Iraq's Kurdistan region denies oil fields takeover as Erbil-Baghdad tensions escalate

Iraq's semi-autonomous Kurdistan Regional Government has denied allegations that it has taken over two oil fields operated by state-owned North Oil Co., which has said that Kurdish armed forces had sought control of Bai Hassan and Dawd Gurg fields in a further escalation of strained Erbil-Baghdad ties.

"The Kurdistan Regional Government denies all allegations that the KRG, with the support of the armed forces, has taken over Bay Hassan and Dawd Gurg oil fields in Kirkuk, which are operated by the North Oil Company," a KRG spokesperson said in a May 14 statement

The North Oil Co. earlier put out a statement saying that Kurdish armed forces accompanied by a technical team wanted to tap the two fields' output to benefit the KRG and held the semi-autonomous government responsible for this "unconstitutional" behavior. It didn't provide any further details.

The Bai Hassan field in Kirkuk has been operated by North Oil Co. since Baghdad took control of the key oil-producing area from the KRG in 2017. But despite a general improvement in security since Kirkuk was under Islamic State control earlier in the last decade, the insurgent group remains active in the region and has attacked the field.

The KRG spokesperson said the NOC allegations are part of a political campaign to tarnish its reputation.

"This campaign against the Kurdistan region is purely political and without legal basis," the spokesperson said. "Such allegations against the Kurdistan region are completely untrue and are aimed at sowing discord and agitating against the rights of the Kurdistan region's oil."

Court ruling

The alleged incident may further strain ties between Erbil and Baghdad, which is seeking to take control of the Kurdish energy sector as part of implementing a Feb. 15 federal supreme court ruling that called for handover of the KRG's oil and gas assets to the federal government. The KRG developed its own oil and gas sector independently from Baghdad based on a 2007 law and started to independently export crude oil through Turkey in 2014.

Iraq's top court said the KRG's 2007 oil and gas law was unconstitutional.

After nearly 75 days of talks, Baghdad and Erbil have failed to reach an agreement on the management of the Kurdish energy sector and therefore the federal oil ministry and state-run Iraqi National Oil Co. will implement the Feb. 15 court ruling, Oil Minister Ihsan Ismaael told a meeting with INOC, according to a May 7 ministry statement.

While the Kurdistan Prime Minister Masrour Barzani defended the region's contracts as constitutional in a press conference on May 11, the Iraq National Oil Co., in a review of international contracts, said May 12 that only the federal Iraqi government can formulate oil and gas development policy and manage the activity related to it.

Kurdistan's oil output has been dwindling for years, hampering its ability to pay international oil companies operating in the region.

In April, Kurdistan produced 474,000 b/d of oil, out of Iraq 's total 4.430 million b/d, according to federal data from state oil marketer SOMO. That's down from a peak of nearly 600,000 b/d in late 2017, before the federal government retook several Kirkuk-area oil fields the KRG had claimed when the Islamic State was driven out.