New Report from Extractive Ind. Transparency Initiative

By John Lee.

The Iraqi-Extractive Industries Transparency Initiative (IEITI) report for year 2011 has been published by an independent and international reconciler firm Ernst & Young.

The report considers for the first time the quantities of crude oil used for local consumption and the paid revenues by the Extractive Oil Companies (National & International).

It concludes that the total revenues from selling crude oil for year 2011 amounts to US$ 83 billion, plus the total paid amounts of US$ 4.5 billion to the International Extractive Companies involved in developing oil fields, and US$ 4.5 billion to the National Extractive Companies in exchange for their participation in the extractive operation of the oil fields in Basra, Umara, Nasiriyah, Kirkuk and others

The International Reconciler concluded that there was a total difference of US$ 1.175 billion between the data reported by the Oil companies compared to those of the Ministry of Oil (MoO),the difference was in favor of MoO; furthermore, a difference of US$ 720 million was also reported in respect to other costs in favor of MoO.

The report clarified that all discrepancies are explained and justified and were due to the difference in the calculation mechanism used by MoO compared to thatused by the Oil Companies. The report summarized the results of the reconciliation process between the Companies and the Iraqi Government (excluding Kurdistan Region) as being 100% comparable, based on adopting a Materiality figure of 1%.

Other challenges faced by the reconciliation process were the inability to reconcile the data information of oil production in Kurdistan Region with the information of data of crude oil consumption by the Electricity Power Generation due to the absence of supplying data by neither the Kurdistan Regional Government nor the Ministry of Electricity.

The full report can be downloaded here, while our Expert Blogger Ahmed Mousa Jiyad gives his initial assessment here.

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