Iraq Finalizes Hydrocarbon Law in 2024
The hydrocarbon sector in Iraq witnesses a significant milestone as the country finalizes the Hydrocarbon Law (HCL) in 2024, a move aiming to boost the oil and gas industry and attract international investments.
Enhancing Investment and Production
The updated HCL introduces a new framework allowing foreign companies to share in oil output when in partnership with the Iraqi government. This shift from the previous fee-per-barrel contracts to production-sharing agreements and service contracts is expected to create a more investor-friendly environment.
Legal Framework for Oil and Gas Contracts
Iraq also finalizes the fifth-plus and sixth rounds of oil and gas contracts, attracting over 20 companies from around the globe. These contracts yield over 30% profit for participating companies, with Chinese firms and a single Iraqi-Kurdish company securing the deals.
Impact on Kurdistan Region
The Kurdistan Region's oil sector, already impacted by the closure of its main pipeline to Turkey, faces further challenges. The new federal budget law calls for a quota of 400,000 barrels per day (b/d) to be handed over to the federal oil marketer SOMO in exchange for 12.6% of federal funding.
Political and Economic Ramifications
The new HCL and budget law have political and economic implications for Iraq's social and political stability. Successful implementation could help calm violence and reflect a spirit of compromise, while failure could have negative repercussions.
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