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

Another big sticking point here: In order to be defined as an oil producing region and to get a say in decisions, a region must produce a certain amount of barrels of oil per day. The parliamentary committee backed by Kurdish politicians wants an oil producing region to come up with 150,000 barrels per day. The cabinet-based committee wants to reduce this to 100,000 barrels per day. If the cabinet-based committee gets their way then there would be more members eligible to be on any decision making body – such as the federal council - which means they have more chance of outvoting the Kurdish bloc.

Existing Oil and Gas Contracts

The parliamentary committee has said that all the oil and gas contracts granted before the enactment of any new law would need to be reviewed by a new three man commission. This would be made up of the Minister of Natural Resources from Iraqi Kurdistan, the Minister of Oil for Iraq and the head of the parliamentary committee itself.

The aforementioned federal council (which doesn’t exist yet) would be given the power to review earlier contracts. However the Kurdish politicians are bound to make sure they are well represented on that council and more than likely, they would veto any decision that renders the earlier contracts illegal.

Sharing Revenues

The method for sharing out the revenues from oil production is currently enshrined in Iraq’s constitution. Article 112 of the constitution requires the Iraqi government to distribute revenues to all the peoples of Iraq “in a fair manner” with consideration given to areas that the previous regime led by Saddam Hussein may have neglected or damaged.

At the moment, Iraqi Kurdistan gets 17 percent of the Iraqi budget. It is possible that a new law on revenue sharing may be introduced. However, trying to do this through the Cabinet committee would not go down very well with the Kurdish bloc because they are happy with the current arrangement and don’t want their 17 percent share reduced.