Alwaght- After years of dispute between the Iraqi central government and Iraq’s Kurdistan region over the latter’s oil sales and Turkish exports of its oil and taking the case to the international Chamber of Commerce’s International Court of Arbitration, Baghdad finally won the legal fight. After 9 years, the Paris-based ICA finally ruled in favor of the central government.
According to the ruling, Turkey is banned from shipment of Kurdistan region’s oil without authorization from Iraqi federal government. Immediately after the verdict, Turkey stopped Kurdistan oil exports from Ceyhan terminal. In the case, Iraq had complained that Turkey violated the 1973 pipeline transit agreement by exporting crude oil supplied by the autonomous region without Baghdad’s consent.
An informed source said that the Iraqi authorities had requested $33 billion from Turkey in financial damages, but could not receive this amount, and Ankara has been ordered to pay only $1.4 billion to Baghdad for the period from 2014-2018. Iraq’s oil ministry announced in a statement that Baghdad, through its State Oil Marketing Organization (SOMO), is the only party that will export through the Ceyhan pipeline. Since 2014, at the same time as ISIS terrorists invaded Iraq, the Kurdistan Regional Government (KRG) took advantage of the weakness of the central government and connected its oil fields to Fishkhabour border crossing using the existing pipeline that used to send the oil from the Iraq’s Kirkuk to Ceyhan. In these years, the Kurds used the money to run the region. But this issue has become a fundamental challenge between Baghdad and Erbil. The political negotiations between the two sides had failed to settle the dispute.
Iraq is OPEC’s second largest oil producer, exporting about 3.3 million barrels per day, of which Baghdad sends 75,000 barrels per day from Kirkuk to Ceyhan. The KRG does not publish its oil production figures, but industry experts estimate it to be around 440,000 barrels per day, most of which it exports. According to data compiled by Bloomberg, more than one million barrels per day passed through the Ceyhan terminal in January, which is equivalent to one percent of global supply, and if all these exports are made by the central government, the revenues can contribute to settling part of country’s economic challenges.
Turkey, which occupies part of Iraq’s north since 2014 under the excuse of fighting terrorism, met part of its energy needs from oil supplied by the Kurdistan region based on contacts it signed with Erbil.
Karwan Anwar, a member of the Patriotic Union of Kurdistan (PUK), said in April 2022 that the Kurdistan Democratic Party signed several cheap oil contracts with Turkey for the next 50 years. He stated that no one except 5 members of the ruling family of the Kurdistan region knew about these contracts. Due to its location on the transit highways, Turkey has made huge profits from the transit of oil to Europe and other regions in the past decade, and for Turkey’s declining economy, Kurdistan’s oil is considered a profitable trade, but with the ICA ruling, Ankara lost this source of profits.
Though the ICA ruling stopped the Kurdistan export of oil from Turkey, the Iraqi ministry of oil said that it will discuss the mechanism of Iraqi-controlled oil export through Ceyhan port with the relevant institutions in the Kurdistan region and Turkish authorities to ensure that oil will keep flowing.
Baghdad political weight boosted over Erbil
The central government and Erbil have engaged in several rounds of talks to settle the oil exports dispute, but Erbil never yielded to Baghdad demands. However, after the court ruling, the Kurdish officials softened their stances. Masrour Barzani, the KRG prime minister, said that a KRG delegation traveled to Baghdad last Sunday to discuss energy issues, and there were good negotiations with the central government, though losing the ability to export oil independently was likely to weaken the autonomy of the region. KRG spokesman Lawak Ghafouri said the decision of the court in favor of the federal government of Iraq against Turkey “will not damage our relations with the federal government of Iraq.”
Iraqi Kurdistan relies on oil exported via Turkey and the court ruling will tie its hands in talks with Baghdad over a legal mechanism for its oil sector.
