Schlumberger, Baker Hughes, Halliburton to exit Kurdish contracts: Iraq's oil ministry

Schlumberger, Baker Hughes and Halliburton are in the process of liquidating and exiting existing tenders and contracts in Iraq's semi-autonomous Kurdistan region to be in compliance with a Federal Supreme Court ruling, the oil ministry said July 4.

The three oil service companies told the federal oil ministry they would not apply for new energy projects in Kurdistan, the ministry said in a statement.

Halliburton, Schlumberger and Baker Hughes were not immediately available for comment.

The Federal Supreme Court ruled on Feb. 15 that Kurdistan's independent oil and gas industry is unconstitutional and ordered the Kurdistan Regional Government, or KRG, to hand over the energy assets to the federal government in Baghdad.

KRG oil is currently produced through several agreements with private companies and is marketed by the regional government's Ministry of Natural Resources, independently of Iraq's federal oil sales, which are controlled by state-owned marketer SOMO.

The Kurdish energy sector is run according to the 2007 oil and gas law in the Kurdistan region, which the Federal Supreme Court has deemed unconstitutional.

Oil export constraints

A Baghdad court on May 19 acted at the request of the federal oil minister and issued summons to international oil companies operating within Kurdistan, including Addax, DNO, Genel Energy, Gulf Keystone Petroleum, HKN, Shamaran and WesternZagros.

The KRG's Ministry of Natural Resources on June 13 called the summons "illegal actions."

The Iraqi oil ministry has also threatened to blacklist IOCs operating in Kurdistan from doing business in Iraq if they did not terminate their contracts with the KRG within three months.

The standoff with the KRG comes at a time when Baghdad has yet to form a government following the October 2021 parliamentary elections.

Iraq, OPEC's second-biggest producer, is also struggling to boost its oil exports, especially from the southern terminals, where most of its crude is exported.

Iraq pumped 4.390 million b/d of oil in May, below its OPEC+ quota for that month, according to the latest Platts survey by S&P Global Commodity Insights.