ERBIL, Kurdistan Region - The Kurdistan Region’s natural resources ministry on Thursday rejected accusations by Iraq’s oil ministry of smuggling crude and failing to cooperate on oil handover. It also called the claim political and accused Baghdad of corruption.
“Once again, the federal oil ministry issues a political statement that is far from objective facts, and insists on the approach of holding the Kurdistan Region responsible for accumulated failures which are, essentially, the product of (central) policies that did not consider the foundations of the real partnership on which the federal Iraq is built,” read a statement from the Kurdistan Region natural resource ministry.
Hours earlier, the federal oil ministry accused the KRG of “oil smuggling operations,” and demanded the immediate handover of all regional oil production.
The KRG called the accusations “an open attempt to divert people's eyes from the widespread smuggling and corruption in other regions of Iraq.”
Tensions escalated last week when the Iraqi finance ministry suspended budget transfers to the KRG. Oil Minister Taif Sami claimed Erbil exceeded its 12.67 percent share of the 2025 budget by over 13.5 trillion Iraqi dinars - approximately $10.34 billion.
On Wednesday, the KRG’s Council of Ministers cited Kurdistan Region Prime Minister Masrour Barzani as defending the KRG’s conduct following a weekly cabinet meeting, saying the government “fulfilled its obligations and transparently presented all financial data and information to the joint team of both the federal and regional financial oversight bureaus.”
“You are the ones smuggling oil from the south and making all forms of corruption in the eyes of all, with local and international reports that expose the extent of waste and corruption,” the KRG’s ministry statement added. "You are the ones mixing oil and serving others' interests instead of serving Iraq and its people, with regrettable policies that have damaged Iraqi oil's reputation globally."
The ministry stated that it has delivered 11,826,218 barrels of oil to a Baghdad-affiliated refinery over the past five months at the request of the federal oil ministry.
“Despite this commitment by the Region, not one dinar was paid in exchange for this amount,” the statement added.
The Kurdish ministry also blamed Baghdad for delays in advancing a long-awaited oil and gas law, which has been under discussion since 2007. The ministry accused the federal government of “a slowdown and a clear delay” in pursuing the legislation.
This comes as the Coordination Framework - a Shiite political alliance that includes Prime Minister Mohammed Shia’ al-Sudani and other influential Shiite figures - on Monday urged parliament to pass the law, describing it as “the essence of resolving outstanding issues between Baghdad and Erbil.”
Baghdad and Erbil have submitted competing oil and gas law drafts, but disagreements remain over control of contracts, revenue sharing, and representation. While the KRG operates under its own 2007 law, Baghdad insists it has sole authority and that all oil revenue must go to the federal treasury.
In 2022, Iraq’s Federal Supreme Court ruled the KRG’s oil law unconstitutional. The KRG rejected the ruling and continued exports until March 2023, when a Paris-based arbitration court ruling halted oil exports through Turkey’s Ceyhan port.
In March this year, a federal lawmaker said the law is unlikely to pass during the current parliamentary term due to persistent political differences.
“Once again, the federal oil ministry issues a political statement that is far from objective facts, and insists on the approach of holding the Kurdistan Region responsible for accumulated failures which are, essentially, the product of (central) policies that did not consider the foundations of the real partnership on which the federal Iraq is built,” read a statement from the Kurdistan Region natural resource ministry.
Hours earlier, the federal oil ministry accused the KRG of “oil smuggling operations,” and demanded the immediate handover of all regional oil production.
The KRG called the accusations “an open attempt to divert people's eyes from the widespread smuggling and corruption in other regions of Iraq.”
Tensions escalated last week when the Iraqi finance ministry suspended budget transfers to the KRG. Oil Minister Taif Sami claimed Erbil exceeded its 12.67 percent share of the 2025 budget by over 13.5 trillion Iraqi dinars - approximately $10.34 billion.
On Wednesday, the KRG’s Council of Ministers cited Kurdistan Region Prime Minister Masrour Barzani as defending the KRG’s conduct following a weekly cabinet meeting, saying the government “fulfilled its obligations and transparently presented all financial data and information to the joint team of both the federal and regional financial oversight bureaus.”
“You are the ones smuggling oil from the south and making all forms of corruption in the eyes of all, with local and international reports that expose the extent of waste and corruption,” the KRG’s ministry statement added. "You are the ones mixing oil and serving others' interests instead of serving Iraq and its people, with regrettable policies that have damaged Iraqi oil's reputation globally."
The ministry stated that it has delivered 11,826,218 barrels of oil to a Baghdad-affiliated refinery over the past five months at the request of the federal oil ministry.
“Despite this commitment by the Region, not one dinar was paid in exchange for this amount,” the statement added.
The Kurdish ministry also blamed Baghdad for delays in advancing a long-awaited oil and gas law, which has been under discussion since 2007. The ministry accused the federal government of “a slowdown and a clear delay” in pursuing the legislation.
This comes as the Coordination Framework - a Shiite political alliance that includes Prime Minister Mohammed Shia’ al-Sudani and other influential Shiite figures - on Monday urged parliament to pass the law, describing it as “the essence of resolving outstanding issues between Baghdad and Erbil.”
Baghdad and Erbil have submitted competing oil and gas law drafts, but disagreements remain over control of contracts, revenue sharing, and representation. While the KRG operates under its own 2007 law, Baghdad insists it has sole authority and that all oil revenue must go to the federal treasury.
In 2022, Iraq’s Federal Supreme Court ruled the KRG’s oil law unconstitutional. The KRG rejected the ruling and continued exports until March 2023, when a Paris-based arbitration court ruling halted oil exports through Turkey’s Ceyhan port.
In March this year, a federal lawmaker said the law is unlikely to pass during the current parliamentary term due to persistent political differences.
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