US energy company Schlumberger has said it will not bid for oil and gas tenders in Iraqi Kurdistan. The company does not want to position itself without Baghdad’s agreement.
Schlumberger wants to comply with Iraqi state law
This follows a decision by the Federal Supreme Court of Iraq. In February, the court ruled that an oil and gas law governing the industry in Kurdistan was unconstitutional. It therefore demanded that the Kurdish authorities return to the Iraqi state.
Schlumberger is simply following this sentence. The Baghdad court’s decision has exacerbated tensions between the Iraqi government and the Kurdish regional government. In May, Baghdad tried to get companies operating in Kurdistan to sign a contract with the state-owned SOMO. This contract will replace the one signed with the Kurdish regional government.
In a letter sent to Oil Minister Ihsan Abdul Jabbar Ismail on behalf of Schlumberger, the company said it was committed to operating in accordance with the decision.
Kurdistan develops its infrastructure
Kurdistan has developed oil and gas resources independently of the federal government. Then, in 2007, the autonomous region enacted its own law establishing that it would administer these resources itself.
The decision of the Federal Supreme Court declared the Kurdistan Regional Government’s oil contracts with oil companies invalid. The ruling also states that the Ministry of Oil must be allowed to audit all agreements entered into by the KRG.
Meanwhile, the Kurdistan Regional Government continues to export oil through the port of Ceyhan in Turkey. But Schlumberger’s decision could be emulated and force Kurdistan to renegotiate with the Iraqi state.