Oil and Gas Law.. The Unsolvable Knot

 Oil and Gas Law.. The Unsolvable Knot

Economy  Oil and Gas Law.. The Unsolvable Knot  Information/Report..   The Oil and Gas Law is one of the sensitive laws in the Iraqi state, as it is one of the axes of the ongoing conflict between the central and regional governments over oil imports.

The center of the dispute over the law is that the region wants to control the oil revenues in its lands according to its mood without the supervision of the federal government, while the political forces do not want to grant this privilege to the region because it gives it a kind of separatist independence, so to speak.

Since the first session of the Iraqi Parliament in 2005, the draft oil and gas law has been stuck in the drawers, as disagreements prevent its approval in its final form.

After 18 years, he announced the formation of a committee to draft the law and present it to the government and the House of Representatives.

The committee formed between Baghdad and Kurdistan to draft an oil and gas law includes the Minister of Oil, the Minister of Natural Resources in the region, the Director General of SOMO, and senior staff in the Ministry of Oil, in addition to oil-producing provinces such as Basra, Dhi Qar, Maysan, and Kirkuk.

Iraq exports an average of 3.3 million barrels of crude oil per day, and black gold constitutes more than 90 percent of the Iraqi treasury's resources.

Article 14 relates to oil revenues in the Kurdistan Region and their audit by the Federal Audit Bureau.

The Iraqi Oil and Gas Bill regulates this vital sector for Iraq and the management of the country’s oil fields through a single national company, with revenues deposited into a single account.

The financial advisor to the Iraqi Prime Minister, Mazhar Mohammed Salih, confirmed in statements that accelerating the approval of the federal oil and gas project law in the House of Representatives as soon as possible will establish a stable national roadmap for investment and production of the country's primary sovereign resource, which is oil and gas.

He explained that this "natural resource contributes directly to Iraq's gross domestic product by nearly 50 percent, and has an indirect impact on our country's total economic activity by no less than 85 percent."

Saleh said, "Adopting a unified national oil policy, and achieving optimal investment and production in Iraq's oil area, starting from the southern fields and going up to the northern and regional fields, is an important and strategic matter in the matter of benefiting from opportunity costs in the optimal and harmonious operation of the current Iraqi oil policy."

The draft of the Iraqi oil and gas law available to parliament stipulates that the responsibility for managing the country's oil fields should be entrusted to a national oil company, supervised by a federal council specializing in this matter.

For its part, the Kurdistan Oil Law indicates that the Iraqi government has the right to participate in the management of fields discovered before 2005, but fields discovered after that are subject to the regional government.

In 2022, the Federal Court in Baghdad ordered the region to hand over the oil produced on its territory to Baghdad, and to cancel contracts signed by the region with foreign companies. The matter went so far as to invalidate contracts with many foreign companies, especially American and Canadian ones, by the judiciary in Baghdad.

After years of exporting oil alone via Turkey, the Kurdistan Region must, as of late 2023, abide by an international arbitration ruling that gives Baghdad the right to fully manage Kurdistan’s oil.

As a result, exports from the region stopped. An interim agreement signed between Baghdad and Erbil stipulates that Kurdistan’s oil sales will be made through the Iraqi State Oil Marketing Organization (SOMO), while revenues generated from the region’s fields will be deposited in a bank account at the Central Bank of Iraq or one of the banks approved by the Central Bank of Iraq.

Oil and Gas Law.. The Unsolvable Knot 7de13617-1067-4c34-ac1f-eeeb319b03ca

Member of the Parliamentary Oil and Gas Committee, MP Dhurgham Al-Maliki, revealed that the Coordination Framework and the State Administration Coalition discussed the oil and gas law with Masoud Barzani.

Al-Maliki told Al-Maalouma Agency, "The committee discussed the draft law in a professional manner and completed most of its paragraphs, but the government requested its withdrawal to make amendments to it, indicating that the law is still in the government's possession."

He considered that "the obstruction of the approval of the annual budgets is due to the oil disputes between the center and the region, indicating that the approval of the law has become an urgent necessity due to its ability to resolve 90% of the disputes between the region and the center."

He stressed that "the legislation of the law is governed by political agreement, not professional agreement," calling on "political forces to pressure the government to send the law for the purpose of legislation." LINK