In a statement, the ministry said the aim of the new company will be to enter into new service contracts with oil firms currently operating there under the Kurdistan Regional Government (KRG), according to Reuters.
The KRG has been developing oil and gas resources independently of the federal government, and in 2007 enacted its own law that established the directives by which the region would administer them.
Kurdistan’s massive untapped oil reserves, lucrative production-sharing contracts and safe environment have prompted international oil companies over recent years to commit to investing billions of dollars there.
But in February, Iraq’s federal court deemed the oil and gas law regulating the oil industry in Kurdistan unconstitutional and demanded that the KRG hand over their crude supplies.
Iraq’s federal court’s ruling gives the oil ministry in Baghdad the authority to manage oil and gas fields in Kurdistan.
Reuters reported on Thursday that the oil ministry had asked oil and gas firms operating in the Region to sign new contracts with state-owned marketer SOMO rather than the Kurdish government.
On May 7, Iraqi oil minister Ihsan Abdul Jabbar said the ministry would begin implementing a federal court ruling gives the ministry oversight of oil output in the Kurdistan Region after talks didn’t lead to a result.
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