SULAIMANI, Kurdistan Region — Iraq’s Ministry of Oil has called on the Kurdistan Regional Government (KRG) to comply with the amended Federal Budget Law, which requires the transfer of all oil produced in the Kurdistan Region to federal authorities. In a statement issued late Wednesday, the Ministry warned that continued noncompliance is inflicting serious financial damage on Iraq and undermining its standing in global energy markets.
The Oil Ministry’s statement comes as tensions rise between Baghdad and Erbil, after the Finance Ministry suspended KRG salaries over failure to hand over oil and non-oil revenues and allegedly exceeding its budget share for 2023–2025.
the Iraqi Parliament’s February 2 approval of amendments to the 2025 Federal Budget Law, paved the way for the resumption of oil exports from the Kurdistan Region via the State Oil Marketing Organization (SOMO) by addressing the costs of oil production and transportation for companies operating in the Kurdistan Region.
“This law obliges the KRG to hand over oil produced from fields within the Region to the Federal Ministry of Oil for export, to support the national treasury,” the Ministry said in its statement.
The Ministry added that it has repeatedly sent formal communications and delegations to the KRG to resolve the issue, but these efforts have failed to yield any results.
Emphasizing the urgency of the KRG’s compliance, stating that “continued refusal to implement the provisions of the budget law constitutes a clear breach of constitutional and legal responsibilities and results in direct financial harm to Iraq.”
Importantly, the federal Oil Ministry’s strong statement followed just one day after the KRG Council of Ministers condemned the Finance Ministry’s suspension of funds as “unconstitutional and illegal,” describing it as “collective punishment” of the Kurdistan Region’s citizens.
The Ministry also highlighted dual losses from the non-delivery of Kurdistan oil: missed export revenues and forced cuts in federal oilfield production to meet Iraq’s OPEC quota, as Kurdistan’s production still counts toward the national share.
In addition, the Ministry voiced concern over reports of ongoing oil smuggling from the Kurdistan Region to destinations outside Iraq. It held the KRG fully responsible and warned that such activities not only breach national and constitutional law but also damage Iraq’s credibility as a reliable energy supplier.
“These practices endanger Iraq’s international obligations and its reputation in global markets,” the Ministry concluded, affirming its right to pursue all necessary legal actions.