September 27th, 2010

KRG And The Oil & Gas Law



The draft oil and gas law has been with the Council of Representatives since 2007 and was followed later by the INOC draft law. There were several reasons behind the legislative stalemate, but the main one is the request of the Kurdish parliamentary block to postpone the debate on oil legislation until an accord is reached regarding the pending issues in the oil and gas law. The main pending issues are related to demands for changes that were presented by the Kurdish side, represented by the Ministry of Natural Resources. Here is a quick overlook of these demands for changes of the relevant articles:

  • Article 8: that the role of the Council of ministers should be limited to “follow up” but not “supervisory” as it was agreed in the original draft.
  • Article 12: that a “specialized entity” which could be a regional oil ministry, and not the federal Ministry of oil, should have the right to award and execute oil operation supply contracts that are outside the exploration, development and production contracts.
  • Article 14: that the KRG would share in the management and operation of fields in the Kurdish region which are assigned by the proposed Federal Oil and Gas Council to INOC.
  • Article 39: that assets ownership shall belong to the “specialized entity” meaning KRG’s Ministry of Natural Resources, but not to the federal authority or ministry on expiry of contract.
  • Article 45: regarding arbitration, that a dispute shall be referred to the “specialized entity” but not the Ministry of Oil if it can’t be resolved amicably.
  • Finally regarding the Annexes to the oil and gas law, there was disagreement on the allocation of certain fields to INOC.

It is worth noting here that all of the above points, except for the last one, were raised by the KRG well after the negotiating committee, of which the KRG minister of natural resources was a member, had completed drafting and unanimously agreed to the now famous text of Feb 15th 2007, and after the council of ministers had approved it on Feb. 26th of the same year.

Excerpt from “Iraq’s Upstream Oil Industry: The Next Legislative Challenge” speech delivered at Iraq Future Energy 2010, Istanbul, Sept. 27, 2010.

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