Iraq Oil AlmanacAn OpenOil Reference Guide

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Table of ContentsList of Abbreviations............................................................................................................ 7Preface.................................................................................................................................. 9History and ContextRise and Fall of the Iraq Petroleum Company.................................................................10Iraq National Oil Company (INOC).................................................................................... 12Nationalisation of Iraqi Oil Industry................................................................................ 13Impact of Wars and Sanctions on Iraq............................................................................. 15Iraq's Oil Industry post-2003............................................................................................. 18Iraqi Membership of OPEC................................................................................................ 21Oil theft in Iraq................................................................................................................... 22Oil Unions in Iraq............................................................................................................... 25Federal Iraq and the KRGFederalism, Factionalism and Regional Differences.......................................................26Revenue Sharing Procedures in Iraq................................................................................ 29KRG Contract Disputes....................................................................................................... 30KRG Export Disputes.......................................................................................................... 32Energy Industry BackgroundIraqi Hydrocarbon Reserves and Production..................................................................34Dependence on Extractives Revenues.............................................................................. 38The 'Energy Mix'................................................................................................................ 39Generic Oil and Gas TermsResource Curse................................................................................................................... 43Definition of Hydrocarbon Reserves................................................................................46Oil Field Depletion.............................................................................................................. 48Enhanced Oil Recovery (EOR)........................................................................................... 49Crude Oil Qualities............................................................................................................. 50Natural Gas......................................................................................................................... 53Natural Gas Flaring............................................................................................................ 55Liquefied Natural Gas (LNG).............................................................................................. 56Liquid Petroleum Gas (LPG).............................................................................................. 56Unconventional Energy Sources...................................................................................... 58Fuel Subsidies..................................................................................................................... 59Oilfield Services Industry.................................................................................................. 62Regulatory FrameworkOverview of Regulatory Framework in Iraq....................................................................64Types of Oil Contracts........................................................................................................ 64Treatment of Oil in Iraq's 2005 Constitution...................................................................67Hydrocarbon Legislation in Iraq....................................................................................... 68Oil and Gas Licensing RoundIraq's First Licensing Round (2009).................................................................................. 71Iraq's Second Licensing Round (2009).............................................................................. 73

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Iraq's Third Licensing Round (2010)................................................................................ 74Iraq's Fourth Licensing Round (2012).............................................................................. 76Regional DynamicsIran-Iraq.............................................................................................................................. 79Saudi Arabia-Iraq............................................................................................................... 82Kuwait-Iraq......................................................................................................................... 83Turkey-Iraq......................................................................................................................... 86The 'Southern Corridor' Gas Transit Route to Europe...................................................89International EntitiesOperating Environment in Iraq........................................................................................ 93BP......................................................................................................................................... 94Chevron Corporation......................................................................................................... 97China National Offshore Oil Corporation (CNOOC).........................................................99China National Petroleum Corporation (CNPC)............................................................101DNO International............................................................................................................ 104Dragon Oil......................................................................................................................... 106Eni...................................................................................................................................... 107ExxonMobil....................................................................................................................... 110Gazprom............................................................................................................................ 114Genel Energy..................................................................................................................... 116Heritage Oil....................................................................................................................... 119Hunt Oil............................................................................................................................. 120Inpex................................................................................................................................. 122Japan Petroleum Exploration Company (Japex)...........................................................123KazMunaiGas (KMG)........................................................................................................ 125Kogas (Korea Gas Corporation)....................................................................................... 126Kuwait Energy Company................................................................................................. 129Lukoil................................................................................................................................. 131Marathon Oil Corporation............................................................................................... 133Occidental Petroleum...................................................................................................... 135Pakistan Petroleum.......................................................................................................... 137Petronas............................................................................................................................ 138Shell................................................................................................................................... 140Sonangol........................................................................................................................... 143Statoil................................................................................................................................ 145Talisman Energy............................................................................................................... 147Total.................................................................................................................................. 148Türkiye Petrolleri Anonim Ortaklığı (TPAO).................................................................151Companies with contracts with the KRG.......................................................................154Iraqi EntitiesMinistry and its operating companiesO inistry of Oil.................................................................................................................. 157State Oil Marketing Organisation (SOMO).....................................................................158Petroleum Contracts and Licensing Directorate (PCLD)..............................................159North Oil Company (NOC)............................................................................................... 160

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South Oil Company (SOC)................................................................................................ 161Iraq Drilling Company (IDC)............................................................................................ 162Maysan Oil Company (MOC)............................................................................................ 163Other Iraqi Entities.......................................................................................................... 164Other Iraqi actorsIraqi Ministry of Finance................................................................................................. 167Central Bank of Iraq (CBI)............................................................................................... 168Iraqi Prime Minister's Office........................................................................................... 169Kurdistan Regional Government (KRG).........................................................................170Key InfrastructureOverview of Infrastructure in Iraq................................................................................. 173RefineriesBaiji Refinery.................................................................................................................... 175Basra Refinery.................................................................................................................. 176Daura Refinery................................................................................................................. 177Erbil Refinery................................................................................................................... 178TerminalsKhor al-Amaya Oil Terminal (KAAOT)........................................................................... 179Basra Oil Terminal (ABOT).............................................................................................. 179PipelinesKirkuk-Banias Pipeline (IPC)........................................................................................... 180Iraq Pipeline through Saudi Arabia (IPSA)....................................................................181Taq Taq-Khurmala Oil Pipeline....................................................................................... 183Kirkuk-Ceyhan Oil Pipeline............................................................................................. 183Strategic Pipeline............................................................................................................. 184Islamic Gas Pipeline......................................................................................................... 185Erbil-Dohuk gas pipeline................................................................................................. 185Other infrastructure projectsSouth Gas Utilisation Project.......................................................................................... 186Environmental Impacts of Iraq's Oil and Gas Industry................................................188Oil and Gas FieldsFields awarded by central governmentAhdab Oil Field................................................................................................................. 192Akkas Gas Field................................................................................................................. 193Badra Oil Field.................................................................................................................. 195Bai Hassan Oil Field.......................................................................................................... 196'Eastern Fields'................................................................................................................. 197East Baghdad Oil Field..................................................................................................... 198Garraf Oil Field................................................................................................................. 199Halfaya Oil Field............................................................................................................... 200Majnoon Oil Field............................................................................................................. 201Mansuriyah Gas Field...................................................................................................... 203Maysan Oil Fields............................................................................................................. 204Middle Furat Oil Fields.................................................................................................... 205Nahr Bin Umar Oil Field.................................................................................................. 206

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Najmah Oil Field............................................................................................................... 207Nasiriyah Oil Field............................................................................................................ 208Qayara Oil Field................................................................................................................ 209Rumaila Oil Field.............................................................................................................. 210Siba Gas Field.................................................................................................................... 212West Qurna Field (Phase 1)............................................................................................. 213West Qurna Field (Phase 2)............................................................................................. 215Zubair Oil Field................................................................................................................. 216Fields awarded by KRGTaq Taq Oil Field.............................................................................................................. 217Tawke Oil Field................................................................................................................. 219Disputed fieldsKirkuk Oil Field................................................................................................................ 219Resource Transparency OpportunitiesTransparency of Contracts.............................................................................................. 223Natural Resource Charter (NRC)..................................................................................... 224Extractive Industries Transparency Initiative (EITI)....................................................226Publish What You Pay (PWYP)........................................................................................ 233Revenue Watch Institute (RWI)...................................................................................... 234Global Witness.................................................................................................................. 236Transparency International............................................................................................ 237DirectoriesIraq Directory of Contacts............................................................................................... 241Iraq Oil Industry Listings................................................................................................. 245

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List of AbbreviationsABOT al-Basra Oil Terminal

boe barrels of oil equivalent

BOR Baiji Oil Refinery

bpd barrels per day

CBI Central Bank of Iraq

COFE Iraqi Committee of Financial Experts

CPA Coalition Provisional Authority

DFI Development Fund for Iraq

EIA US Energy Information Administration

EITI Extractive Industries Transparency Initiative

FOGC Federal Oil and Gas Council

FTP Final Tender Protocol

GUOE General Union of Oil Employees

IEA International Energy Agency

IFOU Iraqi Federation of Oil Unions

IMF International Monetary Fund

INOC Iraq National Oil Company

IOC International oil company

IOTC Iraqi Oil Tankers Company

IPC Iraq Petroleum Company

ITP Initial Tender Protocol

KAAOT Khor al-Amaya Oil Terminal

KRG Kurdistan Regional Government

LNG Liquefied Natural Gas

LPG Liquid Petroleum Gas

MRC Midland Refineries Company

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NGC North Gas Company

NOC North Oil Company

NRC Natural Resource Charter

OEC Iraqi Oil Exploration Company

OPEC Organisation of Petroleum Exporting Countries

PCLD Petroleum Contracts and Licensing Directorate

PKK Kurdistan Workers' Party (Turkey)

PRDC Petroleum Research & Development Center

PSA Production Sharing Agreement

PSC Production Sharing Contract

PUK Patriotic Union of Kurdistan

PWYP Publish What You Pay

RWI Revenue Watch Institute

SCOP State Company of Oil Projects

SGC South Gas Company

SOMO State Oil Marketing Organisation

SPM Single point mooring

SRC South Refineries Company

tcf trillion cubic feet

tcm trillion cubic metres

TI Transparency International

TSC Technical service contract

TTSF Training, Technology and Scholarship Fund

UN United Nations

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History and ContextRise and Fall of the Iraq Petroleum CompanyThe Iraq Petroleum Corporation (IPC) was a consortium of major Western oil compan-ies which held a monopoly on all Iraqi production from the beginnings of the industry until 1962, and continued to dominate production until nationalisation in the early 1970s.1

FoundationThe company was founded in 1912 as the Turkish Petroleum Company (TPC), so called because although it was formed to prospect for oil inside Iraq, Iraq was then a province of the Ottoman Turkish empire.2 The largest shareholder in the company was the Anglo-Persian Oil Company, an antecedent of today's BP, at the time controlled directly by the British government.3 Other major shareholders on its creation were Shell and Armenian oil magnate Calouste Gulbenkian, who owned 5 percent of the shares.

The company received a concession from the Ottoman authorities but then the First World War broke out, ceasing all exploration activity. It would be 15 years before any oil at all was discovered in Iraq,4 but that did not prevent the IPC from being the sub-ject of fierce political battles. The Allies realised the importance of oil during the World War. The status and ownership of the company was a prominent issue at the San Remo Conference of 1920, which discussed the fate of non-Turkish parts of the Ot-toman Empire.2

Discovery of oilIn 1925 the British government, by now ruling Iraq as a direct mandate after the col-lapse of the Ottoman Empire, granted a fresh concession to the TPC. According to Rex Zedalis of the University of Tulsa, the modern history of oil and gas in Iraq begins with this agreement.5 This concession covered the whole of the Mosul and Baghdad provinces, constituting most of Iraq but excluding the southern Basra province. At the time the shareholders in the TPC were the Anglo-Persian Oil Company with 45 per-

1 'Iraq's Oil Sector: Past, Present and Future', James Baker Institute for Public Policy, March 20072 'The Turkish Petroleum Company', US Library of Congress, retrieved 4 January 2013.3 'From Anglo-Persian Oil to BP Amoco', BBC, 11 August 1998.4 'Iraq Petroleum Company Archive', Archives Hub, retrieved 13 January 2012.5 Zedalis, Rex ' The Legal Dimensions of Oil and Gas in Iraq', Cambridge University Press, November 2009.

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cent, Royal Dutch-Shell with 22.5 percent, the Compagnie Francaise des Petroles with 25 percent, and Calouste Gulbekian with 5 percent. In 1927 oil was struck at Baba Gur -gur, just outside Kirkuk, transforming Iraq into one of the most valuable concession-ary areas in the world.6 By the end of 1930 twenty producing wells had been com-pleted.

In July 1928 the Americans, under the Near East Development Corporation, were al-lowed into the concession, taking some of Anglo-Persian's share to hold a 23.75 per-cent stake,6 and in 1929 the TPC reorganised itself as the Iraq Petroleum Company (IPC).7

According to John Blair's book 'Control of Oil', the US and UK-based companies in the TPC consortium deliberately held down production in their Iraq concessions in order to maximise their worldwide profits, during an era in which the Great Depression had resulted in a global glut of oil and low prices. These delaying tactics were employed in drilling and development activities, as well as negotiations over pipelines and export routes. Although the 1925 concession covered most of Iraq, the IPC limited its produc-tion to fields constituting only one-half of 1 percent of the country's total area. By 1950 the only field being developed was Kirkuk and only then did commercial produc-tion in substantial quantities begin until this year, eighteen years after the first ex-ploration of the area.8

In 1960, the same year in which the Organisation of Petroleum Exporting Countries (OPEC) was established in Baghdad, the Iraqi government revoked the IPC's concession for 99 percent of Iraqi territory, limiting their concession area to plots in operation at the time.9

Creation of the Iraq National Oil CompanyThe Iraq National Oil Company (INOC) was created in 1964, leaving the country in the unusual situation of having two production tracks which were in competition with each other. At the time the IPC and its subsidiaries the Mosul Petroleum Company and the Basra Petroleum Company were still responsible for the vast majority of Iraqi pro-duction,9 which by the 1960s was reaching 1 million barrels per day (bpd). In the late 1960s, Iraq signed a series of deals with other foreign companies, notably Entreprise des Recherches et des Activites Petrolieres (ERAP), for offshore areas in southern Iraq, and the Soviet Union under the Iraq-Soviet pact of 1967 which eventually led to the development of the Rumaila field10.

Meanwhile relations between the government and the IPC continued to deteriorate. When Syria raised transit fees on the Banias pipeline in 1966, the IPC refused to pay,

6 Bamberg, James ' The History of the British Petroleum Company: Volume 2', Cambridge University Press, 1994.7 Zedalis, Rex ' The Legal Dimensions of Oil and Gas in Iraq', Cambridge University Press, November 2009.8 'Iraq and the Battle for Oil. A Historical Insight', Global Research, 17 May 2011.9 'Iraq's Oil Sector: Past, Present and Future', Revenue Watch Institute, retrieved 34 January 2013.10 'Iraq - Post World War II Through the 1970s', US Library of Congress, retrieved 4 January 2013.

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the Syrians closed the pipeline and the Iraqi government lost a lot of revenue. When the Suez Canal was closed as a result of the 1967 Middle East War, the government de-manded a premium on oil arriving directly at the Mediterranean by pipeline that was comparable to rates paid to Libya. The IPC refused, responding that Iraqi oil was a heavier grade and more expensive to process. IPC continued to control the core of Ir-aqi production but the government maintained its power by at one stage increasing transit fees through Basra port overnight by 1200 percent.11 In 1970 the IPC was fully nationalised.9

Iraq National Oil Company (INOC)Iraq's state-owned oil company the Iraqi National Oil Company (INOC) was founded in 1964 and took over all aspects of the industry after nationalisation of the Iraq Petro-leum Company until it was dissolved by the government of Saddam Hussein in 1987 into its subsidiary operating companies.12

From 2007 onwards, various pieces of legislation were put before the Iraqi parliament proposing the revival of the INOC.13

Creation & coexistence with the IPCThe company was created to build Iraqi national expertise in the industry, which at the time was still dominated by Western majors, including the leading consortium in Iraq at the time, the Iraq Petroleum Company (IPC). The INOC was granted exclusive rights under Iraqi law to develop oil concessions in the 99.5 percent of territory that had been expropriated from the IPC by Law 80 in 1961. The INOC chairman of the board was given cabinet rank, to allow the company the political authority to develop.

In 1967 the Iraq-Soviet protocol brought in Soviet expertise to develop the Rumaila field. It was one of a number of agreements with experts from countries outside the companies in the IPC, as the INOC sought to develop its own internal capacities.10

Sole controlThe nationalisation of the industry in stages between 1961 and 1975 left the INOC as sole operator in Iraq. The company managed to increase production from 1.4 million barrels per day (bpd) in 1974 to 3 million bpd in 1980, although production was then hit by the outbreak of war with Iran.14

But just as it gained sole control over the industry, the Iraqi government imposed more political control. A law in 1976 made the Oil Minister, a political appointee,

11 'Iraqi oil post-World War II Through the 1970s', US Library of Congress, undated.12 'Iraq's Oil Sector: Issues and Opportunities', James Baker Institute for Public Policy, December 2006.13 'Creation of Iraq national oil company not essential', Saudi Gazette, retrieved 4 January 2013.14 'BP Statistical Review 2010', BP, retrieved 13 January 2012.

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chairman of the board of the company while another law in 1979 removed all financial independence from INOC, stipulating that all revenues from oil had to pass to the Treasury and that the company would be allocated an annual operating budget by the government15.

Upon nationalisation of the IPC, the INOC also took over the IPC subsidiaries the Mosul Petroleum Company and the Basra Petroleum Company, which together became the South Oil Company (SOC). But a series of Ba'ath Party decrees in the 1980s established a range of new regional operating companies which reported directly to the Oil Min-istry, bypassing the INOC.15

Dissolution in 1987Iraq's oil industry was hit immediately when war broke out between Iran and Iraq in 1980. Export facilities at Basra and Khor al-Amaya were damaged in the first weeks. As a result, the INOC's energies in the 1980s were concentrated on building new export capacity, such as expanding the Kirkuk-Ceyhan Oil Pipeline and building the IPSA pipeline across Saudi Arabia. In addition, the company trucked up to 250,000 bpd through Jordan and Turkey.16

In April 1987, under newly appointed Oil Minister Issam Chalabi, Decree 267 merged the INOC with the Oil Ministry, which became the direct operator in the industry as well as its regulator. Its subsidiaries were now broken off into North Oil Company (NOC), South Oil Company (SOC) and the Oil Exploration Company (OEC).15

Mooted recreationSee also: Draft laws concerning hydrocarbons in Iraq

The vast majority of Iraqi oil experts would like to re-establish the INOC, including former Oil Minister Ibrahim Bahr al-Uloum17, former INOC founding chairman Tareq Shafiq among others.

Nationalisation of Iraqi Oil IndustryIraq gradually took control of its own oil industry from international oil companies (IOCs) in a process which began in 1961 and ended in 1975 with the complete national -isation of all assets and production in the country.18

15 'Iraq National Oil Company, An Historical And Political Perspective', Middle East Economic Digest, 21 September 2009.16 'Iraq - Oil in the 1980s', US Library of Congress, retrieved 4 January 2013.17 'Interview with Ibrahim Bahr al-Uloum', Niqash, retrieved 25 July 2010.18 'Iraq's Oil Sector: Past, Present and Future', James Baker Institute for Public Policy, March 2007.

