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

The followings are issues of vital importance, which the proposed law should consider:

A: FOGC Membership and Structure

1. The representatives of the “producing provinces” should have proven record of experience in petroleum industry. The representative could be nominated by the related province but the nomination has to be approved by the Council of Ministers.

2. The three “experts” members should be Iraqis, to avoid any interpretation that permits foreigners to hold membership. The number of experts could increase in case the BIA is removed, as suggested below.

3. It is highly advisable that FOGC has permanent General Secretariat with well-qualified and experienced Iraqi staff in fields related to the nature of FOGC functions, responsibilities and role. Having permanent general secretariat is essential to ensure continuity since all members of FOGC (except the three experts) are there by virtue of their official positions not professional qualities, and thus the possibility of their turnover could be high and frequent. Moreover, it could be appropriate that either the Minister of Oil or the Head of INOC acts as the General Secretary of FOGC in addition to the membership in the council.

4. The core entities of the upstream and midstream petroleum sub-sectors should be well represented in FOGC. These include INOC, SOMO and other related State companies under the auspices of MoO.

5. Considering the rather large number of FOGC membership, their nature of representation, and the magnitude and strategic significance of the functions and role of FOGC it is important to insure balance between representation and efficiency considerations so that FOGC conduct its functions effectively.

 B: Functions of FOGC

1. FOGC cannot decide the “Petroleum industry policies” since FOGC does not have the legal mandate, the technical capacity and institutional representation to do so for three reasons:

1. Decisions on such policies are among the functions of Council of Minister-CoM in the area of development plans.

2. The term “Petroleum industry” covers also all downstream sub-sectors, some of which such as gas industries, petrochemicals, refining industry and others are outside the scope of this law, as stipulated in Article 50.

3. These vital sub-sector downstream companies are not represented in FOGC.

Therefore FOGC could suggest or assist in formulating these policies but not decide them.

2. FOGC should not decide the “national petroleum production level” since this is the function of CoM. However, FOGC can suggest or recommend the suitable national production level and the modalities of assessing the equitable contribution of each producing contracting area.
3. The draft law gives FOGC members new authority to suggest laws. But FOGC members cannot have the authority to suggest laws, as this function is confined to the Parliament and the Government. Thus this right might be contested on grounds of unconstitutionality.