During recent talks in Washington, Kurdistan Regional Government (KRG) Prime Minister Masrour Barzani announced the signing of energy deals worth $110 billion with US-based firms HKN Energy and Western Zagros.
The agreements mark a significant step in strengthening economic ties between the US and the KRG.
However, Baghdad swiftly rejected the deals, citing Iraq's constitutional framework, which places authority over natural resources under the federal government.
The central government maintains that all energy-related investment decisions must be coordinated through Baghdad and declared the KRG's agreements legally invalid.
In contrast, KRG officials assert that the deals are grounded in legal precedent. Analysts note the significance of these agreements not only for US-KRG relations and regional energy security but also as a potential catalyst for resuming stalled negotiations between Erbil and Baghdad—talks that could ultimately restart oil flows through the Iraq-Türkiye Oil Pipeline.
Longstanding dispute over energy control
Tensions between Erbil and Baghdad over oil revenues and energy governance have simmered since the fall of Saddam Hussein in 2003. The KRG's unilateral signing of contracts and disputes over federal budget allocations have repeatedly strained relations.
In 2022, Iraq's Supreme Federal Court ruled that the KRG's independent oil and gas law was unconstitutional, mandating that all oil revenues be transferred to the central government. The decision dealt a significant blow to the KRG's energy sector.
Although the Iraq-Türkiye Oil Pipeline resumed operations in 2023, ongoing political and legal disputes between Erbil and Baghdad have blocked oil exports, resulting in estimated losses of around $20 billion for the region.
KRG-Baghdad reconciliation could unlock broader energy cooperation
A potential reconciliation between Erbil and Baghdad—following the recent energy agreements between the US and KRG—could pave the way for resolving broader energy-related disputes in the region, Sercan Caliskan, Iraqi studies researcher at the Center for Middle Eastern Studies (ORSAM), told Anadolu.
Caliskan highlighted the strategic importance of resuming oil exports through the Kirkuk-Ceyhan pipeline for Türkiye.
"In this context, a consensus on energy sharing and export infrastructure could accelerate negotiations between Baghdad and Erbil, and help restart the technical processes needed to resume oil flows," he said.
He added that if an agreement is reached, Türkiye is likely to maintain its supportive stance toward resolving intergovernmental disputes and promoting political stability in Iraq. The resumption of exports through Turkish territory would also enhance regional energy security.
Caliskan emphasized that resolving regional crises holds significance for Türkiye beyond energy interests.
"Achieving the targeted $30 billion trade volume in Türkiye-Iraq relations requires not only political alignment but also technical and institutional coordination," he said.
"Moreover, ensuring Iraq's internal political stability and economic sustainability is critical for advancing large-scale strategic initiatives such as the Development Road Project, which represents a key strategic gain for Türkiye," Caliskan added.
'US-KRG energy agreements play critical role in regional energy security'
Alberic Mongrenier, executive director of the European Initiative for Energy Security, stated that the recent energy agreements between the US and KRG are significant for the region's energy security.
"Developments of these fields could significantly increase gas production, hence electricity generation," Mongrenier said.
"This may even allow the region to sell surplus power to other regions of Iraq," he added.
He emphasized that the $110 billion investment package reflects strong investor confidence in the region, potentially opening the door to further foreign investment.
However, Mongrenier warned that the Iraqi central government's rejection of the deals could complicate ongoing negotiations over oil exports via Türkiye.
"If the deals were to be threatened or cancelled it would also damage investor confidence on top of the region's electricity security," Mongrenier said.
‘Expiry of Iraq-Türkiye Oil Pipeline agreement presents opportunity for renegotiation'
Yesar Al-Maleki, a Gulf analyst at Middle East Economic Survey (MEES), said Baghdad's rejection of the recent US-KRG energy deals stems from the lack of a comprehensive energy agreement with Erbil.
Al-Maleki noted that the Iraq-Türkiye Pipeline Agreement—last amended in 2010—is set to expire this year, presenting a potential opening for renegotiation.
"This is also coinciding with the upcoming parliamentary elections in Iraq and we could see an all-encompassing political compromise before or after elections towards government formation," he added.
The current agreement, which governs the Kirkuk-Yumurtalik Oil Pipeline, was renewed and extended for 15 years through a protocol signed between Türkiye and Iraq on September 19, 2010.
(Anadolu Agency, May 26, 2025)