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PreludeFrom 1961, when the revolutionary regime of Abdel Karim Qassim passed a law de-priving the Iraq Petroleum Company (IPC) of the right to prospect in 99.5 percent of Iraqi territory, Iraq envisaged the creation of a nationally owned and run oil industry. The creation of the Iraq National Oil Company (INOC) in 1964 confirmed this, even if the INOC was originally set up with limited powers.15

Expropriation of IPC assetsDuring the late 1960s and early 1970s Iraq continued to be dissatisfied with the way the IPC managed production levels in Iraq based on their commercial interests else-where, and there were various disputes about pricing19. Iraq also demanded a 20 per-cent equity stake in IPC, something which the San Remo Conference of the great powers in 1920 had envisaged but which the international partners in the IPC had denied them.20

On the back of the rising tide of economic nationalism in Iraq and more broadly across the Middle East, the IPC offered in May 1972 to increase the Iraqi state's profits, raise production, and agree to some advance payments on royalties.21 But the offers did not prove enough and on the 1 June 1972 the Iraqi government expropriated all of the IPC's assets in Iraq. Saddam Hussein, then formally vice-president to Ahmed Hassan al-Bakr, led the nationalisation process for the Ba'ath Party.22 Only the parent company IPC was affected by this move. Neither the Mosul nor the Basrah companies were in-cluded.23

In 1973, Iraq and the IPC settled their claims and counter-claims. The IPC agreed to pay nearly US $350 million to Iraq as compensation for revenue lost to Iraq over the years when IPC was selling Iraqi oil. In return, the government agreed to provide the IPC with 15 million tons of Kirkuk crude free of charge, valued at the time at over $300 million, in a final settlement of IPC claims. The Mosul Petroleum Company sur-rendered its concession to the government.23

Nationalisation of the Basra Petroleum CompanyEven following the outbreak of the 1973 Yom Kippur war, Iraq did not nationalise the entire Basra Petroleum Company (BPC). On the 7 October the government announced that it had nationalised the shares of the American companies (Exxon and Mobil) in retaliation for the United States' support of Israel, and later that month it also nation -

19 'Post-World War II Through the 1970s', US Library of Congress, retrieved 4 January 2013.20 'Iraq - the Turkish Petroleum Company', US Library of Congress, retrieved 4 January 2013.21'The Nationalization of the Iraqi Petroleum Company', International Journal of Middle East Studies, 29 January 2009.22 Aburish, Said ' Saddam Hussein, the Politics of Revenge', Bloomsbury UK, 2001.23 Shwadran, Benjamin ' Middle East Oil: Issues and Problems', Schenkman Publishing, 1977.

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alised the shares of Royal Dutch Shell for similar reasons. However in December 1975 President Bakr announced the complete takeover of foreign interests in the BPC, com-pleting the nationalisation process.23

Impact of Wars and Sanctions on IraqBetween 1980 and 2013 Iraq has endured three major wars24 and strict economic sanc-tions between 1990 and 2003.25 Iraq's oil infrastructure was damaged in the Iran-Iraq War of the 1980s, the Gulf War of the early 1990s and the Iraq war of the early 2000s, while UN sanctions from 1990 to 2003 severely limited the country's ability to export oil26 and gain access to the latest technology to develop its fields.27 The combined ef-fect of wars and sanctions have resulted in dramatic fluctuations in Iraq's oil produc-tion and economic involvement in the world market.26

Iran-Iraq War 1980-1988Iraq's oil production reached its all-time peak of 3.5 million barrels per day (bpd) in 1979 prior to its invasion of Iran, but the war had a quick and debilitating impact on Iraq's production capability.26 Iraq's two primary offshore export terminals on the Per-sian Gulf, Mina al Bakr and Khawr al Amayah, as well as the Basra refinery, were severely damaged by Iranian attacks in the opening weeks of the conflict.28 The de-struction of Iraq's Persian Gulf terminals caused it to rely exclusively on pipelines to the Mediterranean for exports.29 Then in 1982 Syria, allied with Iran, closed the 650,000 bpd Banias pipeline, which had been a vital Iraqi access route to the Mediter-ranean Sea and European oil markets,30 leaving Iraq with only the pipeline to Dortyol in Turkey.31 Oil production dropped to 2.5 million bpd in 1980 and by 1983 had fallen to less than 1 million bpd.32 By 1983, Iraq's export capabilities were only 700,000 bpd, or less than 30 percent of operable field production capacity at that time.30

Partially in an attempt to break a stalemate that had settled by 1984,33 Iraq intensified its attacks on Iranian commercial shipping. According to author Efraim Karsh, Saddam Hussein had hoped this would provoke Iran to close the Straits of Hormuz, a critical shipping lane in the Persian Gulf. This might have left powers such as the United

24 'Iraq profile', BBC, retrieved 28 November 2011.25 'Were Sanctions Right?', New York Times, retrieved 27 July 2003.26 'CRS Report for Congress', US Library of Congress, 23 September 2004.27 'Playing for Iraq's jackpot', CNN Money 16 April 2003.28 'Oil in the 1980s', US Library of Congress, retrieved 29 November 2011.29 El Azhary, M.S.' The Iran-Iraq war: an historical, economic, and political analysis', Routledge, 1984.30 'Iran-Iraq War (1980-1988)', Global Security, retrieved 12 December 2011.31 El Azhary, M.S.' The Iran-Iraq war: an historical, economic, and political analysis', Routledge, 1984.32 'CRS Report for Congress', US Library of Congress, 23 September 2004.33 'Iran-Iraq War (1980-1988)', Global Security, retrieved 12 December 2011.

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States little choice but to intervene.34 Instead, Iran reciprocated the new wave of as-saults by attacking tankers carrying Iraqi oil from Kuwait, along with any tanker of other Persian Gulf states supporting Iraq.35 The resulting "tanker war", as it has come to be known, brought extensive damage to Iraqi and Iranian shipping capability and that of other Gulf states, and reduced shipping in the Gulf by 25 percent by 1984.33

While damage to oil installations both in Iraq and Iran was extensive, some observers, such as El Azhary, have suggested that the real damage to Iraqi and Iranian oil sectors came in the form of lost revenue.36 The war depleted Iraq's foreign exchange reserves, devastated its economy, and left the country saddled with foreign debt of more than US $40 billion,37 particularly to Saudi Arabia and Kuwait. By 1988, Iraq had to rely on a shrinking source of oil revenue which generated only $11 billion, compared with $26 billion in 1980.38

Persian Gulf War 1991After Iraq invaded Kuwait in August 1990, a US and UK-led coalition initiated a massive aerial campaign against them in January 1991. Nearly a month of air strikes39 targeted primarily Iraq's electricity and fuel production infrastructure,40 dropping around 1200 tons of bombs to shut down the national refining and distribution sys-tem.41 Iraq's three biggest refineries, Baiji, Basra and Doura, were all bombed in the co-alition air campaign,42 as was the strategic Faw peninsula, site of the Khor Al Amaya and Mina al Bakr export terminals,39 which had only recently been restored to near full capacity after the Iran-Iraq war.42

The air campaign wiped out many of Iraq's oil facilities38 and approximately 80 per-cent of its refining capacity was damaged.41 Additionally, more than half of Iraq's 20 electrical generator sites were completely destroyed,40 rendering its remaining un-bombed assets dysfunctional,43 and 42 of its 53 bridges were rendered impassible.44

Sanctions 1990-2003Iraq was under sanctions imposed by the United Nations Security Council (UNSC) from August 1990, when Iraq invaded Kuwait, until May 2003, after Saddam Hussein's re-

34 Karsh, Efraim ' The Iran-Iraq War, 1980-1988', Osprey Publishing, 2002.35 'Tanker War 1984-1988', Military History Encyclopedia, 27 October 2002.36 El Azhary, M.S.' The Iran-Iraq war: an historical, economic, and political analysis', Routledge, 1984.37 'Iraq: Economy', TDS, retrieved 12 December 2011.38 'Iraq: economic sanctions and consequences, 1990–2000', Third World Quarterly, 9 August 2010.39 Tucker, Spencer' The Encyclopedia of Middle East Wars', ABC-CLIO, 2010.40 'Hyperwar - the legacy of Desert Storm', Federation of American Scientists, retrieved 12 December 2011.41 'Chapter VI - the air campaign', Federation of American Scientists, retrieved 12 December 2011.42 Ghareeb, Edmund and Dougherty, Beth, ' Historical dictionary of Iraq', Scarecrow Press, 2004.43 'Iraq: economic sanctions and consequences, 1990–2000', Third World Quarterly 9 August 2010.44 'Hyperwar - the legacy of Desert Storm', Federation of American Scientists, retrieved 12 December 2011.

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gime had been toppled. According to Foreign Affairs magazine the sanctions were the longest running, most comprehensive, and most controversial in the history of the United Nations,45 virtually cutting Iraq off from the world economy with catastrophic consequences for both the economy and the people of Iraq.43

The sanctions included a ban on all trade, an oil embargo, a freezing of Iraqi govern-ment financial assets abroad, an arms embargo, suspension of international flights, and banned financial transactions. The UNSC also called upon member states to en-force naval and air blockades against Iraq.43

Economic impacts included, but were not limited to: decreased imports of industrial and commercial parts and fuel, decreased exports and access to foreign currency, loss of trade partners leading to the closure of business and industry, inflation, emergence of black (parallel) markets, decreased overall economic activity (industry, commerce, agriculture, etc), and the collapse of public and private infrastructure. Sanctions also took a large human toll, with close to 1 million estimated by UNICEF to be dead between 1991 and 1998 due to mass starvation and disease.46

Beginning in 1996, the United Nations implemented its Oil-for-Food Program, which allowed Iraq to sell oil to finance the purchase of humanitarian goods. Iraq was per-mitted to sell $2 billion worth of oil every six months, with two-thirds of that amount to be used to meet humanitarian needs. In 1998 the limit on the level of Iraqi oil ex-ports under the program was raised to $5.26 billion every six months, and in Decem-ber 1999 the ceiling on Iraqi oil exports under the program was removed. 47 The pro-gram made available vast funds for the purchase of food, medicine, and essential civil-ian goods and $24.4 billion worth of goods were delivered to Iraq from the program's inception until November 2002.45

US-led invasion 2003Iraqi oil installations suffered little damage during the 2003 US-led invasion of Iraq, with an estimated nine wells set on fire. But oil infrastructure was targeted for attack by insurgents and smugglers on many occasions in the invasion's immediate after-math and in the following years.4849 In addition, as most of Iraq's power is generated from oil, without a steady supply power plants were unable to reach capacity and blackouts were frequent in the months following the invasion.50

Most attacks focused on pipeline systems in northern Iraq, especially the Kirkuk-Cey-han oil pipeline, which impacted the governments ability to gain export revenues. Southern pipeline infrastructure was also targeted as a means of making oil and re-fined products more vulnerable to theft and diversion. Highly-organised smuggling

45 'Containing Iraq: Sanctions Worked', Foreign Affairs, July-August 2004.46 'Effects of Iraq Sanctions', Global Issues, 2 October 2005.47 'About the Oil-for-Food Programme' ,UN, retrieved 13 December 2011.48 'Iraq: Oil and Gas Legislation, Revenue Sharing, and U.S. Policy', US Congressional Research Service, 3 November 2009.49 'Iraq Pipeline Watch', Institute for the Analysis of Global Security, 27 March 2008.50 'Iraq's Oil Sector One Year After Liberation', Brookings Institution, 17 June 2004.

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operations leveraged supply and price imbalances in the Iraqi refined fuel market to create lucrative oil sale opportunities. The US Department of Defense estimated that in one case as much as 70 percent of the fuel processed at Baiji was lost to the black market, possibly as much as $2 billion a year”48 (see also Oil Theft in Iraq). The sabotage of Iraq's network of pipelines served to create an inhospitable environment for inter-national oil companies (IOCs), leading many to halt their operations in Iraq and divert investments to more stable security environments.50

Initiatives such as the Pipeline Exclusion Zones (PEZs), established in 2007 in order to restrict access to vital oil arteries and build obstacles for attacks, helped improve the security of some of Iraq's oil infrastructure.51 But violence and attacks on infrastruc-ture continued and, as of late 2011, the security situation in Iraq remained difficult.52

Iraq's Oil Industry post-2003

During the insurgencyAccording to industry analyst Daniel Yergin, in 2003 the Iraqi oil industry was suffer-ing from years of neglect and lack of investment, as well as chaotic management fol-lowing the collapse of the Ba'athist regime. At this stage, of 80 discovered oil fields only 23 had been put into production due to the disruption of war and sanctions in place since the 1980s. Thamir Ghadhban (who became head of the Ministry of Oil) and Philip Carroll (former CEO of Shell Oil USA) became the core of the team charged with reviving the industry. The two men set a target of reaching a production level of 3 mil -lion barrels per day (bpd) by the end of 2004. Carroll stated that the urgent priority for the restoration of the oil industry and the rest of the economy must be security.53

As the anti-American insurgency began to intensify and the security situation deteri-orated, oil industry infrastructure also came under attack. Pipelines were regularly bombed from 2003 onwards54 and in 2004, insurgents mounted an attack against the Al-Amiya platform using suicide bombers in three small crafts, which reached within 30 yards of the installation before they were shot by Iraqi guards.55

From the fall of Saddam up until 2008, there were well over 300 incidents affecting the integrity of oil facilities, and oil production remained below target levels. Production fell short of the goals set and the new goal for oil production by 2007 was dropped in 2006 to 2.1 million bpd.56

51 'Iraqi oil pipeline protection earns award for U.S. Engineer', UPI, 9 March 2009.52 'US military winds down Iraq withdrawal', Al Jazeera, 8 December 2011.53 Yergin, Daniel, 'The Quest', Penguin Press, London, 2011.54 'Iraq Pipeline Watch', IAGS, retrieved 24 November 2011.55 'Iraq oil hopes hinge on shielding industry', Energy Daily 8 October 2010.56 Cordesman, Anthony and Davies, Emma ' Iraq's insurgency and the road to civil conflict', Greenwood Publishing Group, 2008.

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Restructuring of economy in occupied IraqOn the 22 May 2003, the United Nations Security Council (UNSC) passed Resolution 1483, abolishing sanctions against Iraq and recognizing the US and the UK as the coun-try's occupying powers.57

On the 20 September 2003, Order 39 was issued by Paul Bremer, head of the Coalition Provisional Authority (CPA), the transitional government established by the US and its allies following the invasion of Iraq. This order abolished Iraq's ban on foreign invest-ment, allowing foreigners to own up to 100 percent of all sectors other than natural resources. Over 200 state enterprises, including electricity, telecommunications and pharmaceuticals were privatized.58 Under the reforms, income and corporate taxes were capped at 15 percent and tariffs slashed to a universal 5 percent rate, with none imposed on food, drugs, books and other 'humanitarian' imports.59

The reforms implemented were described by World Bank economist Joseph Stiglitz as “an even more radical form of shock therapy than pursued in the former Soviet world.”60 and Iraq was branded by the Economist magazine as a 'capitalist dream'.59 BBC correspondent Nick Springate warned at the time that many Iraqis may see the moves to privatize as a 'sell-off', with US multinationals seen to get the majority of the 're-wards'. However US Treasury Secretary John Snow rejected the suggestion that the US dominated the drafting of reforms, asserting that they were based on the ideas of the Iraqi Governing Council.61

As of June 2010 the United States had allocated $1.9 billion to the Iraqi oil and gas sec-tor with the objective of modernisation, but ended its direct involvement in the first quarter of 2008. According to reports by US government agencies and international organisations, long-term Iraq reconstruction costs could reach US $100 billion or high-er.62

Proposed new legislationSee also: Hydrocarbon Legislation in Iraq.

In February 2007 the US-backed Iraqi cabinet approved the first draft of a new Oil and Gas Law which would give foreign companies the long-term contracts and safe legal framework they had been seeking.

Some analysts and labour groups criticized the process of the drafting of the law, warning that it is skewed in favour of foreign firms and that it could heighten tensions and spread instability. The initial draft specified that up to two thirds of Iraq's known reserves would be developed by multinationals under contracts lasting for 15 to 20

57 'Resolution 1483', UN Security Council, 22 May 2003.58 'Coalition Provisional Authority Order Number 39', Iraq Coalition, retrieved 25 November 2011.59 'Let's all go to the yard sale', Economist, 25 September 2003.60 'Baghdad Year Zero', Harpers, September 2004.61 'Iraq adopts sweeping reforms', BBC, 21 September 2003.62 'Doing Business in Iraq', US Commercial Service, 2012.

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years. This would represent a break from normal practice in the Middle East, accord-ing to IPS, and civil society groups and union leaders complained that they had been left out of the drafting process. Critics claimed that under the law, ownership of the oil reserves would remain with the state in form, but not in substance.63 Following re-peated delays and several further drafts, as of late 2012 no framework hydrocarbons law had yet been passed for Iraq.

The prospect of the privatization of Iraq's oil industry was particularly opposed by trade unions in occupied Iraq, and was described by The Guardian as "a red line" for the unions and a "red rag" to the workers on the front line. They vowed to resist any privatisation of what they see as their national assets.64 Concerned that the new hy-drocarbon legislation would lead Iraq's oil industry to full privatisation, in February 2007 the labour unions sent a letter to Iraqi President Jalal Talbani urging him to re-consider the Oil Law draft, commenting that "production-sharing agreements are a relic of the 1960s... they will re-imprison the Iraqi economy and impinge on Iraq's sov-ereignty since they only preserve the interests of foreign companies." Officials from the Iraqi government defended the law, saying it represented a step forward for the war-torn country and that oil revenues would be distributed to all 18 provinces based on population size, and regional administrations would have the authority to negoti-ate contracts with international oil companies.63

Licensing rounds 2009-2012(For further detail, see separate articles on individual bidding rounds).

Hussein Shahristani, a nuclear scientist by training who had been imprisoned during Hussein's regime, returned from exile in Canada and was appointed as Oil Minister in 2006. He was to oversee upcoming bidding rounds and was deemed by Iraq Energy News as the 'architect of Iraq's oil future'.65

Under his mandate, from 2009 onwards Iraq held a series of open bidding rounds for oil contracts, beginning with the first licensing round which took place in 2009, which experienced varying levels of success. These became the main avenue for foreign com-panies looking to invest in the sector after a 2008 decision by the Iraqi government to scrap plans to award no-bid short-term contracts to a handful of Western companies, including Chevron, ExxonMobil, Total and BP.66

The contracts on offer at the bidding rounds were technical service contracts, by which companies are paid on the basis of a per-barrel fee for the oil they extract.67

63'New Oil Law Seen as Cover for Privatisation', IPS, 27 February 2007.64 'Oil and troubled waters', Guardian, 9 July 2008.65 'Shahristani, Architect of Iraq's Oil Future' Iraq Energy News, 17 January 2011.66 'Iraq Rejects No-Bid Contracts', Washington Post, 12 September 2008.67 'Oil Companies Reject Iraq's Contract Terms', Wall Street Journal, 1 July 2009.

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Iraqi Membership of OPECIraq is a Founder Member of the Organization of the Petroleum Exporting Countries (OPEC)68 but had its production quota suspended in 1990 due to Iraq's invasion of Kuwait under Saddam Hussein69

FoundationIraq hosted the conference that led to the foundation of OPEC in Baghdad in Septem-ber 1960, along with Iran, Kuwait, Saudi Arabia and Venezuela.70. However after the initial years, the Iraqi government began to become frustrated with the reluctance of member countries to adopt a unified negotiating stance with international oil com-panies. Instead each member country had decided to negotiate separately, with the result that the oil supermajors were able to switch production away from Iraq in reac-tion to harsher governmental demands.71.

