The Iraqi central and Kurdish Regional Government (KRG) are entering into a new dispute over energy policy. This started when the Kurds signed two new natural gas deals with American companies only for the Oil Ministry to declare them illegal.
On May 18 two U.S. firms HKN Energy and Western Zagros announced new energy deals with Kurdistan. HKN and ONEX Group will develop the Milan natural gas field while Western Zagros will work on the Topkhana-Kurdamir bloc. In total the two companies are supposed to invest around $110 billion. The gas will fuel local power plants to achieve the region’s goal of 24 hours of electricity. KRG Prime Minister Masrour Barzani then travelled to Washington D.C. to sign the contracts. These are the latest examples of Kurdistan continuing with its independent energy policy which it has followed since the fall of Saddam Hussein.
Immediately the Oil Ministry criticized the deals. It said they were illegal because they did not go through the central government. A parliamentarian chipped in that the contracts violated a Federal Court ruling that KRG’s oil production was under Baghdad’s supervision and that Barzani’s government is a caretaker one as didn’t have the authority to sign new deals. That led to the Ministry filing a lawsuit against the KRG on May 27.
This is just the latest example of the on going argument over energy policy. The Kurds have always claimed the constitution allows the regional government to sign contracts with corporations while Baghdad wants to centralize authority under its supervision. This issue has gone back and forth in the courts. The central government holds the upper hand however as the KRG is dependent upon monthly budget payments to cover its large public workforce. When Kurdistan tried to cover its civil service with its independent oil sales it failed miserably. It fell into massive debt and couldn’t pay its workers for months as Baghdad retaliated by cutting off payments. This might happen all over again over these natural gas contracts.
SOURCES
Al Aalem, “Barzani’s Washington contracts widen the rift with Baghdad and threaten a new salary crisis,” 5/22/25
Mahmoud, Sinan, “Iraqi Oil Ministry files lawsuit against Kurdish region over unilaterally signed energy deals,” The National, 5/27/25
The National, “US encourages energy deals with Iraqi Kurdistan,” 5/23/25
Rudaw, “Iraqi oil ministry says all deals must go through Baghdad, not Erbil,” 5/23/25
- "KRG defends gas deals as constitutional amid Baghdad opposition,” 5/20/25
- “PM Barzani says major gas deals with US firms to boost KRG economy,” 5/20/25
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