Baghdad’s lawsuit against Kurdistan over $110 billion gas contracts with U.S. firms intensifies the long-standing dispute over Iraq’s energy sovereignty.
At a Glance
- Iraq’s federal government has filed a lawsuit against the Kurdistan Regional Government (KRG) for signing gas contracts with U.S. firms HKN Energy and WesternZagros
- The deals, signed during a high-profile visit to Washington, D.C., are estimated to be worth $110 billion
- Baghdad argues the contracts violate the Iraqi constitution, which mandates centralized control of energy resources
- The KRG insists its agreements are legal under Iraqi law and past judicial rulings
- The escalating dispute risks deterring foreign investment in Iraq’s lucrative energy sector
Legal Stakes and Sovereignty Strains
The Iraqi federal government has launched a legal offensive against the Kurdistan Regional Government after Erbil inked two massive gas deals with U.S. energy firms. The lawsuits, filed in Baghdad’s Al-Karkh commercial court, aim to cancel contracts signed on May 19 with HKN Energy and WesternZagros—agreements that could reshape the region’s economic landscape.
Baghdad claims the Kurdish-led deals breach Iraqi law by bypassing federal oversight, citing the constitution’s mandate that oil and gas be administered jointly between federal and regional authorities. The KRG rebuts that interpretation, asserting it has long exercised its legal right to manage energy resources independently, with support from prior court decisions.
The contested contracts cover two major gas fields: the Miran block, to be developed by HKN Energy in partnership with Onex Group, and the Topkhana block, acquired by WesternZagros. These assets could yield tens of billions in revenue over time, boosting Kurdish self-sufficiency and reducing its economic reliance on Baghdad.
Watch a report: Iraq sues Kurdistan over US gas contracts.
A High-Stakes Economic Showdown
The implications of Baghdad’s lawsuit extend beyond the courtroom. For the KRG, unlocking vast natural gas reserves offers a potential path to fiscal stability and greater autonomy. But the central government’s legal blockade introduces significant risks for investors, potentially chilling further international deals in the north.
The legal fight follows years of fraught relations over resource control. In early 2022, Iraq’s Federal Supreme Court struck down the Kurdish oil law and ruled that all regional exports must be approved by Baghdad. This led to the suspension of Kurdish oil flows through Turkey and decimated Erbil’s revenues. Since then, the KRG has struggled to pay salaries, fund infrastructure, or attract development projects.
Baghdad’s consistent refusal to compromise—paired with its use of the judiciary to centralize control—has pushed the dispute into a broader geopolitical context. The United States now finds itself uncomfortably wedged between two allies, with U.S. firms potentially ensnared in a legal and political quagmire.
The outcome of this standoff could redefine energy governance in Iraq. Should Baghdad succeed, it would solidify the federal government’s grip over all future hydrocarbon projects. If Kurdistan prevails, it may embolden other regions to challenge central authority—raising the stakes for Iraq’s unity and economic future.
