ERBIL, Kurdistan Region of Iraq – The Iraqi oil ministry on Friday doubled down on their rejection of a recently struck deal between the Kurdistan Regional Government (KRG) and American firms to develop the Kurdistan Region’s oil and gas fields.

Under the supervision of Kurdistan Region Prime Minister Masrour Barzani, the KRG’s natural resources ministry on Monday signed two major agreements in the energy sector with HKN Energy and WesternZagros in Washington DC. The deals have a combined value of around $110 billion and seek to boost the Kurdistan Region’s energy sector.

The Iraqi oil ministry rejected the agreement shortly after in a statement on Tuesday, arguing that the deals “violate the decisions issued by the Federal Court of Cassation.”

When questioned about Baghdad’s response to the agreements in an interview on Thursday with Al-Monitor’s Amberin Zaman, Prime Minister Barzani replied, “They are absolutely legal,” adding that “any dispute or any decision or statements against these deals will be just political statements and nothing else.”

The Iraqi ministry on Friday doubled down on their position in a statement, which noted that they have “no objection or reservation regarding engagement with these companies, provided that such engagement is not conducted directly with the Kurdistan Regional Government in isolation from the Federal Government and its official channels,” arguing that anything short of that “would constitute a violation of the Iraqi Constitution and the applicable laws.”

The Iraqi oil ministry “welcomes and consistently seeks to collaborate with American companies in the development of oil and gas fields through direct relationships and contracts, in accordance with the Iraqi Constitution and the decisions of the Federal Court in this regard,” the statement added.

The Iraqi national power grid suffers from a severe lack of gas supply, relying on Iranian gas imports that account for between 30 and 40 percent of Iraq’s energy needs to alleviate the shortfall. This safety net, however, is growing more and more fragile as tensions build between the US and Iran, and Iraq is forced to strike a diplomatic balance in its relations with the two countries. According to the Kurdistan Region’s Electricity Minister Kamal Mohammed, the Region’s gas fields also contribute to easing the electricity shortages that Baghdad struggles with.

Prime Minister Barzani, as well as the KRG’s Electricity Minister Kamal Mohammed, has repeatedly said that the deals will bear fruit for Iraq by contributing to meeting the country’s power demand. The premier said on Tuesday that the signings will let the Region not only supply its local demand but also enable it to sell to Iraq and neighbors too.

Iraq has a history of restraining and rejecting the Kurdistan Region’s freedom to negotiate and sign agreements relating to its oil reserves. In 2023, Iraq took the Kurdistan Region and Turkey to court over an arrangement to export the region’s oil through the Turkish Ceyhan pipeline, causing a halt in oil exports of Kurdish oil that has cost Baghdad and Erbil well over 20 billion dollars in revenue to date.