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Minister of Oil: The revenues generated from oil in the region do not exceed 50 percent of the sales value
Shafaq News/ On Saturday, Federal Oil Minister Ihsan Abdul Jabbar Ismail expressed his rejection of the policy pursued by the Kurdistan Regional Government in managing the oil and gas file, describing it as "incorrect" and the state budget incurred significant financial losses.
Ismail said in an interview during a meeting of the opinion body in the ministry, followed by Shafak News Agency, that "the court's decision 59 of 2012 and decision 110 of 2019 are important because it is not true what is happening in the management of oil activity in the region that the cost of a barrel is 50 percent of the global selling cost."
He added that "what is currently sold at a price of 50 dollars per barrel in the Kurdistan Region," noting that "the net revenues that reach the region do not in any case exceed 50 percent of the value of the oil sold. in the region."
The minister also indicated that "there is no country in the world that has two energy policies, as all countries of the world have a unified policy, and it is not reasonable for a country that produces oil and gas with two policies, part of which is imported, and the other part gives initiatives to export," stressing that "it does not exist in all countries." the world ".
He added that this matter, "we found its negative effects by dealing with OPEC when Iraq was unable to adhere to the limitations of OPEC due to the region's lack of commitment, and this indicates that the Iraqi oil policy is not integrated," noting that "the lack of revenues derived from oil and gas with the presence of two energy policies in a country." One is incorrect, as the multiplicity of orientations in managing the file is incorrect. The current matter cannot continue in this way, because the energy file must be managed with one thought and integration.
The minister went on to say, "The Federal Court's decision came to explain the provisions of the constitution, and they are clear to us with regard to the energy industry, and this file cannot be managed on the basis of political mood," stressing that "an energy file cannot be formulated on the basis of trends. Political, as the energy file is a very profitable file, and it affects the foreign policy of the state, and the file of the contracting states, producers or consumers, but it is not subject to the whims of internal political trends.
Ismail went on to say, "Oil is a profitable, commercial industry that adopts the highest standards of work. Regardless of the provisions of the constitution, matters are clear, and the Federal Court's decision cut this issue off, and came in line with the correct standards in managing the energy file, which must be unified."
The minister also said, "We do not believe in holding the authorities at the center, and even our policy in the ministry does not believe in that, and that the companies are authorized to engage in oil activity, meaning that the ministry does not interfere with the activity of the Basra Oil Company or the National, and we even assured the region that the Kurdistan Oil Company will have very expanded powers ".
He added that "there is no desire for Baghdad or the Ministry of Oil to impose control over the decision, but rather Baghdad wants to regulate the oil activity and turn it into a real, transparent commercial activity that guarantees all parties their rights and is managed by a federal state-owned company, and its revenues and sale proceeds go to an account owned by the Ministry of Finance that works on Securing the region’s revenues in case the Ministry of Finance is unable to implement it.
The minister stated that "despite all these attempts and flexibility in dealing with the region, we did not get a result, and that more than 75 days of discussion and initiatives that came out of Baghdad or the Oil Ministry had no result," noting that "the opinion body in the Ministry of Oil and the Council of Ministers. The management of the National Oil Company will put it in the picture, and it seems that we are going to implement the literal application of the provisions of the Federal Court's decision."
He added, "The issue is not easy, although we have informed the region that we are ready to put in place clear work mechanisms that satisfy all parties and guarantee their rights and manage the oil activity with a standard management and a highly profitable strategy that guarantees the safety of revenues and the unity of countries towards energy."
He explained, "The result was negative, although we opened a discussion, but we are still going around in the same circle as there is mistrust, and therefore we are going to implement the provisions of the court's decision, although this will lead to internal and external challenges."
He added in his clarification that "with regard to the external challenges, they lie in the energy file and what are the implications of implementing this decision, and also that the National Oil Company (SOMO) must play its role in reducing the size of the impact on the international market," saying that "many arrows will be directed to the Ministry of Oil, and many external challenges that the Ministry of Oil will face in implementing the decision of the Federal Court.
