Oil, Gas, Electricity and Energy Projects

Anyone working in Iraqi energy — an international company on a southern field, a local contractor building a substation, an investor weighing a solar project — faces a legal system that is not gathered in one book. Oil and gas have their own constitutional basis, electricity has a ministry statute defining the private sector's role, tax has a separate text, and contracts are mostly subject to the Civil Code. In this section the office of lawyer Ali Barakat in Baghdad, al-Yarmouk, offers an educational map of those texts, taken from the official Iraqi legislation database.

Layer one: the Constitution

Article 111 of the 2005 Constitution vests petroleum wealth in every Iraqi, across all regions and governorates. Article 112 deals with management: existing fields are run from the centre jointly with producing regions and governorates, revenue is shared equitably by population with a temporary allocation for damaged areas, and detail is left to legislation. Strategy for developing the resource is shared work between the centre and the producers.

Electricity sits in article 114(2) among shared competences: regulating the main sources of electrical energy and their distribution. A project in the Kurdistan Region is therefore also read against regional legislation, while elsewhere the federal statute is the first reference.

Layer two: the Iraq National Oil Company

Law No. 4 of 2018 re-established INOC as a state company with its own legal personality and separate finances and management, attached to the cabinet and seated in Baghdad. On 23/1/2019 the Federal Supreme Court decided case 66 with consolidated cases 71, 157 and 224/federal/2018; the decision is published in the official legislation database. It held unconstitutional article 3 (the company's objectives), items third and fifth of article 4 so far as they concern oil marketing, article 7/first/1 (a chair at minister rank), item (h) of article 7/second/2 (attaching the oil marketing company to INOC), article 8 (board functions), articles 11 and 12 (deductions from oil revenue, income and profit distribution), article 13/second, article 16 (exemption from laws in force) and article 18/sixth. All other challenges were dismissed, and the database shows each struck provision as "cancelled".

What remains of article 4 after the ruling: running, developing and operating producing and discovered undeveloped fields; concluding exploration, production and export contracts within state policy and the Constitution; managing licensing-round service contracts with a duty to review and amend them in the public interest; operating the main pipeline network and export terminals; and founding wholly owned companies with cabinet approval.

The regional statute

The Kurdistan parliament passed its own petroleum statute, numbered 22, in 2007. Its official record marks it as not in force, noting cancellation under the Federal Supreme Court ruling 59/federal/2012 with consolidated case 110/federal/2019. Constitution articles 111 and 112, together with the INOC Law as it stands after the 2019 ruling, remain the federal basis for managing fields. Details are in the legal framework for oil and gas.

The Investment Law and its limits

The 2006 Investment Law, in article 29, leaves upstream oil and gas extraction and production outside its reach. An upstream operator does not obtain an investment licence for that activity; it works through contracts with petroleum bodies. Downstream industries and services, including power plants, may fall within investment rules depending on their nature and the competent commission's view.

Layer three: electricity and the private investor

The 2017 electricity statute (No. 53, Gazette issue 4443) lists among its article 2 aims setting rules for Iraqi and foreign investors in new generating plants and distribution, supporting renewables and localising their industries, and moving gradually toward decentralised management. Article 3 casts the ministry as the body that recommends licensing a private company, working alongside investment commissions, and as a contracting party with private partners in generation and distribution.

Under article 9 the ministry offers investment opportunities for new plants and urges sponsors toward renewable plants with the necessary inducements, detailed in each opportunity announcement. Article 10 puts the ministry's dealings with the oil ministry and others on balanced contracts that secure delivery, take-up and payment. Article 13 leaves the per-unit charge to ministerial instructions endorsed by the cabinet. See the Electricity Law: private generation and solar.

Article 15 sets sanctions for interference with the network, including confiscating equipment, cutting supply, charging remediation costs and, after administrative steps, filing a criminal complaint. That matters to a distribution investor because it defines the tools available against unlawful consumption.

Layer four: tax

Law No. 19 of 2010 is a special tax statute. Its first article takes 35% of income generated inside Iraq from contracts of foreign oil companies, their branches and offices, extending to their subcontractors, in extraction, production and linked industries. Where it is silent, the 1982 income tax legislation applies, and finance ministry instructions agreed with the oil ministry identify covered contracts.

Layer five: foreign staff

No non-Iraqi may work in an establishment before a work permit issues, under articles 30 and 31 of the 2015 Labour Law. The 2026 foreign worker instructions cap foreign labour at half the project's workforce, with a field committee verifying actual need. See foreign worker permit rules and, for sector contractors, oil sector contractors: staffing and tax.

