KRG Deputy PM stresses the need for an oil and gas law in Iraq

Rudaw

ERBIL, Kurdistan Region - Kurdistan Region Deputy Prime Minister Qubad Talabani on Wednesday stressed the importance of having a law in Iraq to regulate the country’s gas and oil resources, adding that this could pave the way for more foreign investment. 

The Oil and Gas Law, which would regulate development and management of the country’s oil fields, has been under discussion since 2007. Repeated attempts to pass it have failed. Kurdish officials have repeatedly called for the passing of such a law at the federal parliament. 

Speaking during a panel at the Middle East Research Institute’s (MERI) Forum 2025 in Erbil, Talabani said that oil and gas would not just benefit the Kurdistan Region but the whole Iraq. 

“An oil and gas law is going to benefit Basra, Anbar and other areas with natural resources as well. It will also bring more trust and confidence to the country, paving the way for more investment from international oil companies under a legal framework,” he said, adding that oil companies are reluctant to invest in Iraq due to lack of a law. 

“How can a country of 46 million population, whose main source of revenue is oil, not have a law to regulate this sector?” he asked. “This is a catastrophe. Therefore, we need an oil and gas law approved in Baghdad and avoid interpretations we have been suffering from since 2017.”

When independently signing contracts with international oil companies, the KRG relied on a law enacted by its parliament and argued that the constitution allowed it. Baghdad, however, has insisted that it has an exclusive jurisdiction over the management of oil contracts and exports and demands all oil revenues be deposited in the federal treasury.

In February 2022, the Federal Supreme Court ruled that the Kurdistan Region’s oil law was unconstitutional, declaring that all oil contracts signed by the KRG should be annulled and exports must be handed over to Baghdad. The KRG rejected the ruling and continued its independent oil operations until March 2023 when the exports through Turkey’s Ceyhan port were halted due a ruling from a Paris-based international arbitration court that favored Baghdad in a case against Turkey. The exports resumed earlier this month following a temporary deal. 

In 2023, two draft versions of the law were proposed - one by the federal government and one by the KRG - but negotiations have stalled over control mechanisms, revenue-sharing terms, and regional representation in federal decision-making bodies.

Revenue diversification
KRG’s Talabani also pointed out that Iraq should not only rely on its oil exports but try to diversify it, warning that if oil prices drop the country will face a "catastrophe."

“We should not rely merely on oil. What will happen to Iraq if the oil prices drop to less than $45-50 in the international markets? There will be a catastrophe. That time, the issue will not be limited to the Region’s salaries but those of Basra as well,” he said, calling on Iraqi politicians to draft a plan to avoid such a scenario. 

Iraq is implementing sweeping reforms aimed at building a sustainable, diversified economy less dependent on volatile oil revenues, Mazhar Mohammed Salih, a financial advisor to Sudani, told Rudaw in July. 

“The government has sought to implement a package of fundamental reforms aimed at increasing non-oil revenues and reducing dependence on volatile oil revenues,” he said, citing tax reform, service fee adjustments, and customs modernization as key measures.

Iraq’s economy is heavily reliant on its oil sector. It is also among the global nations most vulnerable to the effects of climate change, including food and water insecurity. This winter, Iraq has received just a fraction of the rainfall it saw the year before.

Iraq passed its highly-contentious budget bill for the years 2023, 2024, and 2025 in June 2023, which includes a record $152 billion in spending. The massive expenditure sparked concerns of instability should oil prices drop below the $70 per barrel threshold set in the bill. 

Stronger Kurdish presence in Baghdad
Iraq is set to hold parliamentary elections on November 11. Most Kurdish political parties are vying for a stronger presence in Baghdad, especially the ruling ones. 

The KRG Deputy Prime Minister emphasized that Kurds should view Baghdad as the only venue for resolving their issues, and therefore called for a stronger Kurdish presence in the Iraqi capital. He hailed his Patriotic Union of Kurdistan (PUK) - second largest political party in the Kurdistan Region - for its efforts to be stronger in Baghdad. 

“Most of us [Kurdish parties] seek a stronger presence in Baghdad, especially my party. We tell our voters that we are their strength in Baghdad. Why do we say it? Because these big issues can be resolved in Baghdad,” he remarked.

Kurdish unity in Baghdad has often proved effective, paving the way for the Kurdish demands to be considered.