This book covers policy proposals and interim contracts assesses the positions of various
Iraqi political actors and examines the potential significance for international foreign policy
goals in Iraq. Despite a lack of progress in reaching agreements on the hydro-carbon sector and
revenue sharing legislation to set new conditions for the management of the country s
significant oil and gas resources development in Iraq s oil and gas sector is moving forward.
The passage of the oil and gas sector framework and revenue sharing legislation will be seen as
significant milestones by International governments and International Oil Companies (IOC s).
This would provide evidence of the Iraqi government s dedication to promoting political
reconciliation and providing a solid foundation for long term economic development in Iraq.
Interim revenue sharing mechanisms have been introduced due to the lack of new legislation.
Additionally both the Federal Government (the Federal Oil Ministry-MoO) and the Kurdistan
Regional Government (KRG) (the Regional Ministry of Natural Resources and Energy) have made oil
and gas development deals with foreign firms. The MoO is working with existing regulation from
the previous political and administrational regime while the Regional Ministry of Resource and
Energy Kurdistan-Iraq has designed its own laws and regulations which the Federal Government
has not yet recognized. There is wide recognition among Iraqis of the importance of oil and gas
revenue for the Iraqi economy. Most groups see the need for new legal and policy guidelines for
the development of the country s oil and natural gas resources. However Iraq s Council of
Representatives (parliament) has not yet considered the proposed legislation due to ongoing
political discord and general political instability. There are strong differences on key issues
between Iraqi critics and supporters of various proposed solutions. These include the
appropriate role and powers of federal and regional authorities in regulating oil and gas
development the conditions and degree of potential foreign participation in the oil and gas
sectors and proposed formulas and mechanisms for equitably sharing oil and gas revenue.
Simultaneously there are strong disagreements on related discussions about the administrative
status of the city of Kirkuk and proposed amendments to articles of Iraq s constitution that
outline federal and regional oil and gas rights. The U.S. and UK military strategy in Iraq
seeks to lay the ground work for an environment in which Iraqis can resolve core political
differences in order to ensure national stability and security. However it is not yet certain
whether the proposed oil and gas legislation and ongoing interim efforts to develop Iraq s
energy resources will support harmony or create deeper political tension. The United States and
its allies face difficult decisions regarding how to work with Iraqis on assorted policy
proposals related constitutional reforms and oil and gas development contracts and at the
same time encouraging their Iraqi counterparts to ensure that the content of proposed laws
amendments and contracts reflect acceptable political compromises. In the 1920s a wide-ranging
concession was granted to a consortium of oil companies known as the Turkish Petroleum company
and later as the Iraq Petroleum Company. This was the beginning of oil exploration in Iraq. The
nationalization of Iraq s oil resources and production was finished by 1975. From 1975 to 2003
oil production and export operations were entirely state operated. However from the early
1980s until the toppling of Saddam Hussein s government in 2003 the negative effects of war
international sanctions a shortage of investments and technology and in many cases
mismanagement caused difficulties for Iraq s hydrocarbon infrastructure.
