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News / Iraq

Baghdad court annuls three more KRG contracts

Kurdistan's contracts with Addax, ShaMaran, and Gulf Keystone have been ruled invalid; cases against Dana Gas and Gazprom Neft are ongoing. A court in Baghdad has invalidated three more of the Kurdistan Regional Government's (KRG) oil contracts, marking a further escalation in the federal government's campaign to establish authority over the KRG's independently managed oil and gas sector. At a hearing Sunday at the Karkh Commercial Court, Judge Mohammed Ali Mahmoud Nadeem issued decisions to annul the contracts of China's Addax Petroleum, Canada's ShaMaran Petroleum, and UK-listed Gulf Keystone, according to multiple officials who have seen the written rulings. The court has not yet ruled in lawsuits against the UAE's Dana Gas and Russia's Gazprom Neft. A previous set of rulings by Nadeem to annul four other KRG oil contracts has not had any practical effect on those projects, because the KRG controls its own security forces and has rejected the authority of the federal courts. Most oil companies in Kurdistan are operating as usual and even expanding their investment plans.

Iraq calls Russian companies to explore oil in new areas

Head of the technical department in the Iraqi Ministry of Oil, Ali Ward Hammoud, stated on Friday that Iraq is interested in the partnership with Russian oil companies, and called Russian companies to participate in exploring oil in new areas, according to Sputnik News. Hammoud, in a statement to Sputnik, said that plans will be drawn up in the near future to develop oil fields such as Eridu oilfield and Salman oilfield to accelerate their commercial production. “The production from the new oil wells discovered in Eridu oilfield is expected to be 200 thousand barrel per day. The Salman oilfield operated by Bashneft company is now in the evaluation stage, but there are evidences that its production capacity will be high,” Hammoud explained. Eridu is a conventional oil development located onshore Iraq and is operated by the Russian oil company, Lukoil. Discovered in 2017, the Eridu project will include the drilling of approximately 13 wells. The Salman oilfield is located in the Najaf and Muthanna governorates, approximately 80 kilometers southwest of Samnawa city and about 130 kilometers west of Nasriya. The block where Salman oilfield is located covers an area of around eight thousand square kilometers, and it is in the underexplored Salman tectonic zone. 30 percent of the development of Salman oilfield was granted to Bashneft, 40 percent to Premier Oil and 30 percent to PetroVietnam. Bashneft subsequently took over Premier Oil’s allocation to acquire 70 percent of the development. Hammoud elaborated that the initial production from Eridu oilfield is expected to take place in 2025. “I guess the Russian companies will have a share in the new licenses for the unexplored areas,” Hammoud said commenting on new development projects.

Five Iraqi companies have stolen $2.5 billion

Draw Media The owner of one of the companies that withdrew $2.5 billion from the branches of Rafideen Bank is a Kurd named (Hussein Kawa Abdulqadir Brifkani), a resident of Erbil, and he is originally from Duhok. His company alone withdrew 477 billion dinars from the bank. According to reports prepared by the Financial, Integrity and Financial Monitoring Committees, taking 3 trillion and 700 billion dinars (2 billion and 500 million dollars) was carefully planned, and part of Rafidain bank officials were involved in the process. In a way that, they did even transfer a number of employees who were not willing to work with them for stealing the money. These companies worked for a company called The Chinses Consultancy. All five companies have just been established and among them there is a company which has a capital of only 2 million dinars, but has withdrawn 100 billion dinars at once The five companies that took the money: - Al-Ahdab General Trading Company withdrew 982 billion dinars - Riah Baghdad General Trading Company withdrew 477 billion dinars - Al-Qant General Contracting Company withdrew 1.185 trillion dinars - Al-Mabdoon Oil Services Company withdrew 433 billion 15 million dinars - Al-Masa Wine Company and General Trading Limited withdrew (624 billion) dinars. The owner of one of the companies is a Kurd According to the reports prepared so far on the case, the owner of one of the companies is a Kurd from Duhok which he is a resident of Erbil. The owner of Riah Baghdad General Trading Company is Hussein Kawa Abdulqadir. He is from Duhok and was born in 2001 The owner of this company has withdrawn money several times from both branches of Rafidain Bank (Hay Arab, Waziriyah) in Baghdad. The money he withdrew for the first time on 31/3/2022 was five checks, each one was (20) billion dinars, that is, only in the first time withdrew (100) billion dinars. The last time he withdrew four checks on 11/8/2022, three of them were worth (10) billion dinars, and the fourth checks were worth (15) billion dinars. The total amount of money withdrawn by the Kurdish-owned company (Riah Baghdad) is (477) billion dinars out of (3 trillion and 700) billion dinars.