The minister stressed that "the Ministry of Oil is responsible for its management, and the National Oil Company will manage the energy file internally in accordance with the provisions of the Federal Court's decision, and this matter leads to protecting energy security in the federal state, and returning the situation as it is."
On Tuesday (February 15, 2022) the Federal Court issued a decision that the oil and gas law of the Kurdistan Regional Government was unconstitutional, with its obligation to hand over all oil production from oil fields in the region and other areas from which the Kurdistan Ministry of Natural Resources extracted oil and handed it over to the federal government represented by the Federal Ministry of Oil And enabling it to use its constitutional powers regarding oil exploration, extraction and export.
The President of Kurdistan Region, Nechirvan Barzani, described the decision as "unconstitutional" and was based on a law of the time of the former regime, and stressed the regional government that "such an unconstitutional decision cannot be accepted."
The Kurdistan Regional Government considered the decision of the Federal Court on the oil and gas law in the region, on Tuesday, as "unconstitutional", stressing that it cannot be accepted.
And the Kurdistan Region began to sell its oil in isolation from the federal government, after a stifling financial crisis as a result of the collapse of oil prices during the ISIS invasion of areas in Iraq, in addition to the disputes with Baghdad that prompted the latter to stop paying the salaries of the region’s employees.
Baghdad says its national oil company, SOMO, is the only one authorized to sell Iraqi crude oil, but each side claims the constitution is on its side. Since the Iraqi oil and gas law remained imprisoned in the drafting stage due to differences, there was room for maneuver.
The oil file is one of the most prominent outstanding issues between Baghdad and Erbil.
Baghdad used to pay 453 billion Iraqi dinars per month (about $380 million) as salaries to the employees of the Kurdistan Region, but it stopped them after the region conducted the independence referendum on its part, and because of what Baghdad said that the region was not committed to handing over its oil in accordance with the terms of the federal budget.
After several rounds of political negotiations, the region was obligated, according to an agreement with the government in Baghdad, to hand over 250 thousand crude barrels per day of crude oil produced from its fields to the state-owned company SOMO, and hand over the revenues to the federal public treasury.
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Ismail said in an interview during a meeting of the opinion body in the ministry, followed by Shafak News Agency, that "the court's decision 59 of 2012 and decision 110 of 2019 are important because it is not true what is happening in the management of oil activity in the region that the cost of a barrel is 50 percent of the global selling cost."
He added that "what is currently sold at a price of 50 dollars per barrel in the Kurdistan Region," noting that "the net revenues that reach the region do not in any case exceed 50 percent of the value of the oil sold. in the region."
The minister also indicated that "there is no country in the world that has two energy policies, as all countries of the world have a unified policy, and it is not reasonable for a country that produces oil and gas with two policies, part of which is imported, and the other part gives initiatives to export," stressing that "it does not exist in all countries." the world ".
He added that this matter, "we found its negative effects by dealing with OPEC when Iraq was unable to adhere to the limitations of OPEC due to the region's lack of commitment, and this indicates that the Iraqi oil policy is not integrated," noting that "the lack of revenues derived from oil and gas with the presence of two energy policies in a country." One is incorrect, as the multiplicity of orientations in managing the file is incorrect. The current matter cannot continue in this way, because the energy file must be managed with one thought and integration.
The minister went on to say, "The Federal Court's decision came to explain the provisions of the constitution, and they are clear to us with regard to the energy industry, and this file cannot be managed on the basis of political mood," stressing that "an energy file cannot be formulated on the basis of trends. Political, as the energy file is a very profitable file, and it affects the foreign policy of the state, and the file of the contracting states, producers or consumers, but it is not subject to the whims of internal political trends.
Ismail went on to say, "Oil is a profitable, commercial industry that adopts the highest standards of work. Regardless of the provisions of the constitution, matters are clear, and the Federal Court's decision cut this issue off, and came in line with the correct standards in managing the energy file, which must be unified."
