years of attempts by the federal government to bring KRG revenues under its control, including local court rulings and threats of international arbitration.

The oil ministry will pursue legal action against companies that continue to operate under "unlawful production sharing contract schemes" and that "do not engage in good faith negotiations to restructure their contracts," according to the statement.

(Reuters)