Does Iraq have hope for change?

Draw Media, AFP Iraqi lawmakers have elected a new president who swiftly named a prime minister in the hope of ending a year of political gridlock and deadly violence. But major challenges lie ahead for the crisis-hit nation. – How will government talks play out? – Iraq’s parliament, dominated by the pro-Iran Coordination Framework of Shiite Muslim factions, elected on Thursday a new president, 78-year-old Kurdish former minister Abdul Latif Rashid. The new head of state moved immediately to task Shiite politician Mohammad Shia Al-Sudani with forming a government, capping a whole year of deadlock between major parties since Iraq last went to the polls in October 2021. In multi-ethnic, multi-confessional Iraq, where political alliances and coalitions constantly shift, divisions between feuding factions might resurface and complicate Al-Sudani’s efforts in the 30 days afforded to him to form a government capable of commanding a majority in parliament. In the past, constitutional deadlines have been routinely missed amid protracted political wrangling. “Once we start discussing who becomes minister, but even more critically who gains more leverage over the senior civil service, government agencies, state coffers — that’s when we will continue to see the fragmentation and stalemate play out,” said Renad Mansour of British think-tank Chatham House. He explained that Iraq is headed for “another power-sharing government”, where political parties will “try and divide the country’s wealth”. And the stakes are high. A colossal $87 billion in revenues from oil exports are locked up in the central bank’s coffers. The money can help rebuild infrastructure in the war-ravaged country, but it can only be invested after lawmakers approve a state budget presented by the government, once formed. – What will Sadr do? – The future government’s hands may be tied by influential Shiite cleric Moqtada Sadr, capable of mobilising tens of thousands of his supporters with a single tweet. In June, he had ordered the 73 lawmakers in his bloc to resign, leaving parliament in the hands of the rival Coordination Framework, which now controls 138 out of 329 seats in the legislature. This pro-Iranian alliance includes the political arm of the former paramilitary Hashed Al-Shaabi, as well as Sadr’s longtime rival, former prime minister Nuri Al-Maliki. Political analyst Ali Al-Baidar noted the Sadrist movement has kept uncharacteristically “quiet”. It may be that their leader has been “giving the political forces a chance”, but it could also be the result of “an agreement offering the movement some” government positions in return for their tacit approval of Al-Sudani’s nomination, Baidar said. Tensions between the two rival Shiite camps boiled over on August 29 when more than 30 Sadr supporters were killed in clashes with Iran-backed factions and the army in Baghdad’s Green Zone, which houses government buildings and diplomatic missions. “It remains a precarious state of affairs,” Mansour said. “Sadr will remain on the margins of the political scene, trying to disrupt and use protests to replace the political capital” he lost in parliament, the researcher added. Sadr is “hoping to force an early election using controlled instability as he always has, to maintain his power and leverage in negotiations. “But mistakes in the past few months have… put him in a difficult bargaining position,” Mansour continued. – Is there hope for change? – Political analyst Baidar said the “consensus” on Rashid’s appointment means a government will be formed relatively easily, but stressed the “colossal tasks” ahead. Nearly four out of 10 young Iraqis are unemployed and one-third of the oil-rich country’s population of 42 million lives in poverty, according to the United Nations. Prime minister-designate Al-Sudani vowed on Thursday to push through “economic reforms” that would revitalise Iraq’s industry, agriculture and private sector. He also promised to provide young Iraqis “employment opportunities and housing”. According to Baidar, a “growing” global interest in Iraqi politics — specifically from Washington, Paris and London — could “force politicians to perform better”. “While Iraq is by no means a poor country, private and partisan interests conspire to divert resources away from critical investment in national development,” UN envoy Jeanine Hennis-Plasschaert told the Security Council last week. “Iraq’s political and governance system ignores the needs of the Iraqi people,” she charged. “Pervasive corruption is a major root cause of Iraqi dysfunctionality. And frankly, no leader can claim to be shielded from it.” A pessimistic Mansour said “public life will remain as it is”. “People will still not have their basic rights, water, healthcare, electricity.”