OPEC played a key part in the nationalisation process in 1972, providing loans to com-pensate for a transitional period where Baghdad would lose revenues from the Iraq Petroleum Company.72

Rivalry with IranIraq was locked in rivalry with neighbouring producer Iran in the 1980s over OPEC production quotas, at the same time that they fought an eight-year war. Iraq deman-ded parity of quota with Iran at around 3.4 million barrels per day (bpd), but OPEC consistently denied this as Iran's stated proven reserves were higher, and OPEC quotas are based on reserves.73 In response Iraq flouted the quotas. In 1986 then Minister of Oil Issam Chalabi said Iraq would ignore its OPEC quota of 1.54 million bpd of exports, producing instead whatever amount would best serve Iraqi interests.74

This rivalry continued in 2011 following the US occupation of Iraq, when Iran success-fully opposed a move led by Saudi Arabia to raise OPEC oil output quotas in order to meet shortfalls in supplies from Libya.75As a result, no formal agreement on OPEC pro-duction levels could be reached.76

68 'Member Countries', Organization of the Petroleum Exporting Countries website, retrieved 27 November 2011.69 'Opec leaves Iraq oil surge off agenda', Financial Times 17 December 2009.70 'Member Countries', OPEC, retrieved 27 November 2011.71 'Iraq - Post-World War II Through the 1970s', US Library of Congress, retrieved 30 November 2011.72 'The Iraq Petroleum Company 1914-1982', Zajel, 1 February 2005.73 'Iraq - Oil in the 1980s' US Library of Congress Retrieved 30 November 2011.74 'Iraq - Oil in the 1980s', US Library of Congress, retrieved 30 November 2011.75 'Iran calls for OPEC cuts, Arab members unlikely to agree', The Daily Star, 12 November 2011.76 'Iran Energy Profile: Still OPEC's Second-Largest Oil Producer: Analysis', Eurasia Review News & Analysis, 22 November 2011.

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SuspensionAfter the 1991 Gulf War, the United Nations Security Council imposed a continuing ban on Iraqi oil exports that remained in place until the Oil for Food program was ini-tiated in 1996. As a result, in 1998, OPEC formally suspended Iraq's production quota, a state of affairs that remains as of late 2012, however in October 2011 Iraq asked to re-join the OPEC quota system by 2014."77

Iraq and OPEC following the 2003 warIraqi oil output reached its highest in two decades in February 2011 at an average of 2.08 million bpd, which also made it the biggest single contributor to world oil supply growth that month. The website Live Oil Prices reported that this was deemed by OPEC to pose a threat to its control of the global supply of oil, and Leo Drollas of the Centre for Global Energy Studies stated that an extended period of stability for Iraq "could have a major destabilising effect on OPEC and the oil price."78

In October 2011, the country asked to rejoin OPEC's quota system for crude input in 2014 as it reached an average of 2.9 million bpd. Falah al-Amri, director of the State Oil Marketing Organisation (SOMO), stated that the country aieds to increase oil output to 3.4 million bpd by 2012 and to 4.5 million bpd by 2013. However, al-Amri indicated that the country would "seek the biggest possible quota."77

Iraq was selected to take over the OPEC presidency in 2012, taking over from Iran. The OPEC presidency is a ceremonial post that rotates among the 12 members of the or-ganisation, chosen on the consequence of members' alphabetical names, and is for a one-year term.79

Oil theft in IraqOutright physical theft has been one of the major weak points in Iraq's industry since the 1990s, particularly concerning oil produced at Kirkuk.80 According to a report by the Inspector General of the Iraqi Ministry of Oil, the smuggling of oil in the country is a "grave phenomenon" that leads to a great loss of money and resources, which also reflects flaws, weaknesses and shortcomings at various important levels within and outside the oil sector.81

Bunkering, the illegal removal of oil from a pipeline or other distribution system, can sometimes be as simple as drilling a hole in the pipeline and collecting the oil in a

77 'Iraq Aims to Join OPEC Quota System in 2014, Official Says', Business Week, 26 October 2011.78 'OPEC member Iraq oil output may affect future oil prices' Live Oil Prices Retrieved 27 November 2011.79 'Iraq Expects To Be Given OPEC Presidency In 2012 - Oil Min', Rigzone, 13 December 2011.80 'A History Of Oil Smuggling In Iraq', Musings on Iraq, 5 January 2004.81 'Smuggling Crude Oil and Oil Products: Second Transparency Report', Iraqi Oil Ministry, 2006.

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drum. But more complex operations involve equipping tankers with false bottoms to conceal illegal shipments.82 Oil bunkering in Iraq was described as 'endemic' by in-dustry analyst Matthew Hulbert in 2012.83

According to blogger Joel Wing, wherever the oil is taken from, this theft can take dif-ferent forms in Iraq. One form is the mixing of stolen oil with legitimate oil, when a regular shipment is topped up and a separate payment made. It may also involve filling boats or trucks with stolen oil and delivering the product in tankers to the Per-sian Gulf (he notes that in 2006 a sting operation carried out by the Ministry of Oil found 166 craft lined up in rivers in Basra waiting to depart to meet larger boats in the Gulf).84

A third form is filling up tanker trucks and driving the illegal oil to neighbouring countries such as Iran, Syria or Turkey.80 After 2003, illegal trucking has continued, sometimes on a large scale. In one operation in 2006, police seized 400,000 barrels of oil destined for Syria and worth an estimated $28 million on the black market.84

History of oil smuggling in IraqSmuggling of oil began on a large scale during the 1990s when the government used smuggling to defy the United Nations sanctions on the country. During this period trucks sent to Turkey, Jordan, Syria, Kuwait and Saudi Arabia, as well as boats going through the Persian Gulf and Middle East, were adapted for these operations. However the problem continued following the breakdown of order following the 2003 US inva-sion, provoked by the collapse of the state and economy, and the state of general an-archy, following the fall of Saddam.80

The subsidies on Iraqi fuel also made refined products being produced inside Iraq a target for theft, especially those coming from the Baiji Refinery, where in 2007 the US Department of Defence estimated 70 percent of the output was being stolen. 85The New York Times reported that the number of retail petrol outlets near Baiji rose from just eight in 2003 to over 50 by 2008 as the station owners could gain access to oil products at the subsidised price and then re-sell them on the black market.86 However the gov-ernment took steps to reduce oil product subsidies in 2007.87

Connection to insurgencyAccording to the US Ministry of Defence, a variety of criminal, insurgent, and militia groups engage in the theft and illicit sale of oil to fund their activities.85

Since 2003 there have been hundreds of attacks on Iraq's oil industry and analysts

82 'Exploring Oil Data', OpenOil, 2012.83 'Iraq's Rise To No. 2 Oil Producer In OPEC Is Bad News For World', Forbes, 13 August 2012.84 'How Iraqi Oil Smuggling Greases Violence', Middle East Forum, 2006.85 'Measuring Stability and Measuring Stability and Security in Iraq Security in Iraq', US Ministry of Defence, June 2007.86 'Iraq’s Insurgency Runs on Stolen Oil Profits', New York Times, 16 March 200887 'Iraq Energy Outlook', International Energy Agency, 9 October 2011.

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think that many such attacks, which are billed as political acts of insurgency, may in fact be the work of organized crime syndicates in order to maximise the potential for theft. According to reports in the New York Times, pipelines are damaged in order to force transport of oil by truck, so it can then be stolen. Finance Minister Ali Allawi es-timated in 2006 that insurgents were getting between 40 percent and 50 percent of Iraq's oil revenues.88

Joel Wing reported in his blog that some of the security forces deployed to protect the lines also colluded in these illegal activities. For instance in 2004 the Defence Ministry hired the Jabouri tribe to defend the pipeline to Turkey in Saladin and Tamim provinces, but the tribe was reported to be involved in smuggling since and beyond the Saddam Hussein period. A 2009 investigation by the Oil Ministry's Inspector Gen-eral found that army units were stealing from the same line, most destined for mobile refining stations in Iraq or sold to fuel factories and power stations.89

MeteringIraq has suffered a lack of correct metering from its wellheads and pipelines since at least 2003. The International Advisory and Monitoring Board (IAMB), created in 2003 to oversee management of Iraq's natural resources during a transitional period, said in 2006 that years of requesting an accurate metering system had brought no results90.

The IAMB first expressed concern at the lack of metering in July 2004. 91 A 2011 review of an audit by PricewaterhouseCoopers of Iraq's oil revenue management found that the plan to fully install and calibrate a metering system by 2012 was only 39 percent complete.92 According to the IAMB the absence of metering infrastructure represented an internal weakness that could lead to the diversion of oil resources. The absence of such a system meant the CPA was unable to estimate the amount of petroleum that was smuggled in 2004.93

The lack of effective metering can lead to large quantities of crude being stolen, since even a 1 percent discrepancy in the stores of an ultra-large crude carrier (ULCC) with 350,000 tonnes dead weight capacity would be equivalent to 500 entire truckloads of about 1,000 gallons each. In 2007 Ghaith Abul-Ahad reported in The Guardian that one tribe in Basra was paying US $250,000 a week to armed gunmen to secure the Basra Oil Terminal while they loaded tankers with unmetered cargoes of oil.94

88 'Oil corruption fuels insurgency in Iraq', New York Times, 5 February 2006.89 'A History Of Oil Smuggling In Iraq', Musings on Iraq, 5 January 2004.90 'Iraq's Oil Metering System Mysteriously Delayed', Reuters, February 9, 200691 'IAMB Reviews KPMG Audit of the Iraq Development Fund', ReliefWeb, 15 July 2004.92 'Iraq is far behind on oil metering system, audits find', Platts, 10 May 2011.93 'Report of the International Advisory and Monitoring Board of the Development Fund for Iraq', IAMB, 22 May 2003.94 'Oiling the wheels of war: smuggling becomes the real economy of Iraq', Guardian, 9 June 2007.

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Oil Unions in IraqFollowing the fall of Saddam Hussein, unions formed since 2003 with the goal of block-ing privatisation of infrastructure and raising concerns about new draft laws viewed as too friendly towards international oil companies (IOCs). However in 2010 oil unions were still technically illegal in Iraq, a legacy of the Hussein regime,95 which banned them in 1987.96

The country's labour movement was described as "weakened" by the Global Policy For-um. Parliamentarian Nassir al-Esawi said unions had no special protections under Iraqi law and some in the labour movement accuse the Maliki government of trying to weaken them even further.96

In 2009 the Iraqi unions lobbied against Iraq's new oil contract signed with interna-tional oil companies BP and CNPC for the Rumaila oil field. The principal complaints were that the deal was brokered in the absence of new national energy legislation, stalled by a feud between Iraq's Arabs and Kurds, concerns that the terms of the con -tract would overcompensate companies, and the possibility deals would lead to great-er unemployment in the sector.96

In March 2010 a strike and demonstration was held at the South Refineries Company (SRC) headquarters near Basra, with workers calling for a greater percentage of the company's budget to go to employees, and for key members of the administration to be sacked. There was an ensuing crackdown by the Iraqi Army and the Oil Ministry transferred five unionist workers from the Basra refinery to the Baghdad office of the Iraqi Drilling Company (IDC) in an effort to reign them in.95

Iraqi Federation of Oil UnionsThe Iraqi Federation of Oil Unions (IFOU) represents around 26,000 workers from 10 oil unions.97 As of 2010 the organisation was headed by Hassan Juma. The General Sec-retary was Faleh Abood Umara. In 2010 charges were brought against Juma and Abood Umara by the state-owned South Oil Company (SOC), accused them of "impeding the work" at oil developments in Basra and making threatening remarks towards foreign oil companies that could put the economy in danger.98

The IFOU was previously known as the General Union of Oil Employees (GUOE), the forerunner to which was the Southern Oil Company Union (SOCU), founded in May 2003 by worker activists from the South Oil Company. This and other unions from Am-ara, Basra and Nasiriyah provinces, then merged to form the GUOE.99

95 'Union leaders taken to court for oil sector dissent', Iraq Oil Report, 2 July 2010.96 'Iraq’s Weakened Unions Fight Foreign Oil Firms', Global Policy Forum, 13 July 2009.97 'Letter to the American Labor Movement from the IFOU', Solidarity Center.98 'Union leaders taken to court for oil sector dissent', Iraq Oil Report, 2 July 2010.99 'Support Iraqi Oil Workers', Iraqi Occupation Focus, retrieved 30 November 2011.

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Federal Iraq and the KRGFederalism, Factionalism and Regional DifferencesIraq's 2005 Constitution defines the country as a federal republic100 comprising of 18 governorates or 'provinces", three of which make up Iraq's only semi-autonomous re-gion, the Kurdistan Regional Government (KRG).101 According to the US Institute of Peace, the Iraqi state established by the constitution falls short of best-practice federal models and the central government's foundation is "possibly the weakest of any feder-al model in the world."102

The constitution allows for the creation of semi-autonomous federal regions com-prised of one or more of the administrative governorates in Iraq. To the extent that its powers do not conflict with federal authority, a region may have its own constitution and exercise legislative, executive and judicial authority over itself.103 A province can become a "region" in one of two ways: either one third of the provincial council votes to hold a referendum on the issue or one-tenth of registered voters in the governorate ask for one. A referendum can then be held, in which federal status is established only if a majority of voters approves it.104

The only federal region existing as of late 2012 was the Kurdistan Regional Govern-ment (KRG). However nearly half of Iraq's 18 provinces have either declared semi-autonomy or plan to do so.105 The question of exactly what federal structure Iraq should pursue and how power should be shared between those who rule from Bagh-dad, the autonomous government in Erbil and the country's provincial leaders, re-mains unresolved.106

Iraqi Prime Minister Nouri al-Maliki has traditionally been opposed to greater inde-pendence for Iraq's regions, and vowed in a 2011 speech to block any efforts by the provinces to break away, asking "what's the reason for having a ruler in Baghdad?" and warning that “power-sharing cannot be the foundation of solving our problems."107 According to a study for Al Jazeera, the requirement that governorates

100 'Iraqi Constitution' UN Iraq, retrieved 13 December 2011.101 'Background Note: Iraq', US Department of State, 2 May 2011.102 'Weak Viability: The Iraqi Federal State and the Constitutional Amendment Process', United States Institute of Peace, July 2006.103 'Iraq Investment guide – second edition', Herbert Smith LLP, retrieved 13 December 2011.104 'The Empowerment of Governorates in Iraq', Al Jazeera Center for Studies, 12 July 2012.105 'The breakup: More Iraqis bid for autonomy', Al Jazeera, 22 December 2011.106 'Iraq's Federalism Quandary', International Crisis Group, 28 February 2012.107 'Iraq premier Nouri al-Maliki challenges restive provinces', Washington Post, 24 December 2011.

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seeking to form a region must submit any request to Parliament for a vote has allowed the Prime Minister to block such applications by refusing to refer them to Parlia -ment.108

Kurdistan semi-autonomous regionIraqi Kurdistan is recognised as a federal region in the Iraqi Constitution and consists of three provinces, Dahuk, Arbil and Sulaymaniyah. The Kurds have their own Parlia-ment and President and command their own security forces.109

As far as hydrocarbons are concerned, under the KRG's interpretation of the Constitu-tion (which states that such resources are “owned by the people of Iraq in all the re -gions and governates”), the regional government has the right to sign their own con-tracts for oil exploration and production. However Baghdad disagrees and considered such contracts as illegal.110 Tensions between the central government and the north-ern region escalated following the entry of a series of oil majors such as ExxonMobil and Total into Iraqi Kurdistan, as well as ongoing disputes over arrangements for ex-ports of hydrocarbons.

See also: KRG Contract Disputes and KRG Export Disputes

Southern provincesFederalist tendencies have arisen in multiple provinces in Iraq's oil-rich south, includ-ing Maysan, Karbala, Najaf and Babel, but Basra has the south's most evident and per-sistent pro-federal tendency.111

The Basra region is home to Iraq's only sea port and, according to Niqash newspaper, to potentially 60 percent of the country's oil.112 However just one percent of Basra's residents use the public water network (compared to 65 percent nationwide) because the desalinated water is undrinkable, according to a study by the United Nations. Ac-cording to a report by Al Jazeera, Basra seeks independence over what it sees as an un-fair distribution of the province's energy revenues, with leaders particularly angry over a $17 billion deal with oil major Shell to develop three oilfields in southern Iraq, which they say the central government negotiated without their input.113

In August 2011, the Basra provincial council sent a demand to the Council of Ministers in Baghdad to activate the legal measures (that is, to set up a referendum) to trans-form Basra into a federal region. However as of late 2012 the request for a referendum remained with the Council of Ministers. Uday Awad, member of parliament from the Sadrist movement, advised the province to reconsider its demands to become an inde-pendent region and to settle for the 'Basra, Economic Capital of Iraq' project awaiting

108 'The Empowerment of Governorates in Iraq', Al Jazeera Center for Studies, 12 July 2012.109 'Clash Over Regional Power Spurs Iraq’s Sectarian Rift', New York Times, 23 December 2011.110 'An ocean of reserves waiting to be tapped', Financial Times, 9 December 2012.111 'Shahristani and Maliki in Federalism Crossfire', Iraq and Gulf Analysis, 6 September 2011.112 'Escape from centralism: basra postpones bid for independence' Niqash, 1 February 2012.113 'The breakup: More Iraqis bid for autonomy', Al Jazeera, 22 December 2011.

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approval by parliament as of 2011, which would grant the province a greater share of crude oil revenues in addition to wider powers. 114

Sunni federalism and SaladinAccording to reports by the BBC, there was a general upswing in pro-federal senti-ments in Sunni-majority areas of Iraq in late 2011, headlined by a visit to Britain by Parliament speaker Usama al-Nujayfi. Al Nujayfi said that Sunnis of Iraq feel they are being treated by the central government in Baghdad as second-class citizens, and if no improvement takes place many will feel compelled to call for the establishment of "geographically-based federal regions".115

The central-northern governorate of Saladin ("Salah ad Din") has been one of the lead-ing Sunni territories with federalist movements in the post-2005 era. In October 2011, the Saladin governorate council declared its own federal status. 116 According to a re-port by the International Crisis Group Saladin's council emphasised that it wished to remain part of a "united Iraq".117 However the province's move was met with stern op-position from Iraqi Prime Minister Nouri al-Maliki's Shia-dominated government, who rejected the call, saying the formation of regions on a "sectarian basis" would lead to "dividing Iraq and to rivers of blood".118

As the form of the demand made by the Saladin governorate council was illegal (be-cause it was not founded on the basis of a popular referendum) it failed to affect Saladin's status within Iraq. 119 In February 2012 Saladin officials submitted the signa-tures of two percent of the region's voters to the electoral commission as part of their request for autonomy.120

Other provincesAnbarFollowing the moves by the Saladin governorate in 2011, other Sunni-majority provinces such as gas-rich Anbar also began to make claims for a more autonomous status if Baghdad did not respond to their demands.121 The unemployment rate in An-bar province is twice that of Baghdad, adding to the sense among residents that they are receiving an unequal share of essential services and government jobs from Bagh-dad. A majority of the provincial council in Anbar supports a bid for autonomy, but as

114 'Basra, Iraq's Economic Capital, Wants Southern Federal Region' Al Monitor 13 September 2012.115 'Nujayfi Uses the F Word Again', Gulf Analysis, 15 October 2011.116 'In Salahaddin, a Confused Federalism Bid', Iraq and Gulf Analysis 27 October 2011.117 'Iraq's Federalism Quandary', International Crisis Group, 28 February 2012.118 'Iraq PM chides Sunni sections pushing for autonomy', Yahoo News 24 December 2011.119 'Saladin is preparing for a referendum on the establishment of the Region', Investors in Iraq 7 December 2012.120 'Salahaddin hands autonomy signatures to electoral commission', AK News 26 February 2012.121 'Iraq's Federalism Quandary', International Crisis Group, 28 February 2012.

