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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Foreign report: The Kurdistan government is facing a setback after stopping the flow of oil from the

    rocky
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    Foreign report: The Kurdistan government is facing a setback after stopping the flow of oil from the Empty Foreign report: The Kurdistan government is facing a setback after stopping the flow of oil from the

    Post by rocky Sat 01 Apr 2023, 5:04 am

    Foreign report: The Kurdistan government is facing a setback after stopping the flow of oil from the territory of the region

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    Economy News-Baghdad
    AGBI revealed that the Kurdistan Regional Government is facing a major setback in the oil industry, after the ruling issued by the International Court in favor of the central government in Baghdad came to suspend crude oil exports through pipelines from the Kurdistan Region of Iraq.
    The site added that the conflict between the central government in Baghdad and the Kurdistan Regional Government of Iraq dates back to 2014, when the Kurdistan Regional Government began direct export of oil by concluding production agreements with many international oil companies, a move that sparked a long dispute that led to the central government withholding a share. Territory from the state budget periodically.
    The Iraqi government sued Turkey, arguing that the only legal right to export oil through the pipeline to the Turkish city of Ceyhan belongs to the central government in Baghdad alone, not the KRG. The result of the International Court of Arbitration's decision was the immediate halt of pipeline imports by Turkey, dealing a heavy financial and political blow to the KRG that owes $3.35 billion to oil buyers as of December 31.
    Bilal Wahab, a fellow at the Wagner Program offered by the Washington Institute for Middle East Policy, said in an interview with the same website, "This loss represents a major blow to the oil and gas industry in the Kurdistan region of Iraq. It is true that it came after a series of previous losses, but this is The loss itself is different as it can be very decisive.
    And the AGBI website continued that in February 2022, the Iraqi Federal Court issued a ruling requiring the Kurdistan Regional Government to hand over all crude oil produced in the region and its adjacent areas to the Ministry of Oil in Baghdad, and to cancel the oil contracts of the Kurdistan Regional Government, including agreements related to exploration, extraction, exports and sales. other.
    Despite requests for comment, the KRG has remained silent on the matter, claiming it is unconstitutional, following its historical approach of ignoring rulings harmful to its interests issued by the central government, according to the site.
    Bilal Wahhab said, "This international ruling is considered a strengthening of Baghdad's position, which greatly weakens the position of the regional government of Kurdistan. Now, the regional government depends on Baghdad's goodwill for the continuation of its main industry."
    According to the site, in the last three months of 2021, oil production in the Kurdistan Regional Government amounted to about 437 thousand barrels per day, which represents only about a tenth of the total Iraqi oil production. In addition, nearly 90% of Kurdish crude oil was exported through pipelines, according to a Deloitte report prepared for the Kurdistan Regional Government.
    Bilal estimates that the region's storage capacity can only hold up to five days of production. Unless Erbil and Baghdad reach an agreement to resume pipeline-based exports, production is likely to decline or stop completely by Wednesday.
    Bilal added, "This ruling represents the end of the oil and gas industry as we know it today in the Kurdistan Regional Government, so the question is, what will it turn to as an alternative?"
    The KRG used to sell its oil at a significant discount compared to global market prices. The average price in December was $62.95 per barrel, compared to the average for Brent crude of $80.92. The reason for this discrepancy is partly due to the political risks involved in trading with the Kurdistan Regional Government, according to the site.
    Bilal adds that if the KRG reaches an agreement with Baghdad, it can impose a few extra dollars on a barrel, bringing its price to market prices. However, this will require the KRG to give up some of its political autonomy, which could be It has dire consequences."
    Douglas Silliman, president of the Arab Gulf States Institute in Washington and former US ambassador to Iraq from 2016 to 2019, told MEE that the Kurds were given more economic autonomy than many in Baghdad were willing to accept, including the ability to sign sharing agreements. Production with international oil companies and other producers.
    He added, "Over the past fifteen years, most of the economic activity in Kurdistan was based on legal conditions that were not accepted by Baghdad, but they were accepted in Erbil and Sulaymaniyah. Therefore, the Federal Court ruling poses a great threat to foreign investment in Kurdistan that goes beyond the oil and gas sector only."
    AGBI adds that the ongoing oil dispute is causing great harm to the Kurdistan Regional Government, affecting its credibility and undermining foreign investments in the region. “The KRG is already months behind in oil payments to international oil companies, a factor that weakens investor confidence in the region and also affects companies’ willingness to invest,” says Fernando Ferreira, director of geopolitical risk service at the US-based Rapidan Energy Group. Because they don't trust that they will get paid on time.
    To complicate the matter, the pressure exerted by Baghdad recently forced three US oilfield services companies, namely Schlumberger, Baker Hughes, and Halliburton, to withdraw from Kurdistan, and the three companies refused to comment on the matter, according to the website.
    In another blow to the KRG, in March, the oil company Trafigura terminated its contracts with the KRG, according to an AGBI spokesperson.
    "Although the KRG's oil contracts have been invalidated by the Federal Court," says Bilal, "a compromise can be reached between Erbil and Baghdad in the long term. By having the agreement between the two parties allow the old laws to continue to apply to some current situations while the The new law applies to all future cases, meaning that any existing oil contracts signed by the KRG with international oil companies will be allowed to continue despite being invalidated by a federal court ruling, while any new contracts must comply with the new law.
    Bilal suggested that “staying the Federal Court’s decision could be an option, but the best solution is for Iraq to enact a national law for hydrocarbons. This law has been pending since the drafting of the Iraqi constitution in 2005, and the oil and gas industry was mostly governed according to the laws established in There should also be, in one way or another, a legal article that legitimizes the oil and gas contracts signed by the KRG, and that this article makes the KRG alone, not Baghdad, responsible for the money owed."
    Bilal stressed that "the Kurdistan Regional Government must admit its defeat and move forward," admitting that "the region's approach to oil as a geopolitical rather than an economic asset was a mistake."

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