Iraq calls on Kurdistan to hand over oil to the federal government

BAGHDAD,— The Iraqi Oil Ministry has called on the caretaker Kurdistan Regional Government (KRG) to immediately transfer oil output to the federal authorities as outlined in the amended national budget, which was passed in coordination with the KRG, according to a statement issued Thursday.

The ministry emphasized that the KRG is obligated under the constitution and federal court rulings to comply with legal frameworks, including the General Budget Law.

Under this law, the regional government is required to hand over all oil extracted from its territory to the Oil Ministry for export, with revenues channeled into the national treasury.

The ministry said it has repeatedly issued formal requests to the Erbil-based authorities, but has yet to receive cooperation.

“The continued failure to comply with constitutional and legal provisions has disrupted Iraq’s oil exports and harmed the state’s financial resources,” the statement read.

The ministry also warned that persistent non-compliance could lead to “substantial financial losses” and negatively affect Iraq’s standing and commitments in global energy markets.

The latest developments come amid growing tension between Baghdad and Erbil over energy policy and fiscal entitlements.

The Oil Ministry reiterated the need for immediate implementation of the budget law amendments, stressing that failure to deliver oil from the Kurdistan Region continues to inflict financial harm on Iraq.

It also claimed that the KRG’s lack of compliance results in a dual loss: first, by blocking federal access to revenues from Kurdish oil exports, and second, by forcing reductions in output from fields outside the region to stay within Iraq’s OPEC quota.

The ministry said it has received credible information indicating the ongoing smuggling of oil from Kurdistan to destinations outside Iraq. It placed full legal responsibility on the KRG and affirmed its intention to pursue legal measures to halt such operations.

On May 19, 2025, outgoing Kurdistan Regional Government Prime Minister Masrour Barzani signed energy deals with U.S.-based companies HKN Energy and WesternZagros. The contracts involve gas fields located in areas under the control of the Patriotic Union of Kurdistan (PUK), a region where Barzani’s administration holds no authority.

The PUK, led by the Talabanis, did not object to the agreements, indicating silent consent. The party has previously resisted oil and gas projects in its territory, citing unequal revenue distribution and accusing the Barzani-led administration of excluding Sulaimani from energy benefits.