Baghdad sues Iraqs autonomous Kurdistan regional government over $110 billion US energy deal

The Iraqi federal government has initiated legal proceedings against the semi-autonomous Kurdistan regional government (KRG) over recent oil and gas agreements signed with US firms, citing constitutional violations.The lawsuit, filed by Iraq's oil ministry, challenges two contracts the KRG signed with HKN Energy and WesternZagros to develop the Miran and Topkhana-Kurdamir gas fields in Sulaymaniyah province. These deals, announced by KRG Prime Minister Masrour Barzani during his visit to Washington DC, are valued at a combined $110 billion over their lifetimes.Baghdad asserted that such agreements must receive federal approval, referencing a 2022 ruling by Iraq's federal supreme court which deemed the KRG's independent oil and gas law unconstitutional.

The oil ministry said that direct contracts between the KRG and foreign entities without federal oversight violate Iraq's constitution, and it leaves the deal null and void. In response, the KRG maintained that the agreements were extensions of previously established contracts and fell within its constitutional rights. The KRG's ministry of natural resources emphasized that these deals were not new and have been recognized as legal and legitimate by Iraqi courts.

This legal dispute further complicates the resumption of oil exports through the Iraq-Turkey pipeline, which has been inactive since March 2023 following an international arbitration ruling against Turkey for unauthorized Kurdish oil exports, despite the pressure from the Trump administration. A swift restart of oil exports from Iraq's Kurdistan region could help counterbalance any decline in Iranian crude shipments, which the US aims to reduce to zero under US President Trump’s “maximum pressure” campaign against Tehran. Analysts noted that Washington’s actions are intended to mitigate the global impact of restricting Iranian oil supplies.