Today, Friday, Nabil Al-Marsoumi, an economist, offered seven preliminary remarks regarding the third edition of the Oil and Gas Law for the year 2023, while highlighting various problematic features of the law.
In a blog post, Al-Marsoumi stated that “the new third edition of the draft oil and gas legislation is not substantially different from the previous two versions in 2007 and 2011, and some observations on the draft oil and gas law for the year 2023 may be made as follows:
First, the oil and gas law was expected to be enacted before the foundation of the national oil company, and the firm’s president was supposed to be represented on the Federal Oil and Gas Council.
Second, the Governor of the Central Bank is not required to participate in the Federal Oil and Gas Council.
Third, it appears that the Iraqi legislator took advantage of the Federal Court’s decision in February 2022, which ruled that oil and gas activity in the region was illegal, as well as the International Trade Court’s decision in Paris in March 2023, which barred Kurdistan from using the Iraqi-Turkish line, resulting in the region’s oil exports ceasing. This investment is evident in the nature of the Federal Council’s formation, which is dominated by central authority, and in the nature of the great powers enjoyed by the Federal Council for Oil and Gas, in exchange for very limited powers for the region and the producing provinces that are not organized in a region.
Fourth, the law must incorporate the notion of weighted voting in the Federal Oil and Gas Council based on specified criteria, such as having two or more votes for a governorate producing more than one million barrels of equivalent per day.
Fifth, according to Article 8 of the law, (the Federal Ministry of Oil shall manage the oil and gas producing fields throughout Iraq in coordination with the producing region and governorates), and the explored and undeveloped fields, as well as the exploratory patches and how to manage them, were not addressed.
Sixth, the law did not give the region and the producing governorates that are not organized into a region a significant role in developing strategic policies related to the development of oil and gas, which is contrary to Article 112 second of the Iraqi constitution, which states that (the federal government and the governments of the producing regions and governorates together develop the necessary strategic policies for the development of oil wealth and gas in orderde
Seventh, the law contains no provisions for dealing with contractual obligations with foreign companies, particularly the production-sharing contracts signed with Kurdistan 15 years ago, which are subject to mandated international arbitration in the event of a breach of contractual obligations between foreign companies and the region.