On February 15, the federal supreme court ordered that all crude output from the semi-autonomous Kurdish region be delivered to Baghdad's oil ministry, and deemed the Kurdistan Regional Government's oil contracts with foreign oil companies unlawful. International oil companies operating in the region include Genel Energy, Dana Gas, DNO, Chevron, Gazpromneft, and Gulf Keystone.
The Kurdistan Regional Government (KRG) has accused the court of taking precedents from the centralized legislation of Saddam Hussain's erstwhile Ba'ath dictatorship.
It added that Article 112 of the Constitution also states that oil and gas are not solely under the control of the federal government and that the Kurdistan Region retains the ability to produce and develop the region's oil and gas.
The KRG has long been in charge of oil and gas development in northern Iraq's Kurdish area, having established its own legislative framework in 2007. It transports heavy sour Kirkuk blend crude from the Kurdish region to the Ceyhan terminal in Turkey via a pipeline.
Disputes with Baghdad over the KRG's share of the federal budget have centered on exports. Last year, the KRG agreed to pay up 250,000 barrels per day (bpd) of crude to Iraq's state oil marketing company Somo in exchange for a share of the budget until 2021.
According to Somo, the KRG exported 417,000 bpd of petroleum last month, accounting for around 11% of Iraq's total sales.