Baghdad has made many efforts in the past years to gain control over Kurdistan region’s energy resources, and these efforts culminated domestically with the February 2022 ruling by the Iraqi Federal Court declaring the oil and gas law of the region illegal. The federal court also revoked the KRG contracts with foreign oil companies. Currently, the government of Iraqi Prime Minister Mohammad Shia al-Sudani is equipped with the ruling of the ICA in addition to the federal court’s verdict and can impose its terms and demands on the leaders of Erbil at the negotiating table.
Since 2007, the KRG has been managing the region’s oil resources including production and exports independent of the central government, while according to the decision of the Federal Court of Iraq, the local government of Erbil must hand over all the oil of the region and neighboring areas to the federal government. Erbil is heavily dependent on oil revenues, and the inability to sell its crude oil would severely impact its economy. For years, the government has not been able to pay the salaries of more than one million government employees on time and in full. So, if the oil revenues are delivered to the federal government treasury, the salaries of the government employees will also be paid on time.
The oil exports represent a lifeline for the Kurdistan region. For years, the KRG took advantage of the ambiguities in the Iraqi constitution to export its oil to maintain its financial independence from Baghdad.
Big blow to Israeli regime
While facing massive protests and army mutiny at home, the Israeli regime also finds international conditions not in its favor. After the Iranian-Saudi détente agreement that marked an end to the Arab-Israeli normalization process, the ICA ruling in favor of the Iraqi government dealt a new blow to Tel Aviv, a purchaser of Kurdistan oil. Erbil leaders have repeatedly rejected that they export oil to Israeli regime, but many pieces of evidence show that Tel Aviv is one of the main purchasers of Kurdistan oil. Israeli media said that Israeli regime will sustain heavy damages following the ICA ban on Kurdistan oil exports.
Israeli Channel 12 reported that Tel Aviv imports oil from northern Iraq via the Turkish pipeline. The channel added that the oil ceased flowing via Turkey from Saturday and this apparantly cuts off Kurdistan energy trade with the Israeli regime.
Although Erbil and Tel Aviv officials have not yet officially confirmed the oil exports, according to an analysis conducted by ClipperData, an American company specializing in tracking global oil shipments, about half of the crude oil produced from the Kurdistan oil fields in 2017 went to Israel. Also, in 2015, Ashti Hawrami, the then minister of natural resources of the KRG, admitted that in order to prevent the discovery of oil exported to the Israeli regime, in many cases oil was smuggled with ships. The KRG used the ports of Ashkelon and Tel Aviv as storage locations for the marketing of the smuggled oil. On the other hand, according to reports, since the beginning of this year, the Israeli government has imported 40 percent of the oil of the autonomous region. Therefore, given the 400,000 barrels of daily exports from Kurdistan, about 15 million barrels have been exported to the occupied territories in the last three months, which is a considerable amount.
Earlier, Iraqi political officials had revealed that Kurdistan oil met 80 percent of Israeli oil needs, with the oil delivered to Tel Aviv with much lower prices than those of international markets in return for support of the Israeli lobby for Erbil in the US. Iraqi groups have repeatedly called for halt of oil exports, but Erbil continues it oil relations with Tel Aviv, arguing that their oil changes routes before reaching final destination. This is while there are reports about presence of Israeli businesspeople and Mossad spies across Kurdistan region, something suggesting that there are warm relations between Tel Aviv and Erbil developing out of Baghdad watch.
The Israeli government has always supported independence agenda of Erbil for plundering oil resources of an independent Kurdistan. Tel Aviv knows that with the presence of the central government in the autonomous region that is close to the resistance groups, the influence project will meet its failure.
In addition to Kurdistan oil, the Syrian oil plundered by the Americans is also sent to the occupied territories, and this cheap energy is so attractive to the Israelis and Americans that they do not want to forsake this lucrative trade. Therefore, with the Kurdistan oil transit to Israeli regime cut off, oil smuggled from Syria is expected to reach the occupied territories faster to avoid Israeli energy crisis.
