The legal framework for oil and gas in Iraq
A foreign company considering work in the Iraqi petroleum industry, and an Iraqi contractor dealing with sector companies, first ask who holds decision-making power. The answer comes not from one statute but from the Constitution, laws establishing public companies and Federal Supreme Court decisions. The office of lawyer Ali Barakat in Baghdad, al-Yarmouk, offers an educational map of these sources as recorded in the official Iraqi legislation database.
What the Constitution says
Article 111 of the 2005 Constitution vests petroleum wealth in every Iraqi, wherever they live. Article 112(1) puts management of output from existing fields in federal hands jointly with the producing region or governorate, requires revenue to be shared equitably by population, and leaves detail to legislation. Article 112(2) treats long-term development strategy as shared work between Baghdad and the producers.
A question about any body's authority to contract over an oil field therefore turns directly on these two articles. The two articles are read together with the sources below, which form the working basis for authority today.
Iraq National Oil Company
A 2018 statute (No. 4, Gazette issue 4486 of 9/4/2018) created INOC as a state company. Article 2 gives it its own legal status and separate finances and management, attaches it to the cabinet and seats it in Baghdad. It operates throughout Iraq's territory, territorial waters and continental shelf, and abroad, on behalf of the state.
Among the article 4 means that survived the Federal Supreme Court ruling are managing, developing and operating producing and discovered undeveloped fields; concluding exploration, production and export contracts in line with state policy and the Constitution; managing service contracts concluded in licensing rounds, with an obligation to review and amend them in the interest of the Iraqi people; and operating the main pipeline network and export terminals.
The law cannot be read without its footnotes. On 23/1/2019, in case 66 with consolidated cases 71, 157 and 224/federal/2018, the Federal Supreme Court held unconstitutional article 3, items third and fifth of article 4 so far as they concern oil marketing, article 7/first/1, item (h) of article 7/second/2, article 8, articles 11 and 12, article 13/second, article 16 and article 18/sixth, and dismissed the remaining challenges. The decision is published in the official database, which shows each struck text as "cancelled". The operative text should therefore be read from the official database, not from older circulating copies.
Where the regional petroleum statute stands
In 2007 the Kurdistan parliament passed its own petroleum statute, numbered 22. Its record in the official database marks it as not in force, noting cancellation under the Federal Supreme Court ruling 59/federal/2012 and consolidated case 110/federal/2019. Anyone dealing with contracts made under that law should assess the decision's effect on the contract and its review, because the legislative basis relied on no longer stands according to the official record.
Relationship with the Investment Law
The 2006 Investment Law, in article 29, leaves upstream extraction and production outside its reach. Related activities such as services or downstream industries may fall within investment rules depending on their nature. Which investment body to approach is covered in which investment commission to approach.
Who uses this map?
Three groups benefit: a foreign company before entering a service contract or subcontract, a local contractor working for an oil company, and a financier assessing contract risk. Tax and staffing rules for contractors are covered in oil sector contractors: staffing and tax, and drafting risks in drafting risks in power, petroleum and large project contracts.
Legal basis and sources
- Constitution of the Republic of Iraq of 2005
- Iraq National Oil Company Law No. 4 of 2018 (Official Gazette 4486, 9/4/2018)
- Federal Supreme Court decision 66 and consolidated cases 71, 157 and 224/federal/2018, 23/1/2019
- Kurdistan Region Oil and Gas Law No. 22 of 2007: official record marking repeal by the Federal Supreme Court
- Investment Law No. 13 of 2006, as amended
Frequently asked questions
Who owns the petroleum resources?
Article 111 of the Constitution vests them in every Iraqi.
Is the INOC Law fully in force?
It is recorded as in force, except the provisions the Federal Supreme Court held unconstitutional on 23/1/2019, including articles 3, 8, 11 and 12.
Where does the 2007 Kurdistan oil and gas law?
The official database records it as not in force after the Federal Supreme Court ruling 59/federal/2012 and consolidated case 110/federal/2019.
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