Lack of Federal Oil Law Cripples Iraq's Recovery

Iraq's oil ministry says the areas involved in these rounds should increase production to about 12 million bpd by 2017. If actual production gets to even half of that target figure by that year, Iraq will be able to boast of monumental economic and engineering success, by the standards of post-conflict nations at least.

However, to get there certain improvements in the current legal and regulatory regime, as well as infrastructure upgrades, will be essential.

The most urgent need is for a comprehensive federal law to regulate the hydrocarbons industry. At present, petroleum operations are governed by a collection of laws from previous regimes and by the 2005 constitution. This legal hodgepodge gives no guidance on the interplay between the federal government and the Kurdistan Regional Government (KRG), nor does it set out any rules for oil-revenue sharing between the central administration and the regional governorates.

A draft law to govern oil and gas production was tentatively agreed upon as far back as 2007. However, disputes between Baghdad and the KRG blocked enactment of a law, and today there are three draft versions, none of them likely to win approval anytime soon.

The pressure to increase production is adding new urgency to this problem, but there is still no plausible timeline for enactment of a law.

The absence of a hydrocarbons law is one side of a coin. The other side is the lingering, exasperating dispute between Baghdad and the KRG, not only about production but also about exports from Iraq's northern provinces, and about federal-regional power sharing in general.

One Response to Lack of Federal Oil Law Cripples Iraq's Recovery

  1. […] measures to bring about preferred policies such as limiting de-Baathification or regularizing how oil is produced and its revenues distributed – two legislative initiatives that […]

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  1. U.S. Leverage over Iraqis? When Did We Have That? | Alternative Risk Investment News Trends on Gold, Money, Currency Markets and Financial Freedom - 9th January 2014

    […] measures to bring about preferred policies such as limiting de-Baathification or regularizing how oil is produced and its revenues distributed – two legislative initiatives that […]