(New York, 31 October 2006/krg/gco) - On 22 October, the Ministry for Natural Resources of the Kurdistan Region of Iraq published a final draft of a Petroleum Act for the Region for consideration by the Kurdistan National Assembly, the Region's parliament. The new law requires companies seeking exploration or development contracts to "demonstrate a record of compliance with principles of good corporate citizenship, and a commitment to the Ten Principles of the Global Compact."
“Though the draft Petroleum Act is for the Kurdistan Region, it is indeed a model for Iraq,” said Dr. Ashti Abdullah Hawrami, Minister for Natural Resources.
The Petroleum Act is designed to attract private investors with competitive production sharing agreements (PSAs). The Ministry has already issued four PSAs in the Kurdistan Region, and expects a large scale licensing round following the passage of the Act.
Under the Constitution of Iraq, which entered into force earlier this year, Regional authorities have significant control over the management of petroleum resources, and are required to share revenues throughout the country. The Constitution outlines a petroleum revenue sharing formula based on population and the degree of damage done by the previous regime to parts of the country.
“This draft Act also outlines an unambiguous approach to revenue sharing”, said Minister Hawrami, “which we expect the federal Council of Representatives to adopt, by law, in compliance with the Constitution of Iraq.”
The draft Act anticipates that the federal government will restructure the petroleum industry and pass a nationwide petroleum law that encourages private investment, so that revenues from new fields, as well as existing fields, can be shared throughout Iraq. In this way, the revenues from petroleum, and the relative depletion of the reserves around the country, will be equitable for all Iraqi citizens.
“The Kurdistan Region hopes that the federal government will adopt our approach, which will rely heavily on the private sector, and a risk-reward structure”, Minister Hawrami added. “The sooner we can attract investment to all of Iraq, the larger the pool of revenues for Iraq-wide sharing. This will benefit all the Iraqi people.”
The full text of the draft Petroleum Act, and explanatory memorandum, can be viewed in English and Arabic at:
Other features of the draft Act include a requirement that the Government of the Kurdistan Region comply with the transparency principles of the Extractive Industries Transparency Initiative.
KGR Spokesman Mr. Khaled Salih
Tel: 00 964 750 423 51 21 OR 00 46 70 672 22 77