Kirkuk oil revenues and sales have increased

Draw Media Kirkuk's oil revenue has almost doubled from $105 million in August to $193 million in September. The export of Kirkuk oil fields in August was (1 million 109 thousand 528) barrels, the price of a barrel in the month was (95) dollars, the total revenue was (105 million 405 thousand) dollars The export of Kirkuk oil fields in September was (2 million 169 thousand 180) barrels and the price of a barrel in September was (88.83) dollars, the total revenue is (193 million) dollars. According to the Iraqi Oil Ministry, Kirkuk oil exports between August and September 2022 are as follows: • Kirkuk oil exports in September 2022: (2 million 169 thousand 180) barrels • Kirkuk oil exports in August 2022: (1 million 109 thousand 528) barrels The difference between August and September is 1 million 59 thousand 652 barrels. According to Darw, the decline in Kirkuk oil exports in August was due to two reasons: • Storage of oil produced in Kirkuk. • Domestic demand and increased production of domestic refineries. A source in the Kirkuk Oil Company told Darw: Kirkuk oil production on 31/8/2022 was (340 thousand barrels) distributed as follows: • 85,000 barrels of oil, by 25% of the production were stored in Kirkuk reservoirs. • (255 thousand) barrels used by (75%) as follows: - 49,000 barrels of oil have been exported to theTurkish Port of Jayhan, which is 14% of the total daily oil production of Kirkuk. - (206 thousand) barrels consumed domestically as follows: • (40,000) barrels for the refinery. • (39 thousand) barrels for Bazian refinery • (52,000) barrels for Beji refinery • The rest is for other refineries and power plants

Iraq's oil revenue in September was about $8.7 billion

Draw Media The Iraqi Oil Ministry announced oil revenues and sales in September • Oil revenues in September reached (8 billion 773 million) dollars, or (12 trillion 720 billion) dinars • The average amount of crude oil exported in September reached (98 million 765 thousand 153 thousand) barrels • 3 million 292 thousand barrels of oil were sold daily. • The average price of oil in September reached $ 88.83 a barrel. Oil revenues and sales in August • Oil revenues in August reached (9 billion 784 million) dollars, or (14 trillion 620 billion) dinars • The average amount of crude oil exports in August reached (101 million 859 thousand 528 thousand) barrels 3 million 286 thousand barrels of oil were sold daily. - The average price of oil reached $96 a barrel in August. Oil revenues and sales in July • Oil revenues in July reached (10 billion 608 million) dollars, or (15 trillion 381 billion) dinars • The average amount of crude oil exports in July reached (102 million 385 thousand 49 thousand) barrels 3 million 303 thousand barrels of oil were sold daily. - The average price of oil in July reached $ 103 a barrel. Iraq's oil revenue in September was about $8.7 billion Draw Media The Iraqi Oil Ministry announced oil revenues and sales in September • Oil revenues in September reached (8 billion 773 million) dollars, or (12 trillion 720 billion) dinars • The average amount of crude oil exported in September reached (98 million 765 thousand 153 thousand) barrels • 3 million 292 thousand barrels of oil were sold daily. • The average price of oil in September reached $ 88.83 a barrel. Oil revenues and sales in August • Oil revenues in August reached (9 billion 784 million) dollars, or (14 trillion 620 billion) dinars • The average amount of crude oil exports in August reached (101 million 859 thousand 528 thousand) barrels 3 million 286 thousand barrels of oil were sold daily. - The average price of oil reached $96 a barrel in August. Oil revenues and sales in July • Oil revenues in July reached (10 billion 608 million) dollars, or (15 trillion 381 billion) dinars • The average amount of crude oil exports in July reached (102 million 385 thousand 49 thousand) barrels 3 million 303 thousand barrels of oil were sold daily. - The average price of oil in July reached $ 103 a barrel.

Iraq generated about 10 billion US dollars in revenues from its oil sales in August

Draw Media Iraq generated about 10 billion US dollars in revenues from its oil sales in August, according to the Iraqi Oil Ministry. • Oil revenues in August reached (9 billion 784 million) dollars, or (14 trillion 620 billion) dinars • The average amount of crude oil exports in August reached (101 million 859 thousand 528 thousand) barrels 3 million 286 thousand barrels of oil were sold daily. - The average price of oil reached $96 a barrel in August. The Iraqi Oil Ministry announced the oil revenues and sales in July • Oil revenues in July reached (10 billion 608 million) dollars, or (15 trillion 381 billion) dinars • The average amount of crude oil exports in July reached (102 million 385 thousand 49 thousand) barrels 3 million 303 thousand barrels of oil were sold daily. - The average price of oil in July reached $ 103 a barrel.

