POLITICS: Iraq Federal Government Sues Kurdistan Over Gas Contracts with American Companies – USSA News

(LibertySociety.com) – Baghdad’s federal government is taking Kurdistan to court over multi-billion dollar gas contracts with American companies, deepening the power struggle over Iraq’s valuable natural resources.

At a Glance

• Iraq’s Oil Ministry filed a lawsuit against Kurdistan for signing energy deals with US companies without federal approval
• The contracts with HKN Energy and WesternZagros are valued at “tens of billions of US dollars”
• Baghdad claims these deals violate Iraqi law as oil wealth belongs to all citizens
• The dispute highlights the ongoing struggle for control over natural resources since the 2003 US-led invasion
• Kurdistan claims constitutional rights to sign independent energy deals while Baghdad demands centralized control

Federal Authority Challenged

Iraq’s federal government has escalated its long-running dispute with the Kurdistan region by filing a lawsuit in Baghdad’s Al-Karkh commercial court. The legal action directly challenges Kurdistan’s authority to independently sign energy contracts with foreign companies. At issue are two significant deals with American firms HKN Energy and WesternZagros, agreements the Kurdish regional government finalized on May 19 in Washington D.C., without seeking approval from Baghdad.

The Iraqi Oil Ministry has taken a firm stance against these unilateral actions by Kurdistan. “Oil wealth belongs to all Iraqi citizens and any investment decisions should be made through the federal government,” the Ministry stated in its formal complaint. The lawsuit specifically demands the “cancellation of the contracts” that Kurdistan independently negotiated, highlighting the federal government’s determination to maintain centralized control over the nation’s valuable natural resources.

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Iraq’s federal authorities have filed a complaint against the autonomous Kurdistan region for signing gas contracts with two US companies, two officials told AFP on Tuesdayhttps://t.co/QGgZRe3c7f

— The New Arab (@The_NewArab) May 27, 2025

Billion-Dollar Developments

The contested energy deals represent substantial investments in Kurdistan’s natural gas infrastructure. HKN Energy has partnered with Onex Group to form Miran Energy, a joint venture focused on developing the potentially lucrative Miran gasfield. Meanwhile, WesternZagros has acquired rights to the Topkhana block, another promising gas development. Together, these agreements are valued at “tens of billions of US dollars,” making them critical to Kurdistan’s economic ambitions.

“Iraq’s Oil Ministry has filed a lawsuit against the semi-autonomous Kurdish region for signing energy deals with foreign companies without its consent, an official told The National.”

For American energy firms, these deals represent significant opportunities to develop natural gas resources in a region desperate for foreign investment and expertise. However, the legal challenge from Baghdad creates substantial uncertainty about the viability of these projects. The Iraqi federal government characterizes the contracts as “a clear violation to the Iraqi law,” positioning the dispute squarely as a constitutional matter rather than merely an administrative disagreement.

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The Iraqi Oil Ministry has filed a lawsuit against the KRG over its new oil and gas contracts, making the likelihood of KRG oil exports resuming even less likely now.

As we’ve noted repeatedly, KRG oil is now primarily a geopolitical issue rather than an economic one, and the… pic.twitter.com/CcKaVxvyx2

— Kurdistan Watch (@KurdistanWatch) May 26, 2025

Constitutional Crisis

Control over Iraq’s natural resources has remained deeply contentious since the 2003 US-led invasion, with the Kurdish region consistently asserting its constitutional right to manage its own energy resources. In early 2022, Iraq’s Federal Supreme Court dealt a significant blow to Kurdistan’s position by ruling that the Kurdish regional oil law was unconstitutional. This landmark decision demanded that control over all oil operations be transferred to Baghdad, a requirement the Kurdish authorities have yet to fulfill.

“Oil wealth belongs to all Iraqi citizens and any investment decisions should be made through the federal government.”

The economic consequences of this standoff have been severe. Federal authorities have previously withheld Kurdistan’s share of the national budget to pressure compliance with Baghdad’s authority. Additionally, an arbitration ruling halted Kurdistan’s oil exports through Turkey, further straining the region’s finances and affecting its ability to pay public sector salaries in Erbil. Despite these mounting pressures, no meaningful progress has been made toward resolving the fundamental question of who controls Kurdistan’s energy resources.

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