Tag Archive | "hydrocarbon law"

Oil & Gas Law Key to Resolving Issues


Translated from Al-Hayat by Abdel Wahed Tohmeh, for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Iraqi Kurdistan Region Natural Resources Minister Ashti Hawrami (pictured) said that the shares of oil companies operating in the region have exceeded $3.5 billion. He stressed the importance of the oil and gas law’s enactment, and estimated that oil reserves in the three Kurdish governorates are at more than 45 billion barrels.

In an interview with Al-Hayat, Hawrami said that the negotiations with Baghdad will be in accordance with the law, which determines the Kurdistan region’s financial share of federal revenues. “The provincial government informed Baghdad at the beginning of this year that the investing companies requested more than $3.5 billion [in shares], and they are constitutionally entitled to this,” he said.

He denied Baghdad’s accusations that the region is exporting crude oil without coordinating with Baghdad, adding, “This is taking place under an agreement with Baghdad to export our production, on the condition that 50% of proceeds is deducted to pay companies’ dues, while the other 50% is kept by the state treasury. However, all the proceeds were seized.”

He denied rumors of smuggling, saying, “There is no oil smuggling, we do not accept such cheap accusations. What was claimed is a legal entitlement and it came because we forbid them from grabbing it.” He criticized the current management of the country’s imports, which “still follows the methods of the former regime and include laws that are imposed on us by force from the federal government.”

Hawrami demanded that the central government provide the region with the 55 million barrels of fuel “that we did not receive from 2004 to 2012, and that are needed for domestic consumption.”

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Iraq “has Little Interest in Oil Law”


By John Lee.

A leading Sunni figure has said that Iraq is not likely to pass a hydrocarbon law anytime soon, as the government has little interest in pushing a draft through parliament.

Adnan Al-Janabi, a member of the Iraqiyya party, and the head of Iraq’s parliamentary oil and energy committee, told Reuters:

It is at the bottom of the government’s list. The centralists of the ruling party have no interest to sustain a federal policy or pass a federal law … Therefore the government and IOCs (independent oil companies) will continue the risk of working in a legal vacuum.

A draft for the unified Iraqi hydrocarbon law has been under discussion in parliament since 2007, but infighting among the country’s factions has so far thwarted attempts to pass the legislation.

Despite the absence of an oil law, foreign oil companies have signed contracts throughout Iraq. But all involved in the development of Iraq’s energy sector would breathe easier if legal guidelines were in place.

(Source: Reuters)

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Lack of Federal Oil Law Cripples Iraq’s Recovery


By Thomas W Donovan, attorney at the Iraq Law Alliance.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Foreign “experts” like to depict Iraq’s oil industry as a cesspit of corruption, turmoil and factional politics. In fact, however, Iraq has made real progress, and is aiming for more. But it is true that serious legal, political and technical challenges must be met if the sector’s ambitious plans are to become reality.

Remember that the events of the last decade, beginning with the US-UK invasion of March 2003, have presented Iraq with far more social, economic, military, legal, political and infrastructure challenges than any of its Opec neighbours have faced.

Getting oil production up to the current level of about 3 million barrels per day (bpd) is an accomplishment in itself. Baghdad says production is at a 20-year high; the US says Iraq has now surpassed Iran in daily production.

The Iraqi government plans to keep pumping, and is bringing in major international oil companies. The government has now held four petroleum licensing rounds: in the first three, private companies bid to take over certain producing oil and gasfields from the old state monopoly company; the fourth was for exploration rights in promising areas not yet producing.

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A Vote of Confidence in Iraq’s Future


This week in London, Iraq Business News was delighted to be Gold Media Partner at CWC‘s Iraq Petroleum 2012 conference, attended by wide range of senior executives and officials from the energy sector.

The following sound-bites will give you a small taste of the mood of the event:

Iraq has greater potential than any other country to meet [the increasing demand] for oil and gas … Iraq is ahead of the pack in the Arab awakening.

Sir Jeremy Greenstock, former UK Ambassador to the United Nations.

Iraq is the last great frontier of low-cost conventional oil.

