The Iraqi Kurdistan-focused oil and gas company Gulf Keystone Petroleum has said that its business is “unaffected” by the ongoing dispute between Baghdad and Erbil to control Iraqi Kurdistan's oil and gas sector.

A statement said: “We continue to monitor the long-running dispute between the Federal Iraqi Government and the KRG on the management of oil and gas assets in Kurdistan.

“Our operations currently remain unaffected and we continue to work closely with the KRG, our advisers and other stakeholders to protect the company’s interests.”

Oil tensions

Tensions between the federal government and Kurdish regional government are running high as the two entities engage in talks regarding control of the oil and gas sector in Iraqi Kurdistan.

Amid the uncertainty, Gulf Keystone Petroleum said it is on course to produce an average of 44,000-47,000 barrels of oil a day (b/d) in 2022.

The company said that, as of 22 June, its gross average production for this year was around 44,900 b/d and its gross average production for June was around 45,900 b/d.

The company said several issues were impacting its production at the Shaikan Field.

It said its SH-12 well had been brought back online in June at a reduced rate after being shut-in at the beginning of the year.

It added that its SH-14 well production remained constrained following acid stimulation earlier in the year.

The company also said that its SH-15 well was brought online in April after being drilled in record time and is producing towards the lower end of the anticipated range.

Gulf Keystone Petroleum is continuing to review options to accelerate the installation of water handling facilities that would enable further production ramp-up from existing wells, according to its statement.

The company noted that its plans for installing water handling facilities were taking place while the oil and gas industry was experiencing “equipment lead-time pressures in a supply-constrained market”.

Court ruling

A ruling by Iraq’s supreme court in February increased uncertainty about the status of many oil and gas companies operating in the Iraqi Kurdistan region.

The court ruled that Iraqi Kurdistan’s 2007 oil law violated the country’s constitution and was not valid.

The Iraqi Ministry of Oil recently commenced legal proceedings concerning the validity of production sharing contracts (PSCs) issued under the Kurdistan Region of Iraq Oil and Gas Law.

The legal proceedings marked a significant escalation in the dispute between the Federal Iraqi Government and the KRG on managing oil and gas assets in Kurdistan.

Gulf Keystone Petroleum said it has been advised that the Iraqi Ministry of Oil has raised a case in the Baghdad Commercial Court against several international oil companies (IOCs), including Gulf Keystone.

It also said that it understood that the Iraqi Ministry of Oil has also written to contractors and service providers requesting them to cease working in Kurdistan.

The KRG has said that the actions taken by the Iraqi Ministry of Oil are unlawful and that “it will take all constitutional, legal, and judicial measures to protect and preserve all contracts made in the oil and gas sector”.

On 4 June 2022, the Judicial Council of the Kurdistan Region of Iraq stated that the Kurdistan Region of Iraq Oil and Gas Law “remains in full force” and that the Iraq Federal Supreme Court “lacks the constitutional authority” to invalidate the law.

On 13 June 2022, Iraqi Kurdistan’s Ministry of Natural Resources stated that “the contracts entered into between the IOCs and the Kurdistan Regional Government are entirely in accordance with the 2007 Oil and Gas Law”.

As part of the dispute, the KRG has launched criminal and civil lawsuits that seek to protect the validity of the PSCs.