Iraq is Now Blaming International Oil Companies for the Delay in KRG Oil Deliveries, Here's Why
Almost a year has passed since the Federal Government of Iraq imposed an embargo on oil exports from Kurdistan.
One of Baghdad's tools to undermine Erbil's autonomy is to destroy all financial independence for the region, which relies on independent oil supplies.
Another element of the embargo remains that international oil companies are to blame.
Just over a year ago, the Federal Government of Iraq, based in Baghdad, imposed an embargo on oil exports from Kurdistan, a semi-autonomous region centered in Erbil. Many politicians, analysts, and executives of international oil companies working in Kurdistan have spoken out against the embargo, stating that it doesn't benefit anyone involved. However, according to OilPrice.com, the reason behind this embargo is clear: the FGI* wants to eradicate any form of independence for Kurdistan. By cutting off their main source of income through independent oil supplies, the FGI aims to completely absorb the region into a unified Iraq under their control. This becomes even more evident when taking into account the Iran-Saudi Arabia relationship resumption deal brokered by China on March 10th, 2023 -(FGI stands for Federal Government of Iraq)
According to a high-ranking source who works closely with Iran's Petroleum Ministry and exclusively spoke with OilPrice.com, Iraq's Oil Ministry is utilizing various tactics to obscure the true reason for the cessation of oil supplies from Kurdistan. The source claims that the latest maneuver of blaming international oil companies for the embargo is simply another way for Baghdad to delay the situation and ultimately force Kurdistan into accepting any deal offered for its own survival. This strategy aims to strip Kurdistan of its independence and make it function like any other province in Iraq, ultimately controlled by Baghdad.
It goes without saying that the financial dependency of the Kurdistan region of Iraq has full support from Iran, Russia, and China. These nations do not want to see it functioning independently in any significant manner. All three countries, especially Iran, Turkey, and Syria, were fiercely opposed to Kurdistan's 2017 independence referendum.
They fear that allowing Iraqi Kurdistan to maintain any level of independence would set a dangerous precedent for their own Kurdish populations, which total about 9%, 10%, and 18%, respectively. As a result of the referendum on September 25th, 2017—where an overwhelming majority (92.73%) voted for complete independence—members of Iran's Al Quds force entered the region, securing prime oil-rich areas.
Furthermore, top officials from Iran's Vezarat-e Ettela'at Jomhuri-ye Eslami-ye intelligence service made it clear to prominent politicians in Iraqi Kurdistan that continuing to push for independence would not be in their best interest. Around this time, Major General Yahya Rahim Safavi, a trusted military advisor to Iran's Supreme Leader Ali Khamenei, called for a blockade
The strained relationship between Russia and China is complicated by a breakaway region in Iraq that used to be closely aligned with the United States. This creates obstacles for managing the country's vast oil and gas sector. In the past, the US had made assurances to Iraqi Kurdistan that it would support its push for independence in exchange for its military assistance against the Islamic State. However, after the 2017 independence vote, Moscow took over control of Iraqi Kurdistan's oil industry in an effort to reintegrate it with the rest of Iraq.
At the same time, China has been expanding its influence in southern Iraq by striking numerous deals in the energy sector, leading to larger infrastructure projects across the region. The comprehensive 'Iraq-China Framework Agreement' of 2021 highlights the pinnacle of China's objectives. This agreement builds upon and expands upon a previous 'Oil for Reconstruction and Investment' deal signed between Baghdad and Beijing in 2019, which granted Chinese companies access to invest in Iraqi infrastructure projects in exchange for oil resources.
In early April last year, OilPrice.com reported that approval from Iran, Russia, and China was necessary for oil exports from Iraqi Kurdistan to proceed. However, this approval has not been granted, leading us to believe that the situation will not change anytime soon. On the other hand, efforts to eliminate any remaining traces of Kurdish independence are ongoing.
On August 3rd of last year, Iraq's Prime Minister Mohammed Al-Sudani clarified that a new unified oil law centered in Baghdad would govern all oil and gas activities in Iraq and Kurdistan. This law is seen as a means of preserving Iraq's unity. According to an EU energy security source who spoke exclusively with OilPrice.com: "Baghdad is not interested in an independent Kurdistan and therefore has no incentive to allow independent oil sales or worry about the departure of all IOCs operating there."