Sadr announces resignation from political life

Iraq's powerful nationalist Shiite cleric Moqtada Al Sadr has announced his final resignation from political life and the closure of his personal offices, according to a statement he released on Twitter. Sadr's announcement comes after he asked lawmakers from his Sadrist bloc to resign from the parliament.

As Iraq's political crisis deepens, US influence dwindles

By Sean Mathews - Middle East Eye Two days after protesters stormed the Iraqi parliament in July, a group named Ashab al-Kahf, or Companions of the Cave, released a threatening statement about the true source of Iraq's political implosion. "The US embassy and British embassy and other Nato countries" had fomented unrest between Iraq's Shia, the group said on 1 August, and "all of their embassies and bases [would] be targeted" in return. The statement from the Iran-backed militia underscored many of the factors at play in Iraq, where the country's main Shia blocs are locked in a bitter power struggle after the collapse of 10 months of talks aimed at forming a government. The standoff pits influential Shia cleric Muqtada al-Sadr, who emerged as the biggest winner in Iraq's October elections, against a coalition of Iran-backed Shia parties that have frustrated the cleric's attempts to cobble together a government. The crisis escalated in June after Sadr withdrew his bloc of MPs from parliament and told his supporters to storm Iraq's green zone, the country's cloistered centre of power. For more than two weeks, thousands of Sadrists have been camped outside parliament as their mercurial leader calls for a total overhaul of the country's political system, new elections and potentially a new constitution. While the Iranian militia claims the US is behind the chaos, analysts and former US officials say that, far from demonstrating Washington's ability to drive events in Iraq, the unfolding crisis marks the US' dwindling power, and interest, in the country. "The US has relatively little to do with what's going on in Iraq, and has few ways to influence it in a positive or negative way," Douglas Silliman, president of the Arab Gulf States Institute in Washington, DC and a former US ambassador to Iraq, told Middle East Eye. 'Absent engagement' Washington is certainly less visible in Iraq today than it has been in decades. While 2,500 US troops remain in Iraq, late last year the Pentagon's combat mission to defeat the Islamic State group transitioned to an "advise and assist" role in support of the Iraqi army. This lower profile has extended beyond the military realm. Iraq has hosted just two senior US government visits in the months since the country's October election. Meanwhile, the sprawling US embassy has been operating with a skeleton crew since 2019, when the US ordered all "non-emergency" staff to leave Iraq amid security threats. "US engagement in Iraq's political process has been almost completely absent," Jonathan Lord, a former Iraq country director at the Department of Defense, now head of the Middle East security programme at CNAS, a Washington think tank, told MEE. Some consider the past ten months a missed opportunity for the US. Washington apprehensively welcomed what was generally seen as a peaceful election, albeit one plagued by record low turnout, where big political parties backed by armed militias demonstrated their staying power. But there were some signs of progress. The US had supported changes to a law making it easier for independent and reformist candidates to be elected. The move was a response to the Tishreen protests that swept Iraq in 2019. Some independent candidates were voted in, however, Sadr made the biggest gains under the new system. Still, "the result of the election was pretty pleasing to Washington", Silliman said. "The US saw the elections as a relatively good sign that Iraq was moving towards institutional politics that are more stable, and produce more moderate governments." There is little love between the US and Sadr, an Iran-educated cleric who led an armed resistance movement against the US occupation. But in recent years, Sadr has billed himself as an Iraqi nationalist. Some in Washington view him as a potential hedge against Tehran, despite concerns about his thirst for power and aims for a religous government styled along the lines of Iran's own theocracy. "The US sees Sadr as a volatile nationalist with a huge base. He is viewed as someone who needs to be steered in a direction beneficial to the US, and that is what the US has tried to do, and will continue to do," Lahib Higel, senior Iraq analyst at International Crisis Group, told MEE. The US has limited scope for dialogue with Sadr. While Sadrists in the Iraqi government do engage with Western officials, they refuse to speak directly to the US. Communication is left to intermediaries. Following the October election, Washington's main political effort in Iraq has revolved around trying to broker talks between Kurdish KDP and KUP parties to agree on a consensus candidate for president, analysts and former US officials say. Iraq operates under a sectarian power-sharing system imposed after the US occupation. The president of Iraq is always a Kurd, the prime minister an Arab Shia, and the president of the parliament an Arab Sunni. "The US' stated position after the elections was that it was neutral, but to some a preferred route was the tripartite alliance between the KDP, the Sunnis and the Sadrists to slowly push out Iran aligned groups," Renad Mansour, Iraq initiative director at Chatham House, told MEE. But Iraq was not a top priority for the Biden administration last autumn. The October elections came as Washington dealt with the fallout of its chaotic withdrawal from Afghanistan. The US was also deep into negotiations with Iran about re-entering the 2015 nuclear deal. The US was likely unwilling to put forth the level of engagement needed to bring the Iraqi groups together. "The reason we haven't seen much talk of the US in Iraq's political process is simply because they don't have much of a role, and they haven't wanted to," Higel said. After the US-led invasion that toppled Saddam Hussein in 2003, Iraq descended into civil war. The Islamic State group then conquered vast swathes of the country. The economy has also stalled. About 90 percent of Iraq's government revenue comes from oil sales. Private sector growth is anaemic. Rampant corruption means ordinary Iraqis have seen little relief from rising crude prices, while food and other living costs have increased, exacerbated in part by Russia's invasion of Ukraine. At the same time, the country is in the middle of an historic drought. And compounding the domestic challenges is the proliferation of Iran-backed militias. The dire situation means Iraq's series of weak governments, cobbled together as compromises between the country's bickering factions, have looked abroad for success. Prime Minister Mustafa Kadhimi has led efforts to mediate between Iran and Saudi Arabia. He has also spearheaded deeper integration with Jordan and Egypt. Ahead of his trip to the region, US President Joe Biden lauded Baghdad as a “platform for diplomacy". But some say the focus on diplomatic forays abroad has only made the government appear more oblivious and unresponsive to the needs of average Iraqis, such as those blockading parliament. "How much do we celebrate a government in which the main successes come when they go to conferences abroad, while the country is falling apart?" said Mansour from Chatham House. Meanwhile, Iraq's political crisis drags on, and the US embassy in Baghdad remains eerily empty.

