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

9- Balance of and harmonization between the Federal, Regional and Provincial-FRP authorities.

The proposed law should have clear demarcating lines between the three authorities to ensure their effective participation and functional cooperation in a balanced, coherent and harmonious way.

It is very essential to avoid repeating the vague provisions of the constitution that have created confusion, different and contrasting interpretation that could weaken the role and authority of the central/federal government.

Many articles in the proposed law need very serious revision to ensure real, effective and workable FRP co-management.

10- Regulating future field-development contracts

As mentioned earlier most of the highly prized oil and gas fields have been contracted with various IOCs through MoO bid rounds and KRG direct deals of PSCs. These concluded contracts together with other producing fields would bring the country’s production and export capacities to unprecedented levels.

Consequently, the proposed law should take the above into consideration, and thus all provisions regarding future contracts and licensing procedures should be revised accordingly. The followings are the main issues, which the law ought to consider:

1- Earmark all fields (producing, underdevelopment and discovered) and Exploration Blocks (current and future) for INOC;

2-INOC develops all fields through national efforts as a rule and through only Service Contracts as exception but with majority participating interest to ensure national control. It is preferable the law contains clear and specific prohibition of any contracts with IOCs other than the Service Contracts;

3- Service Contracts can only be offered through competitive, transparent and credible biding round with fully known and accessible licensing process involving all stakeholders: provincial, regional and federal related authorities;

4-If such development involves IOCs, the service contracts would be subject to the approval of the parliament and legalized by federal law;

11- Health, Safety and Environmental- HSE considerations

Clearer, broader and enforceable provisions should be included in the proposed law. The status of the related infrastructure, carelessness by the operators and any other incompetence’s and cost considerations could indicate to high probability of serious environmental disasters.

Reference to and full compliance with known international standards and best business practices should constitute the minimum standards for health and safety requirements.

12- Institutional and Human Resource Capacity Development.

The proposed law has to pay special attention to these requirements. Provisions of vital importance are need to ensure increasing “local contents”; to prevents corruption; to protect human rights; strengthening the corporate social responsibility-CSR towards the local communities on the part of the foreign investors.

13- Matters Related to Gas Conservation and Utilization

The conclusion of natural gas related contracts pursuant to the second bid round and the three gas-fields pursuant to the second bid round would make it imperative to revise the related provisions in the proposed law.

The proposed law should also take into consideration the forthcoming exploration blocks bid round.

Clarity is needed regarding the jurisdiction of this law over the recently approved deal for Basra Gas Company-BGC with Shell and Mitsubishi. The proposed law could be interpreted to exclude this and similar important contracts in the future. Yet other law(s), which such contracts may fall under (such as Private Company Law nr. 21 of 1997 as the case for BGC) has NO jurisdiction over foreign investment in midstream and upstream petroleum sub-sectors.

Finally, sufficient consideration should be given to assess the feasibility of having separate legislation for gas resources covering issues of conservation, production, utilization and any other pertaining matters.