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of December 2011 the issue had not yet come to a vote. Anbar's governor has said that Baghdad's neglect is pushing people towards autonomy.122

DiyalaIn December 2011 in the mixed Sunni-Shia-Kurd province of Diyala in the east of the country,121 the provincial council announced that Diyala would become an autonom-ous region following a vote of 18 to 11 in favour. But the announcement was reversed within days pending further discussion, following protests outside the council build-ing in provincial capital Baquba and threats to burn down the governor's house. 122

Autonomy would give Diyala more power over finances, administration and laws, as well as more control over public property in the region.123

Revenue Sharing Procedures in IraqThe 2007 draft hydrocarbon law states that Iraq’s hydrocarbon wealth belongs to all of its citizens,124 but does not contain specific guidelines for how oil and gas revenues should be distributed.125

Concerns over the equitable distribution of Iraq's oil revenues are one of the central issues in the ongoing dispute between the Kurdistan Regional Government (KRG) and the federal government in Baghdad.125 Other regions, such as Anbar in Iraq's northw-est and the oil-rich Basra region in the south, have also demanded more control over their natural resources.126 A primary focus of the revenue sharing debate in Iraq is the issue of whether or not governorates should retain the right to make decisions over revenues from oil and gas produced in their territory.127

The mechanisms through which Iraq's oil revenues are collected and distributed re-main contested. Chief economist at the IEA Faith Birol warned in 2012 that unless "consensus" was reached on revenue-sharing legislation, Iraq's oil output growth could be significantly slowed, but noted that there had been 'encouraging signs' of co-operation between the central government and the KRG on this front. 128

122 'The breakup: More Iraqis bid for autonomy', Al Jazeera, 22 December 2011.123 'Iraqi Shi'ite rally against autonomy push in Diyala', Reuters, 15 December 2011.124 'Parliament studying draft law on petro dollars; Integral to oil and gas law', The Currency Newshound 30 June 2011.125 'Iraq: Oil and Gas Sector, Revenue Sharing, and U.S. Policy', US Congressional Research Service 3 March 2010.126 'Anbar Province, Once a Hotbed of Iraqi Insurgency, Demands a Say on Resources', New York Times 27 October 2010.127 'Iraq: Oil and Gas Sector, Revenue Sharing, and U.S. Policy', US Congressional Research Service 3 March 2010.128 'Iraq the Makeweight in Global Supply', Petroleum Economist, 9 October 2012.

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2007 draft revenue sharing lawThe KRG and the federal government in Baghdad agreed on a draft revenue sharing law for Iraq in June 2007.129 According to the draft law, the federal government is em-powered to collect all of Iraq's oil and gas revenue, with a priority to allocate the funds to support national priorities such as defense and foreign affairs. The remainder would then be distributed to governorates automatically, on a monthly basis, based on agreed population-density-based percentages until a census can be completed. Of this remainder, the KRG would receive a 17 percent share.127

Treatment in national budgetThe Iraqi government presented its draft for the annual 2012 budget law in December 2011; the total budget was 117 trillion Iraqi dinars (ID), or approximately US $100 bil -lion,130 a 21 percent increase over Iraq's 2011 budget.131 According to Reidar Visser of the Iraq and Gulf Analysis blog the 2012 draft budget is favorable to the interests of the KRG. The budget projects Kurdistan's oil exports to amount to 175,000 barrels per day (bpd) in 2012, roughly 6.7 percent of the anticipated total Iraqi daily exports of 2.6 mil-lion barrels. But the budget allocates 17 percent of the expenditure budget to the KRG. Under the 2012 draft budget, other oil-producing governorates receive one US dollar per exported barrel. This is expected to make up about 1.7 trillion ID in total, or less than a tenth of what the KRG alone receives.130

However ahead of the release of the 2013 budget, Iraq Oil Report reported that allies of Prime Minister al-Maliki were lobbying to reduce the KRG's budget allocation, with many supporting a reduction from 17 to 12 percent, considering that current arrange-ments are too generous to the semi-autonomous region. A member of parliament from the Iraqiya list reminded that Erbil and Sulimaniyah are more developed than the rest of Iraq, claiming that the budget allocation is unjust.132

KRG Contract DisputesThe Iraqi Constitution of 2005 is unequivocal about the fact that the country's natural resources, such as oil and gas, are owned by "all the people of Iraq in all regions and governorates."133 The Constitution also states that the federal government will manage oil and gas extracted from Iraqi fields with regional governments and governates. However the document is ambiguous about the specific dynamics, revenue distribu-tion and competencies of the various Iraqi governmental authorities involved.134

129 'Oil & gas legislation and major developments', KRG, 21 June 2009.130 'The Economics of Federalism in the Iraqi 2012 Draft Budget', Iraq and Gulf Analysis 9 December 2011.131 'Iraq cabinet okays 2012 budget at $100 billion', Reuters, 5 December 2011.132 'Baghdad targets KRG budget priorities', Iraq Oil Report, 17 December 2012.133 'Iraqi Constitution', United Nations Assistance Mission for Iraq, retrieved 14 December 2011.134 'Oil and gas contracts in Iraq', Who's Who Legal, July 2010.

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This ambiguity in the Constitution has led to various conflicts, since the federal gov-ernment maintains that contracts signed unilaterally by a regional government (i.e. the Kurdistan Regional Government), after the draft federal oil and gas laws were ap-proved by Iraqi Council of Ministers in February 2007, are "illegal" until review and approval by the Iraqi Ministry of Oil.134 The Kurdistan Regional Government (KRG) maintains that the ambiguity in the Constitution allows for regional government's to sign oil contracts with IOCs on their own. The KRG also maintains that objections to their interpretation of the Constitution are actually attempts to limit Kurdish autonomy.135

IOCs defy Baghdad and move into KurdistanIn 2006, Norwegian energy company DNO drilled the first new oil well since the inva-sion of Iraq in Iraqi Kurdistan.136 Since then, other companies have entered the region, such as: Genel Enerji from Turkey, Gulf Keystone Petroleum from the United Kingdom, Hess Corporation and Marathon Oil Company from the United States, Repsol YPF from Spain, OMV from Austria,137 Western Oil Sands from Canada via its subsidiary West-ernZagros Resources,138 and Sterling Energy from the United Kingdom.139

However the disputes over the KRG's contracts with IOCs reached a critical point when the regional government announced, on 13 November 2011, that it had awarded six exploration and production licenses to ExxonMobil Corporation, the world's largest oil company.140 Exxon was later followed into the region by French Total in July 2012, drawn by the more attractive fiscal terms offered than in the south of the country and by the region's vast oil reserves, by buying a stake in two Kurdish exploration blocks.141 Reuters reported in September 2012 that Shell had also been encouraged by the activities of its commercial rivals to start talks with the KRG with a view to signing energy deals, a move denied by Shell executives in talks with officials in Baghdad. The Iraqi government had threatened Shell with "serious consequences" if it signed a deal with the regional government. Reuters also reported that Norwegian Statoil had been "looking closely" at KRG exploration deals.142

In retaliation for deals struck in Erbil, the central government began to 'blacklist' sev-eral of the companies which signed with the KRG. New-York based Hess was blacklis-ted in 2011 and in February 2012 a government spokesmen stated that Exxon would not be allowed to participate in the upcoming fourth bidding round and warned that in the future the US company would have to choose between its contract to develop the southern West Qurna field and its newly signed contracts in Kurdistan.143In July 2012 Chevron was also barred from bidding on contracts in wider Iraq after buying

135 'Wrapup 1: Kurd, Baghdad oil officials meet on Exxon spat', Reuters, 17 November 2011136 'DNO ASA – PSA agreement in Iraqi Kurdistan', DNO , retrieved 21 November 2011.137 'Trip report: The future of oil in Kurdistan', Financial Times, retrieved 21 November 2011.138 'Operations' Western Zagros Resources, retrieved 21 November 2011.139 'Operations: Kurdistan: Sangaw North', Sterling Energy, retrieved 21 November 2011.140 'Giant Exxon Mobil enters Kurdistan oil market', Kurdish Globe, 19 November 2011.141 'Iraq Blocks Exxon License Bid', Wall Street Journal, 13 February 2012.142 'Iraq says Shell denies oil talks with Kurdistan', Reuters, 26 September 2012.143 'Iraq Blocks Exxon License Bid', Wall Street Journal, 13 February 2012.

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stakes in the north.144 However Adnan Al Janabi, chairman of the Oil and Energy Com-mittee in the Iraqi Council of Representatives, has said that the Oil Ministry does not in fact have the legal authority to blacklist Exxon over its Kurdistan contracts.143

As of November 2012 Exxon continued to operate its West Qurna stake in southern Iraq, however Iraq Oil Report reported that the major was taking steps to look for buy-ers for its stake in the development.145 Commenting on the implications of the devel-opments above, industry specialist Steve LeVine predicted that the companies signing these deals could become "an unintentional fifth column in Kurdistan's move towards economic autonomy".146

KRG Export DisputesAs a result of the deep-rooted political disputes between the Kurdistan Regional Gov-ernment (KRG) and Baghdad, exports of Kurdish crude since 2009 have been governed by a series of temporary political deals. The KRG has on several occasions decided to shut in its growing production, as Baghdad controls the pipeline network and claims exclusive rights to sell Iraqi crude. 147

With the KRG lacking pipelines to export its own oil, in January 2011 Iraqi Prime Min-ister Nouri al-Maliki and then-KRG Prime Minister Barham Salih struck a deal that en-abled the KRG to export crude through pipelines controlled by the Iraqi central gov-ernment in Baghdad. The deal mandated that the KRG would get half the revenues from its exported oil.148 The deal covered 14 months of exports and US $514 millions in payments by Baghdad. It called for Kurdistan to raise exports to 200,000 barrels per day (bpd) that year, and for Baghdad to make two immediate payments totaling 1 tril -lion dinars ($833 million).149

However in April 2012 the KRG responded to the payment dispute with the central government by halting oil shipments. The KRG claimed that it was owed US $1.5 bil -lion in backlogged payments from Baghdad149 and Turkish oil company Genel com-plained that it had not been paid for most of the oil exported in 2009 and 2011, with other operators such as DNO voicing similar grievances.150 In turn Baghdad claimed complete audits were not conducted and accused the KRG of selling crude and fuel products unilaterally rather than sending the revenues back to the central govern-ment as agreed.151

The Kurds later resumed exports through the Baghdad-controlled pipeline from

144 'Iraqi ministry 'bars Chevron over KRG deal', Upstream Online, 24 July 2012.145 'Exxon pressing toward West Qurna sale' Iraq Oil Report, 8 November 2012.146 'Will oil companies provide Kurdistan its de facto statehood?', The OIl and the Glory, 1 August 2012.147 'Budget battle over Kurdistan exports', Iraq Oil Report, 25 October 2012.148 'Kurdistan begins independent crude exports', Iraq Oil Report, 11 July 2012.149 'Budget battle over Kurdistan exports', Iraq Oil Report 25 October 2012.150 'KRG gets oil payment from Baghdad, exports to flow', Reuters, 8 October 2012.151 'Exports start and Turkey line operational', Iraq Oil Report 8 August 2012.

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Kirkuk to Ceyhan in Turkey, and in September 2012 the central government and the autonomous region finally reached a settlement over the dispute, with the KRG prom-ising to continue exports and Baghdad pledging to pay foreign companies working there.150 On the 13 September 2012 Baghdad and Erbil announced that they had come to a new agreement over exports of Kurdish oil. The new export agreement was signed in Baghdad by Oil Minister Abdul Karim Luaibi, KRG Minister of Natural Resources Ashti Hawrami and four other officials.149 However by the end of 2012 this agreement itself looked to be in doubt, according to Iraq Oil Report.152

In the first two weeks of 2013, the Turkish Hurriyet newspaper reported that the KRG in a symbolic move had begun to export crude oil directly to world markets, in small quantities from the Taq Taq field and via the Turkish port of Mersin.153

The central government in Baghdad responded by threatening to seize what it views as illegal exports, claiming that the State Oil Marketing Organisation (SOMO) is the sole legally authorized entity that has the exclusive right to export and import oil and gas.154

Kurdish export infrastructureIn July 2012 the Kar Group announced it had completed 23 percent of the first section of a pipeline to carry oil from Iraqi Kurdistan north across the border to Turkey, by-passing Iraqi Arab regions. The pipeline project is to transport oil from the Taq Taq field to Khurmala, a route currently managed by tanker, and also includes the con-struction of a gas pipeline from Erbil-Dohuk. . The project was described by fund man -ager Ivor Pether as "quite provocative" and Prime Minister Al-Maliki has said that the central government is worried that the planned pipeline may make the Kurds eco-nomically self-sufficient and embolden them to seek independence.155

If this pipeline was to connect to Turkey, as some press reports have suggested, Iraqi Kurdistan would be opened up to external markets. However the future of this export route depends very much on energy cooperation between Turkey and northern Iraq into the future.156 Meanwhile Sami Alaskary, a member of parliament and close advisor to the Prime Minister, commented to Iraq Oil Report that "the Kurds can't rely on pipelines to Turkey to survive", warning that they could risk losing the 17 percent of the national budget currently allocated to the region.157

152 'Baghdad targets KRG budget priorities', Iraq Oil Report, 17 December 2012.153 'KRG starts independent crude oil exports', Hurriyet Daily News, 8 January 2013.154 'Iraq threatens to seize oil shipments, sue dealers', Huffington Post, 11 January 2013.155 'Tony Hayward Loads Trucks With Kurdish Oil Awaiting Pipe: Energy', Bloomberg, 30 July 2012.156 'Kurdistan Oil Pipeline Would Test Turkish Policies on Iraq and Syria', Al Monitor, 24 November 2010.157 'Baghdad targets KRG budget priorities', Iraq Oil Report, 17 December 2012.

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Energy Industry BackgroundIraqi Hydrocarbon Reserves and ProductionAccording to the BP Statistical Review of World Energy 2012, Iraq holds the fifth largest proven petroleum reserves in the world, following Venezuela, Saudi Arabia, Canada and Iran,158 and only a fraction of the country's known fields are in development.159

Around 75 percent of Iraq's proven oil reserves are concentrated in the three southern governorates, with 25 percent in the middle and the north. On the back of a 2012 re-port by the International Energy Agency (IEA) that claimed that Iraq would account for nearly half of the increase in global oil production between 2012-2035, the organ-isation's chief economist described Iraq as a dream for the energy industry, with "high oil reserves, easy geology and low production costs."160 Drilling success rates, at around 70 percent, are some of the highest in the world.161

Many reports and sources estimate oil and natural gas reserves in Iraq and Iraqi Kur -distan in ways that conflict, agree, or simply differ. Reliable and relevant estimates are indicated and explained in the sections that follow.

Oil Proven Reserves

The BP Statistical Review's estimate for proven reserves of crude oil rose to 143.1 billion barrels (bbl) at the end of 2011, up from 34 bbl in 1980, bringing the percentage of total global reserves to 8.7 percent.158 The major part of this increase in the estimates came during the 1980s.

There have been a series of significant leaps in the estimate over this period.

• In 1982, early in the war with Iran, reserves estimates nearly doubled from 32 to 59 bbl.

• In 1987, as the Iraqi economy was suffering from the long war with Iran, and as it appeared that OPEC was about to base production quotas on stated reserves, the figure jumped from 72 bbl to exactly 100 bbl.

• In 1996, as the United Nations was finalising the terms of the Oil For Food program

158 'Statistical Review of World Energy 2012', BP, 2012.159 'Iraq', Energy Information Administration, September 2010.160 'IEA predicts boom in Iraq oil production', Financial Times, 9 October 2012.161 'Will Iraq be the next oil superpower?', Petroleum Economist, 12 December 2012.

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which would allow Iraq to export oil again after a total ban for several years, the estimate increased from 100 billion to 112 bbl.

In 2000, only months before the United Kingdom and the United States carried out bombing raids,162 the reserves estimate was calculated at 112.5 bbl. In 2009, the same year in which Iraq assumed control of security in Baghdad's 'Green Zone', reserve es-timates reached 115 bbl of oil, a figure that remained stable until December 2011.

However, as with other OPEC producers, it is not clear if the current estimate of 143.1 bbl also includes oil that has already been produced. The United States Geological Sur-vey (USGS)'s World Petroleum Outlook of 2000 estimated that of the 100 bbl figure that was then being used, 22 bbl had already been produced, leaving only 78 bbl yet to be recovered from the proven reserves.163

Nevertheless it should be noted that BP defines "proved reserves of oil" in its annual Statistical Review of World Energy, quoted in this publication, as "those quantities that geological and engineering information indicates with reasonable certainty can be re-covered in the future from known reservoirs under existing economic and operating conditions [emphasis is report author's own]." BP also states that the estimates in their tables are compiled using: "a combination of primary official sources, third-party data from the OPEC Secretariat, Oil & Gas Journal and an independent estimate of Russian reserves based on information in the public domain."

Ultimately recoverable reserves

Given that a large portion of Iraq remains unexplored, there have been numerous claims of huge undiscovered reserves (oil thought to exist, and expected to become economically recoverable), to the tune of hundreds of billions of barrels. According to a Brookings Institute paper from 2003, the Petroleum Economist estimates that there may be as many as 200 bbl of oil in Iraq; the Federation of American Scientists estim-ates 215 bbl; a study by the Council on Foreign Relations and Rice University claimed that Iraq has 220 bbl of undiscovered oil.163 In 2003, Tareq Shafiq, a founding executive of the Iraq National Oil Company (INOC) in the 1960s, endorsed a figure of 215 bbl as Iraq's potential reserves.164

Production

BP's Statistical Review of World Energy shows the profound variations in oil production throughout the decade 2000-2009 and until 2010. Average daily production was 2.1 million barrels per day (bpd) in 2002, dropped to a low of 1.3 million in 2003, rose back to 2.0 million in 2004, and kept rising to eventually reach 2.8 million bpd in 2011.165

The original production targets of the Iraqi government of 12 million bpd of output by 2017 have since been downgraded and deemed unrealistic by the industry, and as of

162 'Iraq Profile', BBC, 20 December 2011.163 'How much oil does iraq have?', Brookings Institute, May 12, 2003.164 'Iraq Oil Development Policy Options: In Search Of Balance', Middle East Economic Survey, 15 December 2003.165 'Statistical Review of World Energy 2012', BP, 2012.