Iraq exports over 102 mln barrels of crude oil in July

Draw Media Iraq exported 102.38 million barrels of crude oil in July at revenues of 10.6 billion U.S. dollars, said the Iraqi Oil Ministry. The average price for crude oil in July was 103.6 dollars per barrel, according to a ministry statement, citing statistics from the State Organization for Marketing of Oil. A total of 99.96 million barrels were exported from oil fields in central and southern Iraq via the Port of Basra, while about 2.34 million barrels from the northern province of Kirkuk via the Turkish port of Ceyhan on the Mediterranean, the statement said. Oil prices have risen in global markets since the outbreak of the Russia-Ukraine crisis, benefiting Iraq and other oil export countries. Iraq's economy heavily relies on crude oil exports, which account for more than 90 percent of the country's revenues.

Iraqi Oil Revenue (2004 - 2020)

Ibtsam Abdul Latif Mohammed: Research of the House of Representatives Research Office According to the data of the Central Bank of Iraq, revenue and expenditure, the amount of deficit and revenue surplus during the years (2004-2020) were as follows; 1. Total revenue was (1 quadrillion 296 trillion 284 billion) dinars, of which 1 quadrillion 202 trillion 222 billion dinars were oil revenue by (93%). 2. The total expenditure during that period was (1 quadrillion 144 trillion 731 billion) dinars. 3. The deficit was recorded only in 2015, 2016, 2019 and 2020, the total deficit was (33 trillion and 625 billion dinars). - The highest level of deficit in 2020 by (8.5%), one point higher than the deficit rate in 2016. - All other years recorded a surplus of revenue; the total surplus was (196 trillion and 262 billion) dinars. - The highest level of revenue surplus was recorded in 2011 at 20%, which is slightly higher than the surplus in 2012 - If we subtract the total deficit from the total revenue surplus during the period (2004 - 2020), the net surplus will be about (162 trillion and 637 billion) dinars. Iraqi Oil Revenue (2004 - 2020) 1. Total revenue was (1 quadrillion 296 trillion 284 billion) dinars, of which oil revenue was (1 quadrillion 202 trillion 222 billion) dinars. 2. The highest level of gross income was recorded in 2012, followed by 2013 and 2019, due to rising oil prices in the world markets. 3. Total oil revenue during (2004 - 2020) was (1 quadrillion 202 trillion 222 billion) dinars. 4. Iraq's gross revenue is mainly dependent on oil revenues, except for the years (2015, 2016, 2017 and 2020) in all other years by (90%) and more the gross revenues came from oil. Revenue, expenditure, revenue surplus and deficit of Iraq in 2004 – 2020 1. The total revenue of Iraq during (2004 - 2020) was ((1 quadrillion 296 trillion 284 billion)) dinars, the highest rate of revenue recorded in (2012) and (2013). 2. The total expenditure during (2004 - 2020) was (1 quadrillion 144 trillion 731 billion) dinars. 3. The deficit was recorded only in 2015, 2016, 2019 and 2020, the total deficit was (33 trillion and 625 billion dinars). 4. The highest level of deficit in 2020 and was (8.5%), one point higher than the deficit rate in 2016. 5. All other years recorded a surplus of revenue; the total surplus was (196 trillion and 262 billion) dinars. 6. The highest level of revenue surplus was recorded in 2011 at 20%, which is slightly higher than the surplus in 2012 7. If we subtract the total deficit from the total revenue surplus during the period (2004 - 2020), the net surplus will be about (162 trillion and 637 billion) dinars.

Recent Iraqi Supreme Court Decision Likely to Trigger Investment Arbitration Claims

