US, Iraq Agree to Improve Min. of Oil Transparency

The United States Government, through the U.S. Agency for International Development (USAID), signed a Memorandum of Understanding with the Iraqi Ministry of Oil on March 17. This agreement outlines U.S. support for the Ministry to improve the effectiveness and transparency of its operations.

Held at the U.S. Embassy in Baghdad, the signing ceremony was attended by the Ministry’s Director General for Development and Training Iqdam Mohamed Ridha and USAID Mission Director Thomas Staal.

Support to the Ministry will be delivered through the USAID’s Administrative Reform Project “Tarabot” under the auspices of the U.S.-Iraq Strategic Framework Agreement. USAID-Tarabot will help the Ministry enhance current service delivery and transparency to better meet the needs of the Iraqi people, including improving procurement practices and implementing the new Iraq Development Management System – state-of-the-art software used to manage the Ministry’s capital investment budget. This builds on a previous USAID effort launched in 2007 under the completed Tatweer project to help the Ministry manage its resources.

During the ceremony, Mr. Ridha expressed his optimism for the agreement, stating, “I think the cooperation that this agreement represents will be very beneficial to the Ministry. USAID-Tarabot has done outstanding work in other GOI ministries, and we look forward to the same with our Ministry.”

Mr. Staal noted, “Signing this agreement is part of the U.S. commitment to help Iraq manage its resources more efficiently to benefit its citizens.”

(Source: Embassy of the United States)

One Response to US, Iraq Agree to Improve Min. of Oil Transparency

  1. Ahmed Mousa Jiyad 21st March 2013 at 18:22 #

    Cooperation for more transparency.
    This is very encouraging timely development as Iraq recently declared “Compliant” by the Extractive Industry Transparency Initiative- EITI and the challenges are many to prepare adequately the required annual reports.
    A prerequisite for more and effective transparency in the Iraqi upstream petroleum sector is the accurate understanding of the Transparency Value Cycle-TVC.
    TVC simply implies that all and every “investments”, “revenues” and “payments” done by or/and received by each involved “partners” should be disclosed in full, accurate and verifiable.
    In petroleum industry the concept of TVC is basically aims at tracing and accounting for all “resource and cash flows” pertaining to this industry through three logically semi-consecutive, connected and cyclical flows of main components.
    The first component is about the “Payments made by IOCs”. These cover “all” cash payments, investment and taxes made before contracting, upon contracting and during the entire duration of the contract period.
    The second component covers “Resource flowcharts and revenues.” This covers two flows generated as results from IOCs involvement above mentioned: revenues generated from domestic consumption (in local currency) and those generated from export revenues (in foreign currencies).
    The third component deals with “Payments to IOCs.” This covers all types and categories of payments to IOCs depending on the nature of governing contracts. These include investment recovery; fees or share in production, overhead charges, etc. Such payments could be made in cash and or in-kind as stipulated in the related contracts.
    The above three components cover considerable list of items that are very essential to ensure transparency of all “flows” related to petroleum industry but basically the actual investment, related payments and generated revenues.
    Many fundamental requirements are needed to ensure better transparency reporting structured along the premises of TVC:
    First, enhancement of the “National Capacities” to play significant role in the transparency reporting, oversight and analysis. In other words increasing the “local content” in the Iraqi EITI Reports;
    Second, proper understanding of the actual contracting modalities and legal frameworks that govern the upstream petroleum sector in the concerned country;
    Third, modern integrated “metering system” to trace all flows of “Resources and Revenues”;
    Fourth, proper understanding of the upstream petroleum industry and its linkages with the domestic sectors and international oil market.
    The above are prerequisites for all those involved in preparing the national EITI report including the “Reconciler” and the “Validator”. Needless to say the national EITI report is much more than “accounting” or “auditing” report.
    Ahmed Mousa Jiyad,
    Development Consultancy and Research,
    [email protected]
    21 March 2013