Where local staffing duties and project incentives come from

A contractor's duties to hire Iraqis, buy locally and train staff come from its agreement with the operator or state company, and from the cap of half the workforce on foreign labour in Foreign Workers Instructions No. 1 of 2026. Incentives for renewable plants come from article 9 of the Electricity Law, from the ministry's announcement of each investment opportunity, and from Investment Law benefits where a licence covers the project. A written statement of duties and incentives is therefore requested from the contracting or announcing body before signing.

Layer six: the contract

Most construction contracts in the sector — plant, line or processing facility — are characterised under the Civil Code as muqawala. Several provisions cannot be contracted away:

• Article 146(2): a judge may scale back a ruinous obligation after a general, unforeseeable exceptional event; contrary agreements are void.
• Article 878: rising material and labour costs alone do not justify more consideration unless the economic balance collapses entirely.
• Article 170: a pre-agreed sum falls away where no loss occurred and may be reduced if excessive.
• Article 870: ten-year liability for collapse of fixed installations and defects in their soundness, which no clause can remove.

Where arbitration abroad is chosen, recognising the award at home relies on the 2021 statute that brought Iraq into the New York Convention. See drafting risks in power and large project contracts.

A checklist before signing

Before an energy or infrastructure contract is signed, it helps to confirm in writing:

• the counterparty's legal identity and the source of its authority to contract, especially where a state company or a regional body is involved;
• whether the activity falls inside or outside the Investment Law, which decides whether an investment licence is part of the file;
• the tax position of the main contractor and each subcontractor under the 2010 special statute and the general income tax rules;
• the staffing plan, permit timing and the half-workforce cap;
• the adjustment formula for consideration, the variation procedure and the delay compensation clause, tested against articles 170 and 878;
• the governing law, the controlling language and the dispute forum.

Disputes with public bodies

Where a contract with a state company produces a dispute, the forum depends on the contract: an agreed arbitration clause, or the ordinary courts. Where a ministry or public body issues an administrative decision outside the contract — refusing a licence recommendation, for example — the grievance and Administrative Court route under the State Consultative Council Law, as amended in 2013, may apply unless a special statute designates another body. The type of act therefore decides the route.

How to use this section

Start from your own question:

1. Who has authority over the field or project? The oil and gas framework page.
2. Can a private investor build a plant and sell its output? The Electricity Law page.
3. What tax applies and what staffing limits? The oil sector contractors page.
4. How should the contract be written to withstand mandatory rules? The contract risk page.

Legal basis and sources

1. Constitution of the Republic of Iraq of 2005
2. Iraq National Oil Company Law No. 4 of 2018 (Official Gazette 4486, 9/4/2018)
3. Federal Supreme Court decision 66 and consolidated cases 71, 157 and 224/federal/2018, 23/1/2019
4. Kurdistan Region Oil and Gas Law No. 22 of 2007: official record marking repeal by the Federal Supreme Court
5. Ministry of Electricity Law No. 53 of 2017
6. Law No. 19 of 2010 imposing income tax on foreign oil companies contracted to work in Iraq
7. Income Tax Law No. 113 of 1982, as amended
8. Labour Law No. 37 of 2015
9. Instructions No. 1 of 2026 on recruiting, employing and licensing foreign workers
10. Investment Law No. 13 of 2006, as amended
11. Civil Code No. 40 of 1951
12. Law No. 14 of 2021 on accession to the New York Convention on recognition and enforcement of foreign arbitral awards

Frequently asked questions

Topics in this area

• 01The legal framework for oil and gas in IraqIraq oil and gas framework: Constitution articles 111–112, INOC Law 4/2018 and Federal Supreme Court cancellations, and the status of Kurdistan Law 22/2007.
• 02Electricity Ministry Law 53/2017: private generation and solar plantsHow Iraq's Ministry of Electricity Law 53/2017 opens generation, distribution and renewable plants to private investors, the role of investment bodies and Constitution article 114.
• 03Drafting risk in Iraqi energy and infrastructure contracts under the Civil CodeHow the Iraqi Civil Code treats energy project construction contracts: hardship, cost rises, agreed compensation, delay, ten-year liability, governing law and arbitration.
• 04Oil sector contractors in Iraq: staffing, tax and contractsWhat foreign contractors and subcontractors in Iraq's oil sector face: income tax under Law 19/2010, foreign work permits and the half-workforce cap, and contracts with state companies.

Always check the text in force and its amendments in the official source.

To ask about your matter