Will the Oil and Gas Law have an impact on oil companies operating in the region?

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[size=52]Will the Oil and Gas Law have an impact on oil companies operating in the region?[/size]

[size=45]Translated by / Hamed Ahmed[/size]
[size=45]A report by the American energy news website, Oil Price, indicated that discussions are still ongoing between the federal government in Baghdad and the Kurdistan Regional Government about drafting a draft oil and gas law at a time between the Federal Court’s decision that Baghdad should be responsible for marketing, and this may have some impact on companies’ contracts. International oil companies operating in the region.[/size]
[size=45]The economic expert, Simon Watkins, mentions in his report that a series of legal decisions issued by the Federal Supreme Court on February 21 show the broad outlines upon which the oil and gas law that the Baghdad government is working on will be built, which will likely bring about a change in the mechanisms for exporting oil from the fields of the Kurdistan region. The same applies to the working conditions of Western oil companies operating there.[/size]
[size=45]The economic expert, Watkins, points out that the Federal Court recommended that the regional government hand over the export mechanisms and financial resources to the central government through the State Oil Marketing Company (SOMO), and even if there is another mechanism for export, the financial returns will be transferred to the central government, and in return, The central federal government is responsible and obligated to pay the salaries of public sector employees in the region.[/size]
[size=45]The expert points out that this context will be different from the previous budget payments for oil revenues agreed upon between the regional government and the central government of Baghdad, which dates back to November 2014. The agreement stipulated that the regional government would export at least 550,000 barrels per day of oil produced from its fields through the oil marketing company SOMO. In return, Baghdad allocates 17% of the federal budget.[/size]
[size=45]This agreement was later canceled through an understanding reached between the regional government and the new federal government that was formed in the August 2018 elections and was based in the 2019 budget law. This requires that the federal government transfer sufficient amounts of budget funds to pay the salaries of the region’s employees, in addition to other financial compensation in exchange for the regional government’s delivery of exports of no less than 250,000 barrels per day through the SOMO oil marketing company. This agreement was also marred by some implementation failures.[/size]
[size=45]The report indicates that, according to the regional government, it has the authority, through Articles 112 and 115 of the Constitution, to manage oil and gas extraction operations from fields in the region that were not in production in 2005, the year that was written in the Constitution and voted on in a referendum. In addition, the territorial government insists that Paragraph 115 states that it has the authority and authorization to sell oil and gas and receive resources for what is exported. The regional government also highlights that the constitution gives it priority, in the event of a dispute, to refer to the law of the region and governorates. However, the central government and SOMO Oil Marketing Company insist that Article 111 of the Constitution stipulates that oil and gas are public wealth for all the people in the region and governorates.[/size]
[size=45]The report states that Russian and Chinese oil companies operate in oil and gas fields in southern and northern Iraq in the Kurdistan region, in addition to Western oil companies.[/size]
[size=45]On August 3 of last year, the new federal government under the authority of Prime Minister, Muhammad Shia al-Sudani, stated that the new unified oil law would govern the mechanisms of oil and gas production and investment in both federal Iraq and the Kurdistan region and would contribute to being a strong factor for unifying Iraq.[/size]
[size=45]The Iraqi Oil Minister, Hayyan Abdul Ghani, had confirmed during his participation in the Al-Rafidain Forum in Baghdad last week that discussions on the oil and gas project would be held with the Kurdistan region.[/size]
[size=45]Minister Abdul Ghani said, “We held more than one meeting to discuss this issue in Erbil and Baghdad to prepare a draft of the oil and gas law according to the federal government’s agenda.”[/size]
[size=45]The minister added that a draft of the law had previously been prepared, but officials in the region asked to discuss the draft with all its provisions. The review of many of the basic provisions had been completed, but the discussions stopped due to the occurrence of several incidents.[/size]
[size=45]Abdul Ghani said that the Ministry of Oil held discussions with the Kurdistan region to prepare a draft oil and gas law, and a draft was prepared for this purpose and submitted to the federal government in accordance with the country’s constitution.[/size]
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