Dr Alirio Parra, former Venezuelan Energy Minister.

Iraq deserves to re-take its position at the energy top table … Iraq is a country that brims with potential.

Lord Howell of Guildford, UK Minister of State for the Foreign and Commonwealth Office.

“I am of the opinion that we are not facing an imminent problem regarding Iraq taking its rightful role in OPEC.

H.E. Thamir Ghadhban, Chairman of the Advisory Commission to Prime Minister Nouri al-Maliki, and candidate for the position of next Secretary General of OPEC.

Mr Ghadhban sees no obstacles to increasing Iraq’s oil production by 50 percent over the next two-and-a-half years, but the conference sent a clear message that the continuing delays to the hydrocarbon law risk damaging Iraq’s development in the longer term.

There’s no doubt that Iraq has huge potential, and it’s clear that many Iraqi’s have a huge determination to take the actions necessary to realise that potential.

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Political Tensions Delay Iraq Oil Law


The current political tensions in Iraq are likely to delay the finalisation of a new hydrocarbon law for more than a year, according to Reuters.

“With these chronic political differences I can’t see any possibility of having an oil law this year,” said Adel Barwari, a Kurdish adviser to Maliki.

“If the [differences] were, say for example, 2 or 3 percent, I would say yes we could have a law, but the percentage is much higher.”

(Source: Reuters)

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Oil Law “Will be Passed Without Iraqiya if Needed”


AKnews reports that the debate on draft hydrocarbon legislation has been postponed by the Oil and Gas Committee of the Iraqi Council of Representatives because of the continued absence of Iraqiya List members.

The law needs the approval of all parties to be passed. On 3rd January the committee revealed that an initial agreement between the Kurdistan Regional Government and the federal government had been reached on a new formula to approve the law.

Baghdad and Erbil ended three negotiation sessions in Baghdad at the end of October with outstanding issues.

Committee member Susan al-Saad told AKnews that Iraqiya cannot be marginalized and “we hope to participate in the coming meetings to complete this draft law and submit it to the Council of Representatives to vote on.”

“There are calls for urgent legislation since this issue is causing crises between the Oil Ministry and local governments. If Iraqiya insists on not attending then we will have to decide without its presence,” she added.

The tension increased recently between the governments of Baghdad and Erbil after the KRG rejected a draft Oil and Gas Law approved by the federal government in August. The Region believed the draft gave too much power to Baghdad in terms of managing oil contracts and income, and would be at the expense of the Region.

 (Source: AKnews)

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Federal Oil and Gas Law: Viability, Coherence and Functioning Perspectives


By Ahmed Mousa Jiyad. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Mr Jiyad is an independent development consultant, scholar and Associate with Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya@online.no).

 

Introduction.

The meetings between the federal and KRG delegations held in Baghdad in the last days of October 2011 resulted in an agreement to base their discussion on the February 2007 version of the federal oil and gas law-FOGL.

Detailed, thorough and article-by-article assessments of the February 2007 draft of the law have been done and published by known Iraqi oil professionals, including this writer. The consensus among them indicates the draft suffers from many very serious flaws that ought to be addressed, revised, and redrafted. Moreover, essential and fundamental provisions are, by now, have been overtaken by events that render them outdated, irrelevant and dysfunctional.

What is needed then a very serious look into every article and the entire proposed law from substantive, format and operational aspects to insure its viability, coherence and proper functioning. It would be a grave mistake to consider the “law” as “political deal” since all had learned that most if not all political deals, in Iraq, are easily forgotten and short live!

This intervention aims to shed light on the most important issues and matters of concerns, which should be taken into considerations during the process of negotiating and finalizing a proposed draft of this law.1

  1. Time factor effects

Many very important developments have taken place since February 2007, which makes it imperative to revise seriously various articles in the law since these provisions have been overtaken by events and thus became almost obsolete or redundant.

First: Among these developments are the bid rounds concluded by the MoO that led to concluding long term service contracts. These have generated many major consequences, which have direct implications on the proposed law.

