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

Seventh: The proposed law should be revised in the lights of the recent development pertaining to ExxonMobil/KRG deals and their possible impacts on eradicating the authority of the federal government over the petroleum sector. Specific provisions might be needed to prevent the repetition of such actions in the future.

Finally, by now many have publicly expressed the operational limitations of 2005 constitution, which were not fully tested when oil and gas law was drafted and proposed in February 2007. This is discussed next.

2. Proper and correct application of the constitutional articles.

The proposed law should attempt to have clear provision and article to address and avoid all the known ambiguities of the constitution, particularly those pertaining to oil and gas. There is absolutely no good purpose in repeating selective and biased interpretation of vague articles in the constitution aiming at weakening the role of the government on all petroleum policy issues.

The law should put an end to conflicting interpretation of these constitutional provisions as many respected and independent international legal opinions provide excellent guidance in this respect.

Petroleum policy and fields development, including contracting with IOCs to develop upstream petroleum, should be stated clearly as sovereign matters and are among the prerogatives and authority of the federal government.

Moreover, the law should make it mandatory on the federal government to prove that any field development involving IOCs delivers the highest benefit to the Iraqi people, as the constitution requires.

3. Effective contribution of all branches of Government

The proposed law should adhere to the constitutional principle of balancing the role and contribution of the three branches of authority: Judiciary, legislative and executive, especially with regards to upstream petroleum development contracts with IOCs.

As essential requirements the law should embrace three parallel principles to ensure checks and balances that:

1. Executive authority has the legal mandate to negotiate, conclude and sign the contracts;

2. Legislative authority (the Parliament/Council of Representatives-CoR) has the legal mandate to review, debate and promulgate laws to legalize these contracts if they are in conformity with the best interest of the Iraqi people and other principles on the constitution;

3. Judiciary authority has the legal authority to have the final decision in case of conflict between the two other authorities on the subject matter.

The above three essential requirements ought to be formulated through very clear, definitive and affirmative clauses in the proposed law to avoid the possibility of circumventing any of them and or limiting their due role and authority. Therefore all articles under “CHAPTER II: MANAGEMENT OF PETROLEUM RESOURCES” of the proposed law should be revised and redrafted accordingly.

4- The Federal Oil and Gas Council-FOGC.

This is the most important entity that would be created by this law. Therefore articles pertaining to its role, functions, objectives, formation and structure have to be debate and drafted carefully and clearly. It should be remembered that since no reference is made to this council in the constitution, therefore its creation is not a constitutional requirement. Moreover, the council has “non-election legitimacy” due to the possibility that only its chairman (the Prime Minister) would be elected, while other could be appointed. Finally, the council has specific professional and technical function and nature and therefore should not be considered or perceived as “political” entity.