On February 15, 2022, the Federal Supreme Court of the Republic of Iraq (“Iraq”) issued a sweeping decision upending the existing legal framework governing the oil sector in the country (“Court Decision”).[1] The Government of Iraq has since taken numerous steps to implement the decision, which may have significant and far-reaching repercussions on international oil companies operating under petroleum contracts with the Kurdistan Regional Government (“KRG”). The Court Decision, among other things, purports to (i) repeal the Kurdistan Region Oil and Gas Law (No. 22 of 2007) based on which the KRG has entered into Production Sharing Contracts (“PSCs”) with international oil companies, (ii) rule that the Federal Ministry of Oil is entitled to pursue the nullification of any contracts entered into by the KRG with third parties regarding oil exploration, extraction, export and sale, (iii) rule that the Ministry of Oil and the Federal Board of Supreme Audit are entitled to review and revise any oil contracts entered into by the KRG, and (iv) order the KRG to hand over to the federal government all oil production it has extracted from oilfields. In response to the Court Decision, the KRG Prime Minister reaffirmed the KRG’s commitment to its contracts with international oil companies and emphasized that the KRG will not relinquish any of its rights.[2] In addition, on May 30, 2022, Kurdistan’s Judicial Council released a statement challenging the legality of the Court Decision and the validity and competence of the Court itself.[3] While the Court Decision does not automatically terminate contracts with international oil companies, the Government of Iraq has indicated that it intends to force the cancellation or substantial revision of such contracts. On February 26, 2022, the Oil Minister of Iraq issued an order creating a committee with the purpose of executing the Court Decision.[4] On March 24, 2022, the Oil Minister issued an order to the KRG to send for its review copies of all oil and gas contracts it has entered into since 2004.[5] The Oil Minister has also proposed establishing a state-owned regional oil company that would manage oil assets in the KRG and that would be overseen by the Government of Iraq.[6] More recently, the Oil Ministry has also commenced proceedings with several international oil companies, summoning such companies to appear before the Court in Baghdad on June 5, 2022.[7] While the date of the initial hearing was postponed in order to allow for the summons to be perfected, the proceedings are ongoing.[8] Such interference by the Iraqi Government seems all but certain to lead international oil companies to commence legal proceedings against Iraq if the matter is not resolved promptly. The affected investors are expected to seek redress before international fora, in particular, contract-based arbitrations under the terms of the PSCs and, in parallel, treaty-based arbitrations under applicable international investment agreements. Given the number of international oil companies operating in the Kurdistan Region pursuant to long-term contracts with the KRG (over 30), Iraq’s exposure to damages claims could well reach tens of billions of dollars. I. Contract Claims under Production Sharing Contracts Iraq could be held contractually liable for breaching the PSCs by taking any action to either terminate or modify these agreements. It could also be held liable for violating the stabilization clause (contained within the KRG Model PSC (“Model PSC”)) if it takes any measure altering the fiscal or economic conditions resulting from laws or regulations in force on the date of signature of these agreements.[9] Iraq could be contractually on the hook since, as a matter of Iraqi constitutional law, the KRG is a constituent subdivision of Iraq.[10] In the circumstances, international and/or English legal principles such as attribution or alter ego are likely to be relevant (English law being the applicable law stipulated in the Model PSC).h .[11] In this regard, Claimants could in particular point to a recent decision by the High Court of Justice in England which found, in connection with breaches of two oil and gas PSCs, that acts by the KRG “were done in exercise of the sovereign authority of the state of Iraq.”[12] Investors are expected to initiate arbitrations seated in London, England, and governed by the London Court of International Arbitration (“LCIA”) Rules, as expressly provided for in the Model PSC.