Second: All major oilfields (except few such Kirkuk, Bai Hassan, East Baghdad among others) have been already contracted for re-development and/ or development with IOCs involvement. Consequently, there could be no need to offer any of the remaining fields for IOCs in whatever way or method. These remaining fields could be legally (by this proposed law) earmarked for INOC (to be reinstated), as suggested below.

Third: The concluded service contracts with IOCs, if implemented as envisaged, together with the production from other fields would bring Iraq’s production and export capacities to very high and unprecedented levels, even at partial success of half the contracted production targets. The implications is that there are no compelling reasons for Iraq to expand the production capacities any further at least in the next 15-20 years. The law may suggest a moratorium on any “new” development of oil fields for no less than 15 years. Moreover, the law ought to emphases the proper development of the contracted fields in the most optimum way to ensure the constitutional principle of “highest benefits to the Iraqi people”. Accordingly, the field development plans (initial and final) are of paramount importance that they should be formulated by technically competent petroleum team, approved by and constantly monitored by petroleum central authority;

Fourth: All the bid rounds were based on a service contract type and modality. The law should clearly extend support and preference to this type of contracting by making it mandatory to use this type of contracting. To prevent any misinterpretation it might be advisable to have a specific article in the law to make it unlawful and unconstitutional to conclude Production Sharing Contract- PSC in petroleum upstream sub-sector. The law ought to prohibit PSC in any phase of exploration, or development and production activities, in compliance with constitutional basic principles of collective ownership of petroleum resources and the best interests of the Iraqi people.

Fifth: The service contracts have already established significant milestones that are superior to those envisaged under February 2007 version of this law regarding, interalia, fiscal regime, conservation measures particularly those relating to gas utilization, good vs. best international business practices, dispute settlement modalities etc. Accordingly, good number of articles in this proposed law need revision on the lights of what actually have been concluded and evolved since February 2007.

Sixth: The relationship between this law and the proposed laws for the Ministry of Oil, INOC, Revenue Sharing and finally the General Commission for Observing the Allocation of Federal Revenue have to be well coordinated and considered to ensure harmony and coherence.

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Time to Move on: Iraq’s Oil & Gas Impasse Explained


The furore over the contract signed by US oil giant Exxon with Iraqi Kurdistan is another sign that Iraq urgently needs a new oil and gas law. As this primer from Niqash explains, the lack of this law could well be a sign that the dream of united Iraq is over.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

It’s been years in the making and the latest row about Iraq’s much-debated, much-delayed and mired-in-controversy national oil and gas law only indicates once again that issues around the legislation should have been resolved by now. The resolution of issues around the oil and gas law, which has never been passed in parliament, is essential to not only Iraq’s future but also to the stability of the region and it is way overdue.

The International Energy Agency forecast that Iraq would be the single most important source of new oil production between now and 2035, making the development of the country’s energy industry critical to international oil markets.

The latest drama focuses on the tensions between the federal government in Baghdad and the semi-autonomous state of Iraqi Kurdistan. In mid-October American oil giant ExxonMobil signed a deal with the government of the semi-autonomous region of Iraqi Kurdistan, which is using a form of oil and gas law that they formulated themsleves and which has not been approved by Iraq’s federal authorities, who are still using an older version. The contract signed by Exxon, which has been described as a “landmark deal” authorizes the firm to develop oil and gas in six blocks in the northern region. In doing so, ExxonMobil became the first major oil company to sign such a deal.

This was a huge public relations coup for Iraqi Kurdistan and for the policy makers in its capital, Erbil. It is certain to have an effect when Iraqi Kurdistan starts negotiations with Baghdad again on oil policy and oil legislation. As the Financial Times wrote last week “conventional wisdom says that the interests of US “Big Oil” and Washington go hand-in-hand. Thus, many see ExxonMobil, the largest US oil company, as an extension of the US State Department”. And some analysts believe the deal must have been OK-ed by the US State Department in an attempt to undermine the current Iraqi government, led by Prime Minister Nouri al-Maliki, after acrimonious talks about the nature of the upcoming US troop withdrawal. It seemed very unlikely that Exxon could have acted without being given the green light by Washington.

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