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late 2012 the government was talking of 9 million bpd by 2020.A further threat to Iraq's output goals are the limitations imposed by production quotas set by OPEC, when Iraq eventually rejoins the organisation's quota system. 166

A report released by the International Energy Agency (IEA) in 2012 lays out a 'central scenario', 'high case' and 'delayed case' for Iraq's future production profile towards 2035. According to this 'central scenario', Iraqi oil output would more than double between 2011-2020 to 6.1 mbpd, reaching 8.3 bpd by 2035, with the largest production increase coming from the cluster of super-giant fields around Basra in the south and from Kurdistan in the north. According to the projections, these levels of production could earn Iraq US $5 trillion in export revenues, however in order to realise these gains the country will need strengthened institutions and human capacity, sound long-term strategies for the energy sector and efficient and transparency manage-ment of revenues and spending.167

Gas As of 2012, Iraq's proven gas reserves stood at 3.6 trillion cubic metres (tcm), the ma -jority of which exist as 'associated gas' at the country's oil fields.168

Proven reserves

BP's estimate of proven natural gas reserves changed little from the end of 1990 to the end of 2010, increasing from 3.1 tcm in 1990 to 3.2 tcm in 2010. 169 At the end of 2011 the estimate stood at 3.6 tcm.165

Probable reserves

According to the Energy Information Administration (EIA), probable Iraqi reserves have been estimated at 8.25-9 tcm, and a group of independent and international oil companies are working on more accurate estimates of these reserves. The EIA estim-ates that 70 percent of gas reserves lie in Basra governorate, and two-thirds of re-serves exist as 'associated gas' in oil fields, including Kirkuk in the north, and southern Nahr Umar, Majnoon, Halfaya, Nasiriyah, Rumaila, West Qurna and Zubair. Just under 20 percent of known reserves are thought to be 'non-associated', the majority of which are concentrated in the North, at the Ajil, Bai Hassan, Jambur, Chemchemal, Kor Mor, Khashem al-Ahmar, and Mansuriyah fields.170

Production

BP's June 2011 Statistical Review of World Energy shows a serious decline in natural gas production throughout the decade 2000-2009 and until 2010. From 2000 onwards, ex-cluding gas flared or recycled, yearly production slowly dropped from 3.2 billion cubic

166 'Will Iraq be the next oil superpower?' Petroleum Economist, 12 December 2012.167 'Iraq Energy Outlook', International Energy Agency, 9 October 2012.168 'Country brief: Iraq', Energy Information Administration, September 2010.169 'BP Statistical Review of World Energy June 2011: Natural Gas' BP, June 2011.170 'Statistical Review of World Energy 2012', Energy Information Administration, September 2010.

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meters (bcm) to 1.6 in 2003, 1 in 2004, rising to 1.5 in 2006 and 1.9 in 2008, dropping to 1.3 in 2010 but rising again to 1.9 bcm at the end of 2011.171

Kurdish reserves and productionOilEstimates of petroleum reserves in the Kurdistan region are unofficial and often vary. In December 2011, United Press International (UPI) was one of the media sources that stated that Iraqi Kurdistan had an estimated 45 billion barrels (bbl) of oil (roughly the amount that the United Kingdom has produced from its North Sea fields).172 However Keith Myers of Richmond Energy Partners highlighted in a November 2012 letter to the Economist that this 45-billion-barrel figure first appeared in a presentation by the Kurdistan Regional Government (KRG) itself and refers not to recoverable oil but in fact to discovered oil in place. Myers pointed out that much of Kurdistan's oil exists in 'tight' reservoirs and that the amount of oil likely to be produced in Kurdistan is closer to 11 bbl. By these estimates, Kurdistan holds less than 10 percent of the Iraq's total reserves, while the government is entitled to a 17 percent share of federal petroleum revenues.173

While fluctuating production levels in 2012 remained modest compared to southern Iraq, at around 200,000 barrels per day (bpd) (expected to climb to 250,000 bpd by 2013),174 oil companies exploring in the region have seen high success rates.175 Depend-ing on the level of international investment and accompanying technical expertise, the KRG Minister of Natural Resources announced his goal to reach 2 million bpd of production by 2019.176 KRG Prime Minister Nechirvan Idris Barzani announced at a 2012 conference in Erbil that the region hoped to reach the medium-term landmark of 1 million bpd in 2015.177

GasThere are no official estimates for total gas reserves in Iraqi Kurdistan, and those es-timates that have been made vary significantly in size. The KRG itself estimates the re-gion's gas reserves at between 3 and 6 trillion cubic metres (tcm)178 and news portal

171 'Statistical Review of World Energy 2012', BP, 2012.172 'As Iraq smolders, Kurds sit on oil riches', UPI , 22 December 2011.173 'Letters', Economist 24 November 2012.174 'Iraqi Kurds count on Turkey as energy hub amid friction', Hurriyet Daily News, 20 September 2012.175 'Iraqi Government and Kurdistan at Odds Over Oil Production', New York Times, 14 November 2012.176 'As Kurdistan oil booms, deal-making accelerates', Iraq Oil Report, 3 December 2012.177 'TOP Oil Market News: Crude Near Two-Week High; Bulls Boost Bets', Bloomberg, 3 December 2012.178 'A new era in security and development', Kurdistan Regional Government', retrieved 3 December 2012.

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UPI reported in November 2012 a figure for gas reserves of 3.36 tcm.179 However an es-timate by the US Geological Survey puts total "yet-to-find" gas at 60 trillion cubic metres (tcm) of gas.180

However the Kurdistan region's ability to monetise these reserves will depend on ex-port infrastructure. A role has also been suggested for the region in supplying gas for the 'Southern Corridor' route (via the 'Nabucco' pipeline or one of the other compet-ing proposals), a project aimed at diversifying gas supply routes to Western Europe. An Oil Ministry spokesman has said that initial gas supply for this route could be ex-pected between 2015-2017 but progress depends on a resolution between the central government and the KRG over gas exports.181

Dependence on Extractives RevenuesPolitical scientist Michael Ross describes oil dependence as "the ratio of oil, gas and coal exports to GDP". By this definition, the most highly oil dependent state in 1995 was Angola (68.5 percent), followed by Kuwait (49.1 percent). The most highly miner-al-dependent states were Botswana (35.1 percent) and Sierra Leone (28.9 percent).

High levels of dependence can make states more susceptible to symptoms of the so-called 'resource curse', such as a higher propensity for violent conflict, weak institu-tions and stunted economic development.182 A UN paper investigating patterns of re-source dependency between 1960-1990 found a correlation between countries exhibit-ing high levels of fuel and mineral dependency and negative per capita annual growth rates over that period.183

However there are two different measures of oil revenue dependence, the first being the ratio of oil revenues to fiscal revenues, or the total income of the government and the second is the ratio of oil revenues to total exports. The IMF estimated in 2003 that, of the Gulf producers, the United Arab Emirates shows the least oil dependence, with oil accounting for just over half of government income, and just under half of ex-ports.184

Qatar, by contrast, showed a ratio of 70 percent of government revenues, and 80 per -cent of total exports. The International Monetary Fund identified at least 30 countries where revenues from oil and gas accounted for at least 25 percent of government in-come during the period 2005-8 and where sufficient information was available for meaningful analysis:

Libya, Algeria, Angola, Azerbaijan, Bahrain, Bolivia, Brunei, Cameroon, Chad, Congo, Ecuador, Equatorial Guinea, Gabon, Indonesia, Iran, Kazakhstan, Kuwait, Mexico, Ni-

179 'Iraqi Kurds defy Baghdad, export own oil', UPI, 1 November 2012.180 'Hayward strikes $2bn Kurdistan deal', Financial Times, 7 September 2011.181 'Iraq Wants to Play Role in Nabucco Pipeline', Natural Gas Europe , 1 October 2012.182 'Natural Resources and Violent Conflict', World Bank, 2003.183 'Meeting the Challenge Of the ‘Resource Curse’', UNDP, 2006.184 'GCC Countries: From Oil Dependence to Diversification', International Monetary Fund, 2003.

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geria, Norway, Oman, Qatar, Russia, Saudi Arabia, Sudan, Timor-Leste, Trinidad and Tobago, UAE, Venezuela, Vietnam, and Yemen.185

It is important to note that oil revenue dependence is not related to the quantity of oil produced or exported. Yemen, which exported around 448,000 barrels of oil a day (bpd) in 2003, displayed a higher degrees of dependence on oil revenues than Saudi Ar-abia, which exported around 10.2 million bpd over the same period, or over twenty times more.186

Dependence on extractives revenues in IraqAccording to the International Energy Agency (IEA), the heavy dependence of Iraq's economic development on the success of its oil sector makes the economy highly vul-nerable to changing conditions in the global oil market, accounting for sharp swings in export revenues. Their report notes that, as oil revenue volatility is typically trans-mitted to the non-oil economy through fiscal policy, sound management of national finances is essential to mitigating this risk. Iraq in particular, with a large and growing population, must develop a self-sustaining and productive economy beyond the oil sector, a task that the IEA perceives as complicated by the scale of the country's oil revenues.187

Revenue Watch Institute reports that in In 2010 Iraq accumulated over $51.4 billion in oil revenues, with oil accounting for over 75 percent of GDP and almost 90 percent of government revenues.188

The 'Energy Mix'

What is the 'energy mix'?The 'energy mix' refers to the distribution of consumption per energy source. Each country uses energy differently, defining its own energy mix.189

According to the BP Statistical Review, in 2010 oil consumption accounted for 34 percent of the world's primary energy; coal accounted for 30 percent of the mix; gas contrib-uted 24 percent; hydro-power contributed 6.5 percent and non-hydro renewables (in -cluding biofuels) contributed 1.8 percent.190 BP's Energy Outlook 2030 report highlights three key trends shaping the modern energy economy: industrialisation, urbanisation and motorisation. These trends are led by:

185 'Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle', International Monetary Fund, February 2010.186 'BP Statistical Review of World Energy June 2011', BP, June 2011.187' Iraq Energy Outlook, IEA, 9 October 2012..188' Iraq: Extractive Industries, Revenue Watch, retrieved 28 November 2012..189 'The Energy Mix', Planete Energies, retrieved 1 February 2012.190 'The world gets back to burning', Economist, 8 June 2011.

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• increased energy consumption.

• increased efficiency of energy use in production and consumption.

• increasing diversification of sources of energy.

• increased demand for clean and convenient energy at the point of use.191

Historical trendsOne source of power has always dominated the energy mix. In the pre-industrial age wood dominated, during the industrial revolution coal dominated and oil has domin-ated the 20th century. By 2030 BP predicts that natural gas will gain in importance, however energy efficiency will mean that economic growth will be far less energy in-tensive across the globe.192

The first great wave of industrialisation was powered by coal, a fuel which remained dominant until after the Second World War. The next major transition came with elec-tricity and the internal combustion engine, which allowed diversification away from coal. Coal gradually came to be replaced as the principal fuel in power generation by natural gas and renewable energy sources.191

However between 2000-2011 coal's share of the energy mix increased by 4 percent on the back of strong growth in China, most of whom's growth in the 21st century has come from burning coal. Coal consumption in 2011 was up by 7.6 percent and was growing faster than at any time since 2003.193

Future projectionsThe IEA predicts that the share of natural gas in the global energy mix will increase from 21 percent in 2011 to 25 percent by 2035 and the share of coal will decline. How -ever according to their report, an increased share of natural gas in the energy mix is far from enough to avoid an average global temperature rise of less than 2°C, as al-though gas is estimated to replace some coal and oil in the mix it will also displace some nuclear power, thereby increasing greenhouse gas emissions.194

According to BP's estimates, the fuel mix will change relatively slowly due to long as-set lifetimes. However the fastest growing fuels will be renewables, which are expec-ted to grow at 8.2 percent per year between 2010-2030. Among fossil fuels, gas is ex-pected to grow at the fastest rate (2.1 percent per year). Their outlook predicts that oil will continue a long decline in market share and that recent gains by coal in market share, due to rapid industrialisation in China and India, will be reversed by 2030.195

191 'BP Energy Outlook 2030', BP, January 2011.192 'Watts next', Economist, 25 January 2012.193 'The world gets back to burning', Economist, 8 June 2011.194 'Are we entering the golden age of gas?', International Energy Agency, 2011.195 'BP Energy Outlook 2030', BP, January 2011.

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Unconventional energy sourcesThe Petroleum Economist predicts that unconventional resources such as shale gas and coal bed methane will play a critical role in meeting global energy demand in the fu-ture, the "game changer" being the rise of unconventional gas in the US. However nearly 75 percent of the world's total unconventional resources lie outside North America.196

According to the IEA's 2011 report 'Are we entering a golden age of gas?', unconven-tional gas resources are now estimated to be as large as conventional resources, and unconventional gas now makes up around 60 percent of marketed production in the US.197

KPMG, in their report 'Shale Gas - A Global Perspective' argue that this resource has the potential to turn the world's energy industry on its head and to displace fossil fuels in the energy mix of selected locations, including China, America, Argentina, Mexico and South Africa,198 potentially slowing the development of renewable re-sources. However the industry must first face considerable reputational and regulat-ory obstacles.199

Renewable energy sourcesRenewable energy includes such sources as wind, photovoltaic and thermal solar, tidal and wave power, among others. The renewable energy industry is still in its infancy in terms of its contribution to the global mix, but while the global contribution is still minor, it shows a high growth rate. Wind power, for example, showed growth rates above 30 percent between 1997-2007.200 However, demand for fossil-based energy, such as coal and oil, has outpaced demand for clean energy.201

The 'Energy Mix' in IraqIraq saw its domestic demand for oil rise to over 700,000 barrels per day (bpd) in 2011, up from only 450,000 bpd in 2003. Neglect of refining infrastructure means that most plants are only able to run at around 50 percent capacity, forcing Iraq to import re-fined products from neighbouring countries. The US Department of Energy estimates that in 2011 Iraq relied on imports for a third of its petroleum consumption and a fifth of its liquefied petroleum gas (LPG).202

According to the International Energy Agency (IEA) in 2012, natural gas can play a much more important role in Iraq's future than it has previously, reducing the domin-ance of oil in the domestic energy mix. In order to achieve this, the country's associ-

196 'Unconventional gas's global potential', Petroleum Economist, 18 July 2011.197 'Are we entering the golden age of gas?' ,International Energy Agency, 2011.198 'The World in Figures: Energy', Economist, 17 November 2011.199 'Shale Gas - A Global Perspective', KPMG Institutes, December 2011.200 'World Energy and Population Trends to 2100', Approaching the Limits to Growth, October 2001.201 'Clean Energy Progress Report', International Energy Agency, June 2011.202 'Refining: Domestic processing capacity is rising quickly', Financial Times, 7 December 2011.

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ated gas must be captured and processed, rather than flared. But according to their projects associated gas alone will not satisfy Iraq's projected demand, estimated at 70 billion cubic metres (bcm) by 2035. Therefore Iraq's gas balance and the availability of surplus gas for export will depend on creating incentives to develop the country's non-associated gas reserves.203 In the meantime the growing demand means that the country must rely on power imports in the short term.204

However while Iraq is seeking to export the natural gas it produces,205 because of rising and unsatisfied demand the country suffers from chronic power cuts that led to the Minister of Electricity standing down in 2010.206 In 2012, for example, the average Iraqi household received power for only 7.6 hours per day (a calculation which takes into account homes in the semi-autonomous region of Iraqi Kurdistan, where citizens have access to electricity around the clock). Many households rely on household or neighbourhood generators for power.207

203 'Iraq Energy Outlook', International Energy Agency, 9 October 2012.204 'Power generation a top priority in Iraq', Middle East Business Intelligence, 2012.205 'Iraq eyes EU gas exports through Turkey', Petroleum Economist, 8 September 2011.206 'Iraq electricity minister resigns over power cuts', Reuters, 21 June 2010.207 'Power generation a top priority in Iraq', Middle East Business Intelligence, 2012.

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Generic Oil and Gas TermsResource CurseThe 'resource curse' (sometimes termed the 'paradox of plenty') refers to the theory that natural resource wealth and a high degree of dependency on natural resources can sometimes paradoxically create negative development outcomes in producing countries. This is due to weakened governmental institutions, neglect of other key sec-tors of the economy, corruption, high income inequality and other factors.208

Evidence and researchThe idea that natural resources can result in poor development outcomes has been in play since the 1950s, when it was hotly contested by the ideological camps of the Left and Right. Empirical data began to accumulate to support the idea over time. In the 1970s Gobind Nankani, a vice-president at the World Bank, showed that a group of mineral exporting countries grew on average by 1.5 percent per year over the period 1960 to 1976, about half the growth in a control group of non resource-rich coun-tries.209 In 1988 a study commissioned by the World Bank examined the windfalls ac-cruing to six oil-rich countries during the boom of the 1970s and concluded that those states had performed less well than other, resource-poor countries.210

At the end of the 1990s Jeffrey Sachs and Andrew Warner's publication 'Natural Re-source Abundance and Economic Growth' examined 97 countries over a period of 18 years (1971 - 1989) and found that states with a high abundance of natural resource exports had abnormally slow economic growth in general, relative to other countries. The study became the basis of a growing recognition of the need to address the prob -lems that natural resource abundance can create in developing societies.211

Opponents of the termSome economists have resisted the term 'resource curse' because they claim it sounds fatalistic.212 Oxford professor Paul Collier suggests that the term poses the problem the wrong way round, since he estimates there are more natural resources in developed countries than in developing ones. The dominance of natural resource industries in some developing countries' economies is simply, he states, due to the fact that they

208 'Exploring Oil Data', OpenOil, 2012.209 Nankani, Gobind 'Developmental Problems of Mineral Exporting Countries' World Bank, 1979.210 'Oil Windfalls, Blessing or Curse?' Alan Gelb and Associates, 1988.211 Sachs, Jeffrey and Warner, Andrew 'Natural Resource Abundance and Economic Growth', Center for International Development and Harvard Institute for International Development, November 1997.212 'Resource Curse, or Resource Trap?', Thinking Out Aloud, 23 February 2010.

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have had few other options for economic development, which in turn is due to a whole host of political and social factors. Collier argues that for the world's 'bottom billion' - the poorest billion people on the planet - a greater problem is rather that their natural resources have not been discovered or developed enough.213

Others have resisted the conclusion that the phenomenon is inevitable, arguing that any resource curse must be contingent. Paul Collier cites the case of Botswana, for ex -ample, which has experienced rapid growth since the discovery of diamonds.214

Attitudes of major institutionsInternational institutionsThe International Monetary Fund (IMF) has published papers discussing how to ad-dress the resource curse in Nigeria215 and Botswana.216 For its part, the World Bank uses the term 'resource curse'217218 while arguing that it is not inevitable and can be avoided by good governance.