[13] Notably, the Model PSC broadly defines the scope of “disputes” to cover, among other things, any dispute as to the “existence,” “validity,” “enforceability,” or “termination” of the contract.[14] II. Treaty Claims under Applicable International Investment Agreements Iraq has also entered into several Bilateral Investment Treaties (“BITs”) and multilateral Treaties with Investment Provisions (“TIPs”) that provide substantive protections to investors and commit Iraq to resolving disputes through arbitration. For example, the Japan-Iraq Bilateral Investment Treaty (“BIT”) protects against “expropriation” and “arbitrary measures” and affirms that investors are to be afforded both “fair and equitable treatment” and “full protection and security.”[15] Similarly, investors who are nationals of a member State of the Organization of the Islamic Conference (“OIC”) can initiate arbitration pursuant to the OIC Investment Agreement. The OIC Investment Agreement both protects nationals of OIC Member States against expropriation and allows such nationals, through its most-favored-nation provision, to avail themselves of substantive protections contained in other investment treaties to which Iraq is a party.[16] III. Conclusion The international oil companies impacted by the Court Decision have numerous legal avenues for seeking redress as a result of the substantial harm they may suffer. It is therefore very possible that Iraq will find itself subject to numerous claims in the range of tens of billions of dollars (if not more) before international fora for years to come due to the Court Decision and the Government’s actions to implement that decision. ______________________ [1] Federal Minister of Oil and Ali Shadad Fares v. Minister of Natural Resources of the Kurdistan Region and Speaker of Parliament of the Kurdistan Region, Supreme Court of the Republic of Iraq, 59/Federal/2012 unified with 110/Federal/2019 (15 February 2022). [2] Press Conference of Masrour Barzani, Prime Minister of the Kurdistan Region of Iraq, 3 March 2022. [3] Statement of the Judicial Council of the Kurdistan Region of Iraq No. 1511, 30 May 2022. The KRG maintains that the Court was not properly constituted as the Federal Supreme Court capable of determining matters of constitutional law. [4] Iraq Oil Reporter, Uncertainty Deepens After Landmark Ruling Against Kurdistan’s Oil Sector, 8 March 2022, accessible: https://www.iraqoilreport.com/news/uncertainty-deepens-after-landmark-ruling-against-kurdistans-oil-sector-44651/ [5] Iraq Oil Reporter, Uncertainty Deepens After Landmark Ruling Against Kurdistan’s Oil Sector, 8 March 2022, accessible: https://www.iraqoilreport.com/news/uncertainty-deepens-after-landmark-ruling-against-kurdistans-oil-sector-44651/ [6] Iraq Oil Reporter, Baghdad Launches Legal Action Against Kurdistan’s Oil Companies, 2 June 2022, accessible here. [7] Iraq Oil Reporter, Kurdistan Opens New Front in Baghdad Legal Battles, 9 June 2022, accessible: https://www.iraqoilreport.com/news/kurdistan-opens-new-front-in-baghdad-legal-battles-44896/ [8] Iraq Oil Reporter, Kurdistan Opens New Front in Baghdad Legal Battles, 9 June 2022, accessible: https://www.iraqoilreport.com/news/kurdistan-opens-new-front-in-baghdad-legal-battles-44896/ [9] Model Production Sharing Contract, Kurdistan Regional Government, Article 43. [10] See Constitution of the Republic of Iraq, Article 117. [11] Model Production Sharing Contract, Kurdistan Regional Government, Article 43; See Chevron Bangladesh Block Twelve, Ltd. and Chevron Bangladesh Blocks Thirteen and Fourteen, Ltd. v. People’s Republic of Bangladesh, ICSID Case No. ARB/06/10, Award (17 May 2010); Perenco Ecuador Limited v. Republic of Ecuador and Petroecuador, ICSID Case No. ARB/08/6, Decision on Jurisdiction (30 June 2011). [12] Dynasty Company for Oil and Gas Trading Limited v. Kurdistan Regional Government of Iraq and Dr. Ashti Hawrami, English High Court of Justice 2021 EWHC 953 (Comm) (23 April 2021). [13] Model Production Sharing Contract, Kurdistan Regional Government, Article 42.1. [14] Model Production Sharing Contract, Kurdistan Regional Government, Article 42.1. [15] Agreement between Japan and the Republic of Iraq for the Promotion and Protection of Investments, 25 February 2014, Articles 5(1), 5(2), and 5(3).

