BAGHDAD (Reuters) – Iraq has made a fresh attempt to control revenue from the Kurdistan region by asking oil and gas firms operating there to sign new contracts with state-owned marketer, SOMO, rather than the Kurdistan Regional Government (KRG).
Oil Minister, Ihsan Ismael, said Iraq’s Oil Ministry would start implementing a February federal court ruling that deemed the legal foundations of the Kurdistan region’s oil and gas sector unconstitutional.
A letter seen by Reuters shows that the Oil Ministry appointed international law firm, Cleary Gottlieb Steen and Hamilton, to approach some oil and gas firms operating in the Kurdistan region to “initiate discussions to bring their operations into line with applicable Iraqi law.”
Implementing the court decision “will require changes to the contractual regime” for the companies, the letter added. Other firms received a letter directly from the Oil Minister, one source said.
The KRG has repeatedly rejected the federal court ruling.
The letters mark the first direct contact between the Ministry and oil firms operating in the Kurdistan region.
Baghdad’s persistent attempts to implement the ruling have the capacity to worsen already fraught tensions with Erbil.
Iraq’s state-owned North Oil (NOC) claimed, on Saturday, that KRG forces occupied some oil wells in Kirkuk.
Iraq has struggled to attract major fresh investments into its federal energy industry since signing a flurry of post U.S.-invasion deals over a decade ago.
The Iraqi government has cut oil output targets repeatedly as international oil companies that signed those initial deals leave due to poor returns.