Oil companiesThe attitude of private oil companies towards acceptance of the term varies, however in a 2004 speech Nick Butler, BP's vice-president for Strategy and Policy Development, made the following comment in acknowledgment of the phenomenon: "The reality of the problems which have afflicted a number of different countries as a result of natur-al resource development is undeniable. I am convinced that there are things we can do to mitigate many of the problems but it would be quite wrong to start from a position of denial."216

On the other hand, in an advertisement from 2006, US major ExxonMobil rejected use of the term 'resource curse', but did say it supported the Extractive Industries Trans-parency Initiative (EITI) process because it acknowledges that good governance is ne-cessary to deliver benefits from oil production, and that transparency is a part of that. The advertisement made the point that "disparaging the resource itself is not the an-swer.219

213 Collier, Paul 'The Plundered Planet: Why We Must--and How We Can--Manage Nature for Global Prosperity', Oxford University Press, 2011.214 'Laws and Codes for the ‘Resource Curse’' Oxford University, September 2007.215 'Addressing the Natural Resource Curse: An Illustration from Nigeria', IMF, July 2003.216 'Escaping from the Resource Curse: Evidence from Botswana and the Rest of the World', IMF, 2007.217 'Property Rights and the Resource Curse', World Bank, 5 April 2007.218 'Contributing to development’? Q&A with World Bank Group director', Critical Resource, January 2010.219 Garsten, Christina and Lindh de Montoya, Monica 'Transparency in a New Global Order', Edward Elgar Publishing, 2008.

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Economic symptomsDutch DiseaseSo-called 'Dutch disease' is the effect on a country's economy when it earns a lot of revenues from exporting a natural resource. It was named after the period in the Netherlands when a decline in the manufacturing sector was witnessed during the 1960s following the discovery of a major natural gas field. The theory goes that oil ex-ports result in large inflows of foreign currency, which in turn tends to lead to the ap-preciation of the local currency and makes exports from other sectors uncompetitive. Simultaneously the earning power of the oil sector draws in labour and capital from other sectors of the economy, adversely affecting them, whether they are export-ori-ented or not.220

Oil and debtEconomists have long noted the link between oil revenues and higher fiscal spending. Overspending during a commodity boom, thanks to access to cheap credit in interna-tional capital markets, can lead to the accumulation of high levels of debt, leading to high interest rate spreads during periods of lower natural resource prices. Some have attributed the 'resource curse' in oil-rich countries to the 'debt overhang' which oc-curred in the 1970s when these countries used commodities as collateral to take on ex-cessive debt when oil prices were high. A collapse in oil prices in the 1980s left these countries with no ability to service their debts.221

A 2005 study by the Institute for Public Policy Reform analysed data from 101 coun-tries for the period 1991-2002 and concluded there was a statistical correlation between increased oil production and exports, and public debt in the producing coun-try.222 The case of Venezuela during the 1970s oil boom displays the symptoms detailed above, where President Carlos Andres Perez increased public spending dramatically, leading to high levels of debt and ensuing management problems through commodity price cycles.223

Political symptomsWeakening of institutionsMany political scientists have outlined a 'resource curse' which both makes rulers in a state less accountable, and state institutions weaker. They are less accountable be-cause the presence of resource revenues means a state is not under the same pressure to raise taxes in order to provide welfare and public services (to a greater or lesser ex -tent depending on the degree of their resource wealth). State institutions become

220 'Mineral-Rich Countries and Dutch Disease', World Bank, 2008.221 Coutinho, Leonor ' The Resource Curse and Fiscal Policy', Cyprus Economic Policy Review, 2011.222 'Drilling into Debt' Institute of Public Policy Research, 2005.223 Hausmann, Ricardo and Rodriguez, Francisco ' Venezuela: Anatomy of a collapse', 2006.

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weaker because they do not develop the same degree of discipline, through merito-cracy and against measured goals and results. The most notable exponent of this the-ory has been Professor Terry Lynn Karl, who studied the cases of Venezuela, Nigeria, Algeria and Iran for her analysis.224

ConflictAnalysts of the resource curse point to many cases where natural resource wealth cre-ates or exacerbates conflicts, either between states or within them. Notable cases in-clude:

• South Sudan, where the presence of oil renewed tensions between the Khartoum government in Sudan and the newly formed country.

• The oil-rich Cabinda region of Angola, where a secessionist movement has flour-ished since the discovery of oil.

• Nigeria, where the concentration of oil in the Niger Delta was a contributing factor to the Nigerian Civil War of 1966-70, and ever since has been a cause of significant unrest.225

Avoiding the resource curseMechanisms and policies which have been proposed to avoid the 'resource curse' in-clude: simply leaving the oil in the ground (one of the more extreme proposed solu-tions that allows an economy and society time to adjust before inflows arrive, but op-posed by the private sector); economic diversification (to develop other sources of value and reduce dependency on mineral exports); 'revenue sterilisation' (to neutral-ise the impact of windfall revenues by resisting spending pressures); and stabilisation funds (set up to invest revenues outside the domestic economy and guard against fluc-tuating commodity prices).226

Definition of Hydrocarbon ReservesDifferent systems have been used to classify reserves of oil and gas since the industry first developed in the nineteenth century. But the most widely used definitions today are provided by the Petroleum Resources Management System of the American Soci-ety of Petroleum Engineers (SPE).227

Reserve estimates are a major driver of value for exploration and production compan-

224 Karl, Terry Lynn, ' The Paradox of Plenty: Oil Booms and Petro States', University of California Press, 1997.225 'The Natural Resource Curse: A Survey', Harvard Kennedy School, February 2010.226 'Resource Impact - Curse or Blessing?', University of Dundee, 25 March 2003.227 'Petroleum Reserves & Resources Definitions', Society of Petroleum Engineers, retrieved 18 January 2012.

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ies. All reserves are estimates of underground reservoirs which cannot be physically inspected and always involve some degree of uncertainty. However such systems are important in creating a 'universal language' of clear terms and definitions that result in reliable and easily comparable reserve estimations for investors, regulators, gov-ernments and consumers.228 It should be noted that around the world, government agencies and organizations use slightly different definitions.227

According to the vice-president of petroleum consultancy Ryder Scott, there has been a trend towards commissioning external audits of estimated reserves. With increased attention given to corporate responsibility in financial reporting, he asserts that oil and gas companies are now engaging third-party engineers to evaluate or audit petro-leum reserves.229

Categories of reservesAccording to the SPE Guidelines, 'reserves' are a subset of 'resources', representing the part of resources which are commercially recoverable and have been justified for de-velopment. Reserves can be subsequently divided into the following three categories depending on certainty of recovery.228

Proved reserves The highest valued category of reserves is 'proved' reserves. Proved reserves have a 'reasonable certainty' of being recovered, which means a high degree of confidence that the volumes will be recovered. To be clear, reserves must have all commercial aspects addressed. It is technical issues which separate proved from unproved categories.228

The term 1P is frequently used to denote proved reserves.228 BP publishes an annual Statistical Review which details proved reserves for over 50 producing countries.230

Probable and possible reserves 'Probable' or 'possible' reserves are lower categories of reserves, commonly combined and referred to as 'unproved reserves,' with decreasing levels of technical certainty. Probable reserves are volumes that are defined as 'less likely to be recovered than proved, but more certain to be recovered than Possible Reserves'. Possible reserves are reserves which analysis of geological and engineering data suggests are less likely to be recoverable than probable reserves.231

The term 2P is used to denote the sum of proved and probable reserves and 3P the sum of proved, probable and possible reserves. The best estimate of recovery from commit-ted projects is generally considered to be the 2P sum of proved and probable re-

228 'SPE Petroleum Resources Management System Guide for Non-Technical Users',Society of Petroleum Engineers, retrieved 18 January 2012.229 'The Reserves Audit' Ryder Scott, retrieved 18 January 2012.230 'BP Statistical Review 2009', BP, 2009.231 'SPE Petroleum Resources Management System Guide for Non-Technical Users', Society of Petroleum Engineers, retrieved 18 January 2012.

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serves.231

Resources'Resources' denotes less certainty than 'reserves' because some significant commercial or technical hurdle must be overcome prior to there being confidence in the eventual production of the volumes.231

Contingent resourcesThese are resources that are potentially recoverable but not yet considered mature enough for commercial development due to technological or business hurdles. For contingent resources to move into the reserves category, the key conditions, or contingencies, that prevented commercial development must be clarified and removed. As an example, all required internal and external approvals should be in place or determined to be forthcoming, including environmental and governmental approvals. There also must be evidence of firm intention by a company’s management to proceed with development within a reasonable time frame (typically 5 years, though it could be longer).231

Prospective resources Prospective resources are estimated volumes associated with undiscovered accumulations. These represent quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled. This class represents a higher risk than contingent resources since the risk of discovery is also added. For prospective resources to become classified as contingent resources, hydrocarbons must be discovered, the accumulations must be further evaluated and an estimate of quantities that would be recoverable under appropriate development projects prepared.231

Oil Field DepletionOil field depletion refers to the decline in an oil field's production over time,232 when a field's recoverable resources become exhausted and production is reduced due to the physical limitations of the reservoir.233 Depletion is a natural process by which an oil field produces an increasing volume of oil until output eventually hits a peak, after which the volume that can be pumped out of that field gradually declines.234

The analysis of depletion rates is a key element in forecasting the future production of oil reservoirs.233 A metric often used to determine the remaining lifespan of an oil re-serve is the 'reserves-to-production ratio', used to forecast the future availability of a

232 'The life of an oil reservoir', The Oil Drum, 14 August 2006.233 'Depletion and Decline Curve Analysis in Crude Oil Production', Global Energy System, May 2009.234 'Oil Fields and what they do (or might) produce, and when' ,Natural Hub, retrieved 1 February 2012.

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resource.235

Enhanced Oil Recovery (EOR)The life of an oil well goes through at least three distinct phases, with various tech-niques employed to keep oil production at maximum levels. Enhanced oil recovery (EOR) is the third and most advanced stage in this process. EOR can substantially im-prove the efficiency of extraction.236

EOR can refer to any method of increasing oil production from a reservoir, using soph-isticated technological techniques to add energy to a reservoir to stimulate oil produc-tion and increase recovery factor, or the amount of the reservoir's total oil that is ex-tracted.237 EOR also has some considerable drawbacks, including the relatively high cost of its implementation and, in some cases, the unpredictability of its effective-ness.238

According to the Petroleum Technology Transfer Council, about 10 percent of all oil produced in the United States in 2009 used enhanced recovery techniques.239

Three stages of oil field developmentIn the first stage of an oil field's development, oil is forced out by pressure generated from gas present in the oil (also known as 'associated gas').240 The natural pressure of the reservoir, or gravity, drives oil into the wellbore, combined with artificial lift tech-niques such as pumps which bring the oil to the surface. Only about 10 percent of a reservoir's original oil in place is typically produced during primary recovery.241

In the secondary stage, the reservoir is flooded with water or injected with gas to maintain sufficient pressure levels to displace oil and drive it to the production well-bore.240 This stage extends a field's productive life and results in the recovery of 20 to 40 percent of the original oil in place.241

EOR refers to the tertiary stage of development, which involves the introduction of fluids that the reduce the viscosity, or thickness, of the oil and improve its flow. Ter-tiary recovery enables producers to extract up to or over half of a reservoir's original oil content, depending on the reservoir and the technique used.240

235 'Reserves to Production Ratio', Investopedia, retrieved 8 January 2012.236 'Enhanced Oil Recovery (EOR)', Teledyne ISCO, Retrieved 1 February 2012.237 'Oil Field Glossary' Schlumberger, retrieved 1 February 2012.238 'Enhanced Oil Recovery/CO2 Injection', Fossil Energy, Retrieved 1 February 2012.239 'Enhanced Oil Recovery', Petroleum Technology Transfer Council, retrieved 1 February 2012.240 'Enhanced Oil Recovery (EOR)', Teledyne ISCO, retrieved 1 February 2012.241 'Enhanced Oil Recovery/CO2 Injection', Fossil Energy, retrieved 1 February 2012.

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Categories of EOR techniquesThe primary categories of EOR are thermal recovery, gas injection and chemical injec-tion.241

• Thermal EOR has historically been the most widely applied.240 This method in-volves the introduction of heat, most commonly in the form of steam, into a reser-voir to reduce the viscosity of the oil to be extracted.241

• Gas injection uses gases such as nitrogen or carbon dioxide that expand in a reser-voir to push additional oil to the production wellbore. Other gases can also be used to dissolve in the oil to lower its viscosity and increase its flow rate.241 Other gases, such as hydrocarbon gases and flue gases (the combustion exhaust gas of a power plant, for example), can also be used in this method of EOR.240

• Chemical EOR generally involves the flooding of a reservoir with water-soluble polymers, or long-chained molecules, to help reduce the surface tension that often prevents oil from moving through a reservoir.241 This effects a more efficient dis-placement, and therefore better recovery, of moderately viscous oils.240

A number of other EOR processes have also evolved, including the injection of carbon-ated water, microorganisms, foams, alkaline, and other substances. These have shown varying degrees of promise but require additional development to enter into more common use.240

According to the US Department of Energy in December 2011, thermal techniques ac-counted for over 40 percent of EOR production in the United States, gas injection ac-counted for nearly 60 percent, and chemical techniques accounted for about one per-cent.242

Crude Oil Qualities

DensityOil density is generally expressed in degrees using an API scale. This is a specific grav-ity scale developed by the American Petroleum Institute (API), designed to measure the relative density of various petroleum liquids. The measure is expressed in degrees and most values fall between 10° and 70°.243 The specific gravity of oil is its relative density to water at 60° Farenheit.244

242 'Enhanced Oil Recovery/CO2 Injection', Fossil Energy, Retrieved 1 February 2012.243 'API Gravity', Schlumberger Oil Glossary, retrieved 22 January 2012.244 'Tech Talk - Venezuela, heavy crudes, API gravity and refinery gains', The Oil Drum, 9 January 2011.

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Light oilOtherwise known as 'conventional oil', light oil has an API gravity of 22° or over.245

For example, Saudi Arabia's new blend of super light crude has an API gravity of 44°.245

The oil produced from Libyan fields is also typically very 'light' and the country's nine export grades have API gravities that range from 26-43.3°.246

Heavy oilHeavy oil is a dense, viscous oil with low API gravity. Definitions vary, but it is gener-ally accepted that the upper limit for heavy oils is 22°API. In Venezuela for example, the Bachaquero Heavy Crude Oil has an API gravity of 17º.247

Heavy oils are usually not recoverable in their natural state through a well or using or-dinary production methods. Most need to be heated or diluted so that they can flow into a well or through a pipeline.245

Extra heavy oilExtra heavy oil has an API gravity of less than 10°.245

BitumenOtherwise known as "oil sands", bitumen shares many attributes of heavy oil but is even more dense and viscous.248

Sulphur contentCrude oil can also be measured in terms of sulphur content (ranging from 'sweet' to 'sour'). 'Sweet' crude is usually defined as oil with a sulphur content below 0.5 percent, while 'sour' crude has a sulphur content of 0.5 percent or over.249

Impact on refiningThe density and 'sourness' of crude oil feedstocks affects the amount of processing and conversion necessary to achieve what is known as an optimal mix of products. Light, sweet crude demands a higher price than heavier, sourer crude as it requires less processing and produces a greater percentage of value-added products, such as gasoline, diesel and aviation fuel. Heavier grades of fuel generally require additional processing to producer lighter products.249

245 'What is Heavy Oil and How is it Formed?' ,Rigzone, retrieved 22 January 2012.246 'Saudi's New Super Light Crude Blend To Hit Market In April -Source', Internationa Energy Agency, 31 March 2011.247 'Crude Oil Types', A Barrel Full, 31 March 2011.248 'What is Heavy Oil and How is it Formed?', Rigzone, retrieved 22 January 2012.249 'Types of Crude Oil', Neste Oil, retrieved 23 January 2012.

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Crude oil blendsBlended crude is a mixture of crude oils, blended in the pipeline to create a crude with specific physical properties. This may be to reduce viscosity and ease transportation, or alternatively to create added value compared to the raw crude.250

Oil producing countries, particularly those with a many different qualities of crude from their fields, must decide which brand they will put on the international market. There were around 160 crude grades marketed globally as of 2012. In order to optimise investments in pipelines and storage facilities, countries tend to reduce the number of marketable streams by blending different oil grades. For example, the Brent blend in fact comes from the blending of 15 different grades of oil from the North Sea.251

Crude Oil Qualities in IraqCrude oil found in Iraq varies significantly in quality, with API gravities generally ran-ging from 22° (heavy) to 35° (medium - light).252 Over 70 percent of national oil re-serves are below 28° API251 and the International Energy Agency (IEA) predicted in its 2012 report on Iraq that future production is likely to include a larger share of heavier crudes.253 However some of the crudes produced at the Taq Taq field in the norther semi-autonomous Kurdistan region are as light as 48° API, dubbed by Reuters as "cham-pagne crude".254

Reuters reported in November 2012 that Iraq was struggling to find buyers for its 2013 oil output due to complaints from refiners in Asia, Europe and the US over high prices and variable quality.255

Export blendsThe main export crudes come from Rumaila and Kirkuk, the two largest active fields. The two blends used for export are the Basra Light blend, transported by tanker from the south, and the Kirkuk blend, by pipeline to the north.256 In terms of quality, the Basra Light blend is in the middle of the market, close to the global average density of 32.5° API.256

The API gravity and sulphur content for each blend is shown in the table below.

Crude API Gravity Sulphur content

Basra Light 34° 2.1%257

250 'Blended Crude', Schlumberger OIl Glossary', retrieved 29 November 2012.251 'Iraq oil: The crude oil quality dilemma', Gulf News', 11 November 2012.252 'Iraqi Crude Heavier Due to Fuel Blending: Traders' Iraq Energy, 1 June 2011.253 'Iraq Energy Outlook', International Energy Agency, 6 September 2012.254 'Kurdistan Taq Taq oil exports rise ahead of Sept deadline' Reuters, 9 October 2012.255 'Light crude surplus spins world oil trade compass' Reuters, 16 November 2012.256 'Iraq oil: The crude oil quality dilemma' Gulf News', 11 November 2012.257 'Iraqi Crude Heavier Due to Fuel Blending: Traders', Iraq Energy, 1 June 2011.

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Basra Medium 30° 2.6 %

Basra Heavy 22-24° 3.4%

Basra Blend 32° 1.95%

Kirkuk 35.8°257 n/a

Due to the large number of fields and differing grades of crude (particularly in the South), as well as the limited sea outlet and export routes, the crude blending process in Iraq can be problematic256 and according to the IEA, the country "has to offer dis-counts to compensate for the specification of the delivered oil being heavier than the contractual figures, as a result of the heavier crudes and heavy fuel oil being blended into the export stream."258

A former official at the OPEC Secretariat comments that Iraq lacks a proper blending system to ensure a relatively stable quality of its crude oil export streams. 259 However the IEA report also notes that much of future demand for Iraqi crudes is to come from Asia, where large, modern refineries are equipped to deal with processing a range of specifications.260

Natural Gas

What is natural gas?About 85 percent of natural gas produced from conventional wells is methane, a highly flammable compound made up of one carbon atom and four hydrogen atoms.261 It is colourless and, in its pure form, odourless. As the gas has no odour, gas companies often add a chemical to the gas to give it a distinctive smell so that gas leaks may be detected by smell.262

The units of measurement used for natural gas are generally based on volume and measured in cubic feet (a cubic foot being one foot long, by one foot wide, by one foot deep). This volume is usually expressed in BCF (billion cubic feet), TCF (trillion cubic feet) and MCF (thousand cubic feet).263 It can also be measured in terms of cubic metres.