Baghdad court rejects Kurdistan’s delay tactics in lawsuit against IOCs

Draw Media, Iraq Oil Report The Oil Ministry’s lawsuit against seven oil companies operating in Kurdistan gained momentum as a Baghdad judge moves toward reviewing contracts. A Baghdad court dealt a setback Sunday to the Kurdistan Regional Government’s (KRG) legal strategy of attempting to delay a federal lawsuit against seven international oil companies (IOCs) operating in Kurdistan. Judge Mohammed Ali Mahmoud Nadeem said the federal Oil Ministry’s case against the IOCs at Baghdad’s Karkh Commercial Court could move forward even though the KRG Ministry of Natural Resources (MNR) has filed a related lawsuit against several Oil Ministry leaders at Erbil’s Court of Criminal Investigation.

Halliburton pledges to obey blacklist policy against KRG oil sector

Draw Media, Iraq Oil Report Three major U.S. oil services companies have now told the Oil Ministry they will comply with new restrictions stemming from February's landmark court ruling against Kurdistan. U.S. oil services giant Halliburton joined Schlumberger and Baker Hughes in notifying Iraq's Oil Ministry that it will comply with a Federal Supreme Court (FSC) ruling invalidating the legal foundations of Iraqi Kurdistan’s energy sector. In a letter dated June 28 and addressed to Iraqi Oil Minister Ihsan Ismaael, which was seen by Iraq Oil Report and confirmed as authentic, Halliburton said it would refrain from entering into new contracts or participating in ongoing tenders in the Kurdistan region without Baghdad’s blessing. Halliburton's letter came in response to a set of circular letters — one from the Ministry of Oil to the Iraqi National Oil Company and one from the Basra Oil Company — instructing “all lead contractors and sub-contractors” to sever their contractual engagements with the KRG within three months or risk being blacklisted by Baghdad.

Iraq's oil revenue in May was $11.436 billion

Draw Media The Iraqi Oil Ministry announced oil revenues in May. • Oil revenues in March reached (11 billion 436 million) dollars, or (16 trillion 580 billion) dinars • The average amount of crude oil exports in April reached (102 million 303 thousand 20 thousand) barrels • 3.3 million barrels of oil were sold daily. - The average price of oil in April reached $ 111.79 a barrel. The Iraqi Oil Ministry announced the oil revenues and sales in April. • Oil revenues in March reached $10.55 billion. • The average amount of crude oil exports in April reached (101 million 390 thousand 662 thousand) barrels 3 million 380 thousand barrels of oil were sold daily. - The average price of oil in April reached $ 104,091 a barrel. The Iraqi Oil Ministry announced the oil revenues and sales in March: • Oil revenues in March reached (10 billion 913 million 197 thousand) dollars. • The average amount of crude oil exports in March reached (100 million 579 thousand 612 thousand barrels) and is distributed among the oil fields as follows: - 99 million 130 thousand 677 barrels of oil were exported from central and southern Iraq. - 1 million 448 thousand 935 barrels of oil were exported from Kirkuk to Turkey. - The average price of oil in March reached $ 108,503 per barrel. - The oil exported in March was loaded by 34 international companies from the southern port and the port of Jayhan.