The minister also said, "We do not believe in holding the authorities at the center, and even our policy in the ministry does not believe in that, and that the companies are authorized to engage in oil activity, meaning that the ministry does not interfere with the activity of the Basra Oil Company or the National, and we even assured the region that the Kurdistan Oil Company will have very expanded powers ".
He added that "there is no desire for Baghdad or the Ministry of Oil to impose control over the decision, but rather Baghdad wants to regulate the oil activity and turn it into a real, transparent commercial activity that guarantees all parties their rights and is managed by a federal state-owned company, and its revenues and sale proceeds go to an account owned by the Ministry of Finance that works on Securing the region’s revenues in case the Ministry of Finance is unable to implement it.
The minister stated that "despite all these attempts and flexibility in dealing with the region, we did not get a result, and that more than 75 days of discussion and initiatives that came out of Baghdad or the Oil Ministry had no result," noting that "the opinion body in the Ministry of Oil and the Council of Ministers. The management of the National Oil Company will put it in the picture, and it seems that we are going to implement the literal application of the provisions of the Federal Court's decision."
He added, "The issue is not easy, although we have informed the region that we are ready to put in place clear work mechanisms that satisfy all parties and guarantee their rights and manage the oil activity with a standard management and a highly profitable strategy that guarantees the safety of revenues and the unity of countries towards energy."
He explained, "The result was negative, although we opened a discussion, but we are still going around in the same circle as there is mistrust, and therefore we are going to implement the provisions of the court's decision, although this will lead to internal and external challenges."
He added in his clarification that "with regard to the external challenges, they lie in the energy file and what are the implications of implementing this decision, and also that the National Oil Company (SOMO) must play its role in reducing the size of the impact on the international market," saying that "many arrows will be directed to the Ministry of Oil, and many external challenges that the Ministry of Oil will face in implementing the decision of the Federal Court.
The minister stressed that "the Ministry of Oil is responsible for its management, and the National Oil Company will manage the energy file internally in accordance with the provisions of the Federal Court's decision, and this matter leads to protecting energy security in the federal state, and returning the situation as it is."
On Tuesday (February 15, 2022) the Federal Court issued a decision that the oil and gas law of the Kurdistan Regional Government was unconstitutional, with its obligation to hand over all oil production from oil fields in the region and other areas from which the Kurdistan Ministry of Natural Resources extracted oil and handed it over to the federal government represented by the Federal Ministry of Oil And enabling it to use its constitutional powers regarding oil exploration, extraction and export.
The President of Kurdistan Region, Nechirvan Barzani, described the decision as "unconstitutional" and was based on a law of the time of the former regime, and stressed the regional government that "such an unconstitutional decision cannot be accepted."
The Kurdistan Regional Government considered the decision of the Federal Court on the oil and gas law in the region, on Tuesday, as "unconstitutional", stressing that it cannot be accepted.
And the Kurdistan Region began to sell its oil in isolation from the federal government, after a stifling financial crisis as a result of the collapse of oil prices during the ISIS invasion of areas in Iraq, in addition to the disputes with Baghdad that prompted the latter to stop paying the salaries of the region’s employees.
Baghdad says its national oil company, SOMO, is the only one authorized to sell Iraqi crude oil, but each side claims the constitution is on its side. Since the Iraqi oil and gas law remained imprisoned in the drafting stage due to differences, there was room for maneuver.
The oil file is one of the most prominent outstanding issues between Baghdad and Erbil.
Baghdad used to pay 453 billion Iraqi dinars per month (about $380 million) as salaries to the employees of the Kurdistan Region, but it stopped them after the region conducted the independence referendum on its part, and because of what Baghdad said that the region was not committed to handing over its oil in accordance with the terms of the federal budget.
After several rounds of political negotiations, the region was obligated, according to an agreement with the government in Baghdad, to hand over 250 thousand crude barrels per day of crude oil produced from its fields to the state-owned company SOMO, and hand over the revenues to the federal public treasury.
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