According to the US Department of Energy, for many years natural gas was considered worthless and discarded, and is still released by flaring today in many countries.262

Natural gas can be found as either associated gas, non-associated gas, wet gas (a type of non-associated gas) or coal bed methane.261

258 'Iraq Energy Outlook', International Energy Agency, 9 October 2012.259 'Iraq oil: The crude oil quality dilemma', Gulf News', 11 November 2012.260 'Iraq Energy Outlook', International Energy Agency, 9 October 2012.261 'Oil and Gas Resources and Their Uses', TEEIC, retrieved 13 February 2012.262 'Natural Gas', US Department of Energy, retrieved 13 February 2012.263 'Natural Gas Measurement', KGM, retrieved 13 February 2012.

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Non-associated gasNon-associated gas is gas which is found in reservoirs which do not contain significant quantities of crude oil.264 It often occurs at greater depths where heat has split all of the hydrocarbons into smaller, lighter gas molecules. Shale gas is one type of uncon-ventional non-associated gas.261

Associated gasAssociated gas is found in association with crude oil, either dissolved in the oil or as a 'cap' of free gas above the oil. Where it cannot be used, associated gas is either reinjec-ted into the well, flared or vented.265

Coal bed methaneCoal bed methane (CBM) or coal seam gas (CSG) is the natural gas extracted from coal beds during underground coal mining.

History of natural gasThrough the 1800s the natural gas which was found was used almost exclusively as a fuel for lamps. However the invention of the 'bunsen burner' in 1885 proved that gas could be used to provide heat for cooking and warming buildings.

The construction of pipelines allowed natural gas to be brought to new markets. One of the first substantial pipelines was built in 1891 in the US, however few pipelines were built until after the Second World War in the 1940s.266

Role of natural gas in the energy mixThe International Energy Agency (IEA) estimated in 2011 that natural gas could over-take coal and rival oil by 2035 to account for over 25 percent of global energy de-mand.267

According to the London-based Petroleum Economist, the growing interest in gas as an element in today's energy mix represents a "structural shift in energy markets." Nat-ural gas holds several benefits as a fuel for a low-carbon future, including:

• the lowest carbon footprint of all fossil fuels.

• a shorter lead time to build gas-fired power plants and greater operational flexibil-ity.

• ability to reduce greenhouse gas emissions by 25 percent in the transport sector

264 'NON-ASSOCIATED GAS DEFINITION', Oil and Gas Glossary, retrieved 13 February 2012.265 'Associated Gas', A Barrel Full, retrieved 13 February 2012.266 'The History of Natural Gas', US Department of Energy, retrieved 13 February 2012.267 'Gas could make up 25% of global energy mix by 2035: IEA', Platts, 2011.

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compared to traditional motor fuels.268

The IEA also points out that gas can help to diversify energy supply and so improve energy security.269

Natural Gas FlaringGas flaring is the disposal by burning of unwanted associate natural gas released from an oil field by burning it. It is widely used where there is no infrastructure to make use of the gas. However it is widely recognized as a waste of energy and as environment-ally dangerous in contributing carbon emissions to the atmosphere.270

The top four 'flarers' internationally by the Global Gas Flaring Project (GGFP)'s 2011 statistics were Russia, Nigeria, Iran and Iraq. However according to Iraq Oil Report, gas flaring is a global problem on the descent as producing countries are increasingly magnetising the gas in a maturing market for the fuel. Between 2009-2012 the practice saw a 22 percent decrease on a global level, despite outliers such as Iraq where the level increased.271

Natural Gas Flaring in IraqIn 2012, as Iraq was ramping up production of crude oil, Iraq flared an estimated 9 bil-lion cubic metres (bcm) of associated gas, ranking it among the top five flaring nations in the world, according to the Word Bank. The gas being flared was enough to fuel all of Iraq's electric power needs272 and, according to advisor Fabrice Mosneron Dupin, the wasted gas itself is worth around US $5 million per day.271 Of the 1,838 million cubic feet (mcf) per day of natural gas produced in the second half of 2012, an average of 1,253 million (68 percent) was flared.273

As of 2012 Iraqi laws and regulations allowed flaring of natural gas and by contract, oil field operators were not compensated for gas produced in association with crude oil, thus 'incentivising' flaring activities.272 However the South Gas Project, a joint venture between the Oil Ministry and oil major Shell is intended as an attempt to address the problem by capturing and utilising associated gas from a number of southern oil fields.273 In 2012 Shell announced that the preliminary work it had done in capturing associated gas in Basra cut down flaring by around 20 percent.271

268 'Unconventional Gas's Global Potential', Petroleum Economist, 18 July 2011.269 'Are We Entering a Golden Age of Gas?', International Energy Agency, 2011.270 'Global Gas Flaring Estimates',NOAA, retrieved 15 February 2012.271 'Wasted money, global concern over Iraq’s persistent gas flaring',Iraq Oil Report, 1 November 2011.272 'My encounter with gas flares in Iraq', World Bank, 18 July 2011.273 'Gas flaring hits unprecedented levels in Iraq', MEED, 8 November 2012.

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Liquefied Natural Gas (LNG)LNG is liquefied natural gas, a clear, colourless, non-toxic liquid,274 produced by cool-ing natural gas to -260° Fahrenheit (-160ºC), at which point it becomes a liquid. This process occurs to allow more efficient transport of natural gas, either by truck or by sea.275 LNG takes up 600 times less space than natural gas in its gaseous form.276

Converting natural gas into LNG can make stranded natural gas deposits more eco-nomically viable, as constructing pipelines can be expensive. In addition, LNG will not explode in an unconfined environment, so in the unlikely event of an LNG spill, the natural gas has little chance of igniting an explosion. Other benefits of LNG include that the liquefication process removes oxygen, carbon dioxide, sulphur and water from the natural gas, resulting in LNG which is almost pure methane.276 Once it reaches its destination, LNG is stored as a liquid until it is warmed back to natural gas via the process of regasification.275

ProductionAs of early 2012, there were 20 LNG production and export terminals worldwide, 63 import terminals and nearly 300 LNG ships altogether handling approximately 170 million metric tons of LNG every year. Oil major ConocoPhillips notes that these num-bers are predicted to increase dramatically over the next decade due to the growing popularity of this clean fuel source.277

LNG plants are capital intensive and rely on heavy debt.278 But while LNG is reasonably costly to produce, advances in technology are reducing the costs associated with the liquefication and regasification process.276 The BP World Energy Outlook in 2012 pre-dicted that LNG trade will grow twice as fast as global gas production, that is, at a rate of 4.4 percent per annum.279

Liquid Petroleum Gas (LPG)Liquid Petroleum Gas (LPG), also referred to as 'liquefied petroleum gas', is a mixture of gaseous hydrocarbons, produced from natural gas and oil extraction (66 percent) and from oil refining (34 percent). Hence LPG is an example of an associated gas.280

Unlike liquefied natural gas (LNG), which must be be stored at at -162°C in order to re-

274 'What is LNG?', Shell, retrieved 13 February 2012.275 'Overview-About LNG', Center for Liquified Natural Gas, retrieved 13 February 2012.276 'Liquified Natural Gas (LNG)', NaturalGas.org, retrieved 13 February 2012.277 'What is LNG?', ConocoPhillips, retrieved 13 February 2012.278 'Analysis: East Africa risks missing LNG boom', Reuters, 19 September 2012.279 'World Energy Outlook 2030', BP, retrieved 13 February 2012.280 'What is LPG?', FloGas, 1 March 2012.

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main liquefied under atmospheric pressure,281 LPG becomes a liquid when compressed at room temperature for storage and transport.282

When natural gas is extracted from the ground, around 90 percent of it is methane, and the rest is made up of various liquid petroleum gases. The methane is separated from this mixture and transported via pipelines. These gases can also be produced during the crude oil refining process, usually producing around a 3 percent yield.283

LPG is mostly made up of propane, butane or a mix of the two. Other elements present are primarily used as chemical feedstocks rather than fuel.284

LPG was first produced in 1910 by Walter Snelling and the first car powered by pro-pane ran in 1913.285

UsageLPG is popular as a fuel for domestic use, as it is safe to store and portable. It is used for portable camping grills, hot water tanks, refrigerators, caravans, or for use on boats or isolated cabins or lodges. The fuel also has many industrial uses, including uses in metal working, glass working and ceramics, and for industrial forklifts and heavy lifting.286

According to industry commentator Ed Grabianowski, LPG was one of the most com-mon alternative fuels in the world as of 2011 and is a particularly popular fuel for heating and cooking in certain areas of India and in rural parts of the US. He reports that the fuel is becoming an attractive source of energy for people struggling to meet increasing heating bills.287

The World Liquefied Petroleum Gas Association (WLPGA) estimates that more than 9 million vehicles in 38 countries currently operate on LPG. Cited benefits of using the fuel to power cars rather than conventional fuels include reduced greenhouse gas emissions, government incentives and tax breaks in many countries, and affordability. However cars must first undergo a conversion process to be able to run on LPG.287

Though rare, LPG (particularly propane and butane) poses a risk of sudden depressur-ization and explosions during storage and transport, so is often subject to regulations on its production, storage and transport.288

281 'Technology', Deen Shipping, retrieved 12 April 2012.282 'Liquefied Natural Gas (LNG) - natural gas that is very, very cold', Energy Quest, retrieved 12 April 2012.283 'How Liquefied Petroleum Gas Works', HowStuffWorks, retrieved 1 March 2012.284 'Liquefied Petroleum Gas (LPG)', Window on State Government, retrieved 1 March 2012.285 'LPG: A History', Extraordinary Road Trip, retrieved 1 March 2012.286 'LPG: A History', Extraordinary Road Trip, retrieved 1 March 2012.287 'How Liquefied Petroleum Gas Works', HowStuffWorks, retrieved 1 March 2012.288 'Liquefied Petroleum Gas (LPG)', Window on State Government, retrieved 1 March 2012.

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LPG marketsIn countries like India, which do not have reliable oil or natural gas supplies, LPG makes up a major share of the energy mix. In such cases, many everyday heating and cooking needs are supplied by propane instead of oil or coal.287

According to the LP Gas Association, rapid population growth in many of the world's developing countries has outpaced the increase in modern energy provision, a gap which creates an opportunity for LPG gas markets.289

LPG in IraqLPG is a key household fuel in Iraq for cooking at home and in restaurants. According to transportation advisor Poten and Partners, the probable demand in 2004 stood at around 1.4 million tons per year. However domestic supplies accounted for about 25 percent of market demand, creating a need for LPG imports by land and sea.

In the aftermath of the 2003 war shortages of LPG cylinders were seen, and rationing introduced in the main cities. But a black market emerged where the cost of a cylinder could be 2 - 4 times higher.290

Plants at Kirkuk and Basra are the main source of domestic supplies.290 In 2011 a fur-ther plant was opened at Khor Mor in the northern Kurdistan region, which produces LPG.291

Unconventional Energy SourcesAccording to oilfield services provider Schlumberger, unconventional resources is an umbrella term referring to oil and natural gas produced by means that do not meet the criteria for conventional production.

Unconventional oil consists of a wider variety of liquid sources than conventional oil including oil sands, extra heavy oil, gas-to-liquids and other liquids. In general con-ventional oil is easier and cheaper to produce than unconventional oil.292 However the qualification criteria for unconventional resources are not fixed and inevitably shift over time depending on the availability of exploration and production technologies, the economic environment and other factors. As of 2011 for example resources such as coal bed methane (CBM), shale gas, fractured reservoirs and tight gas sands are con-sidered unconventional resources.293

Many industry analysts have pointed to a significant future role for 'unconventionals'

289 'Developing Rural Markets for LP Gas', World LP Gas Association, 2005.290 'Iraq LPG: A Struggle', Poten & Partners, 29 January 2004.291 'Fire at Dana Gas LPG plant in Iraq kills one', Reuters, 24 June 2012.292 'FAQs about oil', International Energy Agency, retrieved 29 November 2012.293 'Unconventional resources', Schlumberger, retrieved 9 February 2012.

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in the energy mix in many parts of the world. BP estimates that unconventional gas will account for 57 percent of US production by 2030, that CBM and shale will account for almost half of Chinese output growth, and that shale and other new gas sources could meet almost 60 percent of US supply needs by the same date.294 Nevertheless the IEA notes the key constraint on further development of global unconventional energy resources that in most places, exploitation of such resources does not enjoy the degree of social acceptance required in order to flourish, due to environmental and social concerns that have arisen.292

Fuel Subsidies

Global snapshotGovernment control of the domestic prices of petroleum products is a common fea-ture in developing countries.295 However fuel subsidies cover a wide range of govern-ment actions that lower the cost of fossil fuels.296 A report by the Organisation for Eco-nomic Co-operation and Development (OECD) in 2011 listed over 250 individual budgetary and taxation mechanisms for altering the price of fossil fuels,297 and there-fore estimating fuel subsidies can be difficult. The most commonly used methodology for quantifying fuel subsidies, known as the price-gap approach, calculates subsidies applied to fossil fuels that are consumed directly by end-users or consumed as inputs to electricity generation.298 This approach compares an average price paid by the end-user with a reference price that corresponds to the full cost of supply.

According to the Washington-based Center for Global Development, most oil exporters subsidise their fuel prices domestically, sometimes at very low prices and implying a large cost for governments.299 The International Energy Agency (IEA) estimates that the cost of fossil-fuel subsidies amounted to US$ 409 billion worldwide in 2010, and they predict that subsidies could rise to US$ 660 billion by 2020, equating to 0.7 per-cent of global Gross Domestic Product (GDP).300 Deutsche Bank said that in 2010, 70 percent of fuel subsidies were made in the world’s major oil and gas exporting nations, and that such subsidies have been instrumental in driving an increase in domestic de-mand within Organization of the Petroleum Exporting (OPEC) countries and other oil-exporting countries in the 2000s.301

294 'The US' future in unconventional, says BP', Petroleum Economist, 27 March 2011.295 'The Magnitude and Distribution of Fuel Subsidies: Evidence from Bolivia, Ghana, Jordan, Mali, and Sri Lanka', IMF, 2006.296 'Fossil Fuel Subsidies', Price of Oil, retrieved 19 April 2012.297 'Inventory of estimated budgetary support and tax expenditures for fossil fuels', OECD, 2011.298 'Fossil-fuel subsidies – methodology and assumptions', International Energy Agency, retrieved 19 April 2012.299 'Nigerians Demand Cheap Gas, But Fuel Subsidies Are NOT Pro-Poor', Center for Global Development, 6 January 2012.300 'World Energy Outlook 2011', International Energy Agency, 2011.301 'Crude Oil: Iceberg Glimpsed Off West Africa', Deutsche Bank, 2 February 2012.

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The table below illustrates the 15 countries that spent the most on fossil-fuel subsidies in absolute terms in 2010, along with the relative value of such subsidies as a share of Gross Domestic Product (GDP).302303

Country Total Fossil-Fuel Subsidies (US $ billions)

Fossil-Fuel Subsidies as a share of GDP

Iran 80.8 22.6%

Saudi Arabia 43.5 9.8%

Russia 39.3 2.7%

India 22.3 1.4%

China 21.3 0.4%

Egypt 20.3 9.3%

Venezuela 19.9 6.9%

UAE 18.2 6%

Indonesia 16.0 2.5%

Uzbekistan 12.0 30.5%

Iraq 11.4 13.8%

Algeria 10.6 6.6%

Mexico 9.5 0.9%

Thailand 8.4 2.7%

Ukraine 7.9 5.6%

CriticismThe International Energy Agency (IEA) said in a 2011 report that the normal rationale for fuel subsidies is that they promote economic development and alleviate poverty. However they argued that subsidies can have unintended consequences such as en-couraging wasteful consumption, discouraging energy efficiency and reducing the competitiveness of renewable fuels. Crucially the IEA rejected the argument that fuel subsidies promote development, arguing that instead they foster inequality through disproportionately benefiting richer households who are more likely to own fuel-con-suming cars and electrical appliances. Therefore the IEA concluded that fuel subsidies are an extremely inefficient means of assisting the poor, with only eight percent of the US$ 409 billion spent on fuel subsidies in 2010 reaching the poorest 20 percent of the global population.304 G20 Leaders have also criticised fuel subsidies, agreeing in 2009 to

302 'Fossil fuel subsidies: a tour of the data', The Guardian, retrieved 19 April 2012.303 'Fossil-Fuel consumption subsidy rate as a proportion of the full cost of supply, 2010', International Energy Agency, 2012.304 'World Energy Outlook 2011', International Energy Agency, 2011.

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"rationalise and phase out over the medium term inefficient fossil-fuel subsidies", with the leaders of the Asia-Pacific Economic Cooperation (APEC) making a similar commitment the same year.305

In March 2012 a United Nations Development Programme (UNDP) report put forward the case for eliminating fossil fuel subsidies, arguing that the savings made could be used to help the poorest citizens cope with rising world energy prices. On top of this, the report said that the move would address climate change, reduce energy waste, cut government expenditure and minimise social inequality. 306 Balazs Horvath, the re-port's lead author, pointed out that in Europe and Central Asia the elimination of fuel subsidies has been followed by both economic growth and a fall in greenhouse gas production, which "gives quite a bit of weight to the argument that this can work". Between 1990 and 2008 gross domestic product (GDP) expanded by 22 percent in the region as a whole whilst carbon emissions fell by 28 percent - the largest regional de-cline in the world.307

Elimination of subsidiesThe elimination of fuel subsidies presents a political dilemma, due to the social unrest which can often result.308

For example the proposed removal of fuel and transport subsidies was one of the key motivations behind the violent 'Caracazo' riots in the capital of Venezuela in 1989.309 Furthermore, in the first quarter of 2012 alone, multiple protests and strikes were launched in reaction to the prospect of fuel subsidy cuts.

In January 2012 Nigeria experienced a wave of protests in response to the govern-ment's decision to remove subsidies on imported oil products, forcing the government to partially re-instate the subsidies.310 Ghanaian fuel prices increased by about 20 per-cent when their fuel subsidy was cut at the end of 2011, 311 causing civil society groups to talk of nationwide strikes312313 and forcing a policy reversal in February 2012.314 In March 2012 the Indonesian government was forced to rule out a fuel subsidy cut after weeks of protests across the country. Indonesian officials were wary of the political consequences of fuel price hikes - in 1998 a fuel price rise in Indonesia helped trigger

305 'Inventory of estimated budgetary support and tax expenditures for fossil fuels', OECD, 2011.306 'From Transition to Transformation', United Nations Development Programme, retrieved 18 April 2012.307 'Cutting fuel subsidies key to sustainable development – report', Alert Net, 13 April 2012.308 'Removal of Fuel Subsidies in Nigeria: An Economic Necessity and a Political Dilemma', Brookings Institute, 10 January 2012.309 'Caracazo Was 'Forerunner' to Anti-Neoliberalism Protests, States Venezuela's Chávez', Venezuela Analysis, 6 October 2011.310 'Crude Oil: Iceberg Glimpsed Off West Africa', Deutsche Bank, retrieved 19 April 2012.311 'How Ghana, Tanzania, Uganda tackle fuel subsidy', BusinessDay, 18 January 2012.312 'Ghana Reinstates Fuel Subsidy But Higher Transport Fares Remain', SaharaReporters.com, 8 February 2012.313 'Protests, strikes may erupt in Ghana over removal of fuel subsidy', Punch, 19 January 2012.314 'Ghana: mixing politics and fuel prices', Financial Times, 9 February 2012.

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student riots that toppled the 32-year Suharto dictatorship.315

Oilfield Services IndustryOilfield services companies assist drilling companies in the oil industry in setting up oil and gas wells. Such companies may manufacture, repair or maintain the equipment used in oil extraction and transport. Services can include seismic testing (mapping the geological structure beneath the ground), transport services (such as movement of land and water rigs) and directional services (such as angled or horizontal holes).316 State-owned oil companies and international oil companies (IOCs) often lack such technical and geological skills and so turn to service companies.317

According to a 2010 report by GBI Research, the global oilfield services industry has witnessed considerable growth in recent years. It is expected to become a $200 billion industry by 2015 (up from $140 billion in 2008). In part this is due to the growth in activity in offshore fields around the world.318

Major trendsUnconventionals and offshore drillingIndustry observers predict that the burgeoning unconventional energy industry will create a boost in demand for the services industry. Production of shale oil and other unconventionals brings logistical and technological challenges and demands a huge increase in the number of rigs supplied. A surge in offshore drilling activity is also pre-dicted to boost demand. The Economist reported, for example, that American service provider Halliburton was planning to boost its workforce of 60,000 by 25 percent over 2011. Dahlman Rose, a bank, estimated that global exploration budgets would rise by around 14 percent in 2011 to US $533 billion.

According to reports in the Economist newspaper, the US is the centre of the oilfield service boom, where firms pioneered the technique of horizontal drilling in order to access shale oil and shale gas.319

Demand for local contentAccording to Ayman Asfari, CEO of UK-based Petrofac, national oil companies (NOCs) are increasingly demanding to see 'local content' (ie. local operators) playing a part in new contracts for exploration, production and plant construction. This puts interna-

315 'Emerging Asia struggles to cut soaring fuel subsidies', Financial Tribune, 1 April 2012.316 'Industry Handbook: The Oil Services Industry', Investopedia, retrieved 12 March 2012.317 'The oil-services industry: Rigging the market', Economist, 23 June 2011.318 'The Future of the Oil Fields Services Industry to 2015 - Rebound in Exploration and Drilling Activity Drives Growth', GBI Research, May 2010.319 'The oil-services industry: Rigging the market', Economist, 23 June 2011.

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tional oil companies at a disadvantage and creates an opportunity for oil services com-panies to build assets with local partners, maintain that asset for a period of time and then 'hand it back' to the NOC to run in the long term.320

Key industry playersAccording to Arabian Oil and Gas, as of 2008 the ten largest oilfield service companies globally were:

1. Schlumberger Limited

2. Halliburton

3. Saipem

4. Transocean Ltd.

5. Baker Hughes

6. Fluor

7. Weatherford International

8. BJ Services Company

9. Petrofac

10. China Oilfield Services Ltd.

An Economist report suggests that by offering a full range of oilfield services, the 'big four' of the industry (Schlumberger, Halliburton, Baker Hughes and Weatherford In-ternational) enjoy an advantage over smaller firms, as NOCs often prefer to deal with only one firm rather than deal with several.321

In 2011 a group of business school professors carried out a study to identify the 100 most innovative companies globally. They found that the oilfield services industries accounted for six of the top 100. Two of these were Schlumberger and Halliburton, and a further two were leading drilling equipment companies FMC Technologies and Cameron International. The remaining two were China Oilfield Services and Tenaris SA.322

320 'Ayman Asfari on Petrofac's road to Damascus', Telegraph, 30 October 2010.321 'The oil-services industry: Rigging the market', Economist, 23 June 2011.322 'Musings: The Innovators in The Oilfield Service Industry Identified', RigZone, 30 October 2010.

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Regulatory FrameworkOverview of Regulatory Framework in IraqIraq's oil and gas industry operates under the framework laid out by the 2005 Consti -tution. However while the constitutional document makes clear that the Iraqi people are the ultimate owners of the country's natural resources, there is less explicit clari-fication over the question of jurisdiction over hydrocarbon exploration and develop-ment between the central government and the regions.

A new hydrocarbons law intended to create a more stable investment regime re-mained stalled in parliament as of 2012, and in the meantime the federal system of re-source development (using technical service contracts) co-exists with the Kurdistan Regional Government's approach (preferring production sharing agreements), which are contested by central government.323

The northern Kurds have pursued an independent oil policy and took an important step towards that end by drafting their own oil law in 2007.324

Types of Oil ContractsSeveral types of oil contracts are in use throughout the world:

• concessions, in which the contractor owns the oil in the ground.

• production sharing agreements (PSA), in which the contractor owns a share of oil once it is out of the ground.

• service contracts, in which the contractor receives a fee for extracting the oil from the ground (service contracts are often depicted as a subset of PSAs).

• Joint ventures (JVs), in which the state enters into partnership with one or more oil companies.

The publication by Berlin-based OpenOil, 'Oil Contracts: How to read and understand them', notes that it is rare to find any contract that fits cleanly into any one of these categories, however, and in reality most contracts combine some elements of each.325

323 'Iraq Energy Outlook', IEA, 9 October 2012.324 'Iraq and the Kurds, the high stakes hydrocarbons gambit', International Crisis Group, 19 April 2012.325 'Understanding Oil Contracts', OpenOil, retrieved 14 January 2013.

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All oil contracts must address two key issues, according to Revenue Watch Institute (RWI): how profits, often called "rents", are divided between the government and par-ticipating companies and how costs are to be treated.326

ConcessionsConcessions are the oldest form of a petroleum contract, having first been developed during the oil boom in the United States in the 19th century.327 When they were intro-duced around the world, concessions were one-sided contracts favoring companies, according to Revenue Watch, when many of the resource-rich nations of today were dependencies, colonies, or protectorates of other states or empires.326

Concessions are based on the American system of land ownership, in which a land owner owns all resources in the ground under the land he owns and theoretically all resources in the air above it. Concessions grant an area of land, sub-soil resources in-cluded, to a company so that if a company discovers oil on a piece of land, it owns that oil. In concession contracts the contractor also has exclusive rights to explore and prospect for oil in that pre-defined area. While the benefit to companies comes dir-ectly in the form of ownership over any oil and gas found, governments granting con-cessions benefit in the form of taxes and royalties on oil and gas produced.327 Compan-ies compete by offering bids, often coupled with signing bonuses, for the license to these rights. This type of agreement is quite common throughout the world and is used in Kuwait, Sudan, Angola, and Ecuador, among other countries.326

Advantages and disadvantagesFor governments, concession contracts have the advantage of being relatively straightforward compared to other kinds of agreements, and the degree of profession-al support and expertise required is often less complex than that needed to negotiate JVs or PSAs. Also, the host government keeps the fees paid by the contractor regard-less of whether oil is found and commercial production takes place. All financial risks of development, including the costs of exploration, are absorbed by the contractor. The main disadvantage, for governments, of concession contracts is that companies bidding for the contract tend to be more cautious in their bids. If there oil and gas re-serves are not proven then there is no guarantee that a company's costs will be covered, so the host government may not maximize its potential return.326

Production sharing agreementsProduction sharing agreements (PSAs), sometimes called production sharing contracts (PSCs), do not vest a contractor with ownership over the oil in the ground. Instead ownership of the resource lies with the state. In this situation the PSA is drafted so that a contractor can extract the government's oil on behalf of the government. The PSA was first used in Indonesia in 1966, when the government decided to maintain

326 'A Reporter’s Guide to Energy and Development', Revenue Watch, retrieved 14 January 2013.327 'Understanding Oil Contracts', OpenOil, retrieved 14 January 2013.

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ownership of the oil in the ground, so that the international company had the right to explore for oil but gained the right to own it and sell it (or a portion of it) once it had been extracted. In Indonesia, according to Revenue Watch, the concession licensing method had been discredited as a legacy of imperialistic and colonial periods and the PSA system was developed in the context of a broader movement of 'resource nation -alism' among oil-producing countries worldwide.328 Since that time PSAs have spread globally and are now a common form of doing business, especially in Central Asia and the Caucasus.329

Oil companies are entitled to cost recovery for operating expenses and capital invest-ment, and receive a share of annual earnings - 'cost oil' - to this effect. Once the com-panies have used annual earnings to repay themselves, the rest - 'profit oil' - is shared according to the agreed percentage division with the host government.329

Advantages and disadvantagesAll financial and operational risk rests with the international oil companies in the PSA arrangement, and a host government has the added advantage that it shares any po-tential profits without having to make an investment, unless it agreed to do so. For companies, the advantage in some countries is that the PSA is superior to all other present and future laws, with the result that the government effectively surrenders its right to adopt new laws and regulations if they adversely impact any rights of the oil company under the PSA.329

A disadvantage of the PSA for host governments is that it puts a premium on highly professional negotiations, and the government must have access to technical, environ-mental, financial, commercial, and legal expertise. This is more feasible for some oil-rich countries than others.329

Service contractsLike a PSA, a service contract does not give an ownership right to oil in the ground. Unlike a PSA, in a service contract the international company never actually gains ownership, or 'title', to the oil produced either. In these cases the company is simply paid a fee for its services in extracting the government's oil.328

Joint venturesAnother arrangement, sometimes considered to be a fourth type of contractual ar-rangement, is the joint venture (JV), which involves the state, through a national oil company, entering into a partnership with an oil company or a group of companies. The JV itself is in this case awarded the rights to explore, develop, produce and sell petroleum.328 Because there is no commonly-accepted form or structure for JVs, they are less commonly used as the basic agreement between an oil company and a host government. JVs require host governments and companies to do things jointly, so if

328 'Understanding Oil Contracts', OpenOil, retrieved 14 January 2013.329 'A Reporter’s Guide to Energy and Development', Revenue Watch, retrieved 14 January 2013.

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the parties fail to work together the negotiations can be painstaking and disagreement common.330

Advantages and disadvantagesFor the government, the only advantage of a JV is that it is not alone in decision-mak-ing on oil and gas matters and can count on the expertise and shared stake of a major international company. One of the main disadvantages of JVs is that they require more extended negotiations and require much more legal advice because their format is so ambiguous. Additionally, costs must also be shared between the parties, meaning that the host government is a direct and responsible participant in the natural resource ex-traction, and responsibility also brings with it liability, including for environmental damage.330

Treatment of Oil in Iraq's 2005 ConstitutionThe Iraqi Constitution of 2005 functions as the regulatory framework of Iraq's oil and gas sector. The Constitution contains several provisions that address, in somewhat vague terms, the control and distribution of natural resources.331

Articles concerning natural resourcesOnly two articles of the Constitution contain provisions that deal with Iraq's natural resources: articles 111 and 112.332

Article 111 of the Constitution states: Oil and gas are owned by all the people of Iraq in all the regions and governorates.332

Hence, the ownership of any particular resource is not attributed to any particular group or geographical or political region.331

Article 112 of the Constitution states: First: The federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields, provided that it distributes its revenues in a fair manner in proportion to the population distribution in all parts of the country, specifying an allotment for a specified period for the damaged regions which were unjustly deprived of them by the former regime, and the regions that were damaged afterwards in a way that ensures balanced development in different areas of the country, and this shall be regulated by a law.

330 'A Reporter’s Guide to Energy and Development', Revenue Watch, retrieved 14 January 2013.331 'Oil and gas contracts in Iraq', Who's Who Legal, July 2010.332 'Iraqi Constitution', United Nations Assistance Mission for Iraq, retrieved 14 December 2011.

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Second: The federal government, with the producing regional and governorate governments, shall together formulate the necessary strategic policies to develop the oil and gas wealth in a way that achieves the highest benefit to the Iraqi people using the most advanced techniques of the market principles and encouraging investment.332

Because the term 'present fields' is not defined, it remains unclear whether it includes only fields that are currently producing or if it extends to other fields. Similarly, whether the currently producing fields include partially developed fields also remains unclear.Error: Reference source not found

The proper roles and authorities of federal and regional authorities for equitably shar-ing oil and gas and making strategic decisions is a further point of contention. 333 The Iraqi federal government and the Kurdistan Regional Government (KRG) continue to clash over this, which is why new sector legislation as of late 2012 remained stalled.334 The federal government maintains that the Constitution does not allow the KRG to ad-opt unilateral and permanent measures over the management of oil and gas fields. Un-der this interpretation any contract signed after the draft oil and gas law was agreed in February 2007 is deemed 'illegal' until reviewed and approved by the Iraqi Ministry of Oil.335

Nonetheless, the Constitution does not expressly authorize either the Ministry of Oil or the Ministry's Petroleum Contracts and Licensing Directorate (PCLD) to award con-tracts to international oil companies (IOCs) either. The Ministry of Oil interprets the legality of contracts awarded to IOCs on the grounds that:

1) the constitutional requirement for the approval of the Council of Representatives336 (the 325-seat main elected body of representatives in Iraq)337 only applies to interna-tional treaties and agreements between the State of Iraq and other states, so commer-cial contracts between Iraqi regional oil companies and IOCs do not need such approv-al, and

2) the technical service contracts (TSCs) were awarded under the proposed Hydrocar-bon Law (despite the fact that this is not yet approved by the Council of Representat -ives).336

Hydrocarbon Legislation in IraqThe 2005 Constitution called for legislation governing the oil sector338 and various drafts of new federal hydrocarbons laws have been under discussion in Iraq since 2006. Delays have arisen largely as a consequence of lack of consensus between central gov-

333 'Iraq's Next Government: What do the Kurds Want?', Time, 6 October 2010.334 'UPDATE 2 - Iraq's Shahristani retains hard line on Kurdish oil' Reuters, 10 October 2011.335 'Oil power struggle as US leaves Iraq', CNN ,12 December 2011.336 'Oil and gas contracts in Iraq', Who's Who Legal, July 2010.337 'Fact Sheet: Iraq's Council of Representative Election', United Nations Assistance Mission for Iraq, 11 February 2010.338 'Oil experts debate a new state oil company', Iraq Oil Report, 16 January 2011.

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ernment and the regions.339 Ben Lando of Iraq Oil Report goes so far as to assert that the legislation has become the grounds for a 'proxy battle' over the balance of powers between the central government, the semi-autonomous Kurdistan region, and the oth-er provinces.338

The much-discussed draft oil and gas law (or draft hydrocarbon law), key to resolving long-standing disputes over the exploitation of Iraq's reserves and boosting produc-tion, first received approval by the Iraqi Council of Ministers in February 2007.336 How-ever its approval by Parliament has been repeatedly delayed by the political stalemate between Baghdad and the regions. Due to the ongoing political disputes, as of late 2012 no framework law had been passed into law, and two competing drafts of the docu-ment were on the table awaiting further discussion in Parliament.340

The second key draft law is the Iraq National Oil Company Law, which would re-estab-lish the Iraq National Oil Company (dissolved in 1997), thereby creating once again a single entity to manage the country's oil business.340 These two laws are interdepend-ent. The hydrocarbons law would create a Federal Council for Oil and Gas (FCOG), which would set the policy carried out by INOC.341

In their analysis, Revenue Watch Institute state that despite the media's focus on the role of the private sector, the most contentious issue in Iraq's legal framework is the division of authority between the federal centre and the regions.342

Hydrocarbons lawThe Iraq Federal Oil and Gas Law has been referred to by Keith Myers or Revenue Watch Institute as "one of the most eagerly awaited and contentious pieces of legisla-tion in the oil industry worldwide."343 The stalled law should set out terms regulating how foreign oil firms will be able to operate in Iraq, resolve bitter disputes between the central government and Iraqi Kurdistan, and remove a key obstacle to the devel-opment of the country's hydrocarbon reserves.344

The differing drafts which have been discussed since 2007 are based on differing inter-pretations of the wording of the 2005 Constitution, much of which lacks clarity.343 In the summer of 2011 the Cabinet and Parliament each produced their own drafts of an oil law. The draft drawn up by the Cabinet concentrated state oil powers in the central government, while the Parliament version (supported by the KRG), distributes more authority to the regions. The Parliament Oil Committee approved its own draft in Au-gust 2011 and sent it to the full Parliament, but a group of MPs loyal to Prime Minister al-Maliki walked out of the session, broke quorum and effectively halted the law's pro-gress. Later in October 2011, Maliki and then-KRG Prime Minister Barham Salih agreed to restart negotiations taking an earlier draft law from February 2007 as a base, how-

339 'Iraq Energy Outlook', Internationa Energy Agency, 9 October 2012.340 'Iraq oil law deal festers as crisis drags on', Reuters, 26 January 2012.341 'Progress on two key oil laws', Iraq Oil Report, 1 July 2011.342 'Iraq Hydrocarbons Legal Framework', Revenue Watch Institute, retrieved 29 November 2012.343 'Breaking Iraq's oil-law stalemate', Petroleum Economist, 1 December 2011.344 'Iraq oil law deal festers as crisis drags on', Reuters, 26 January 2012.

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ever these talks never took place.345

All of the draft versions being considered would create a body called the Federal Oil and Gas Council (FOGC), on which regions, governorates and federal government are represented.343 However each version dictates a different structure of powers and re-sponsibilities. The Cabinet draft envisages an FOGC that reports to the executive, while many oil committee MPs believe it should be an independent body responsible to the Parliament.345

The prospect of a negotiated resolution to the impasse dimmed during 2011 following a political crisis sparked by the sacking and arrest of vice-president Tariq al-Hashemi,346 and deepened following disputes over contracts awarded by the KRG to Ex-xonMobil and other oil majors, and further disputes over crude exports.

In April 2012, Kurdish Oil Minister Ashti Hawrami told Iraq Oil Report that the Constitu-tion already grants Kurdistan the right to develop its resources with full autonomy, and suggested that a federal oil law may not even be needed in the KRG, which passed its own regional law in 2007.345

Iraq National Oil Company LawThe draft Iraq National Oil Company Law would re-establish the Iraq National Oil Com-pany (INOC) as a state-owned company managing all of the state interests in current and new fields and operating with a degree of financial and administrative autonomy.347

As a result of the law, the Ministry of Oil would be stripped of its operational respons -ibility to become more of a policy-making body.348 It would also be likely to acquire some powers currently held by the Kurdistan Regional Government (KRG). Supporters of the law assert that if the company is set up properly it would increase both the effi-ciency of the Oil Ministry and be a more effective steward of the industry. However Oil Minister Karim al-Luaibi stated in 2012 that "this law adds nothing to what the Min-istry of Oil is doing already."349

Since being proposed in 2007 this law has also undergone substantial changes and was stalled as of 2012.350

Local content provisionsAs of 2012 there were no measures in place in Iraq that mandate a certain level of local content in energy sector projects, that is legislation which obliges contractors to make use of local goods and services.347 Such concerns are instead addressed under Article 26

345 'Parliament rebuffs Cabinet oil law', Iraq Oil Report, 24 April 2012.346 'Iraq vice-president sentenced to death amid deadly wave of insurgent attacks', Guardian, 10 September 2012.347 'Iraq Energy Outlook', International Energy Agency, 9 October 2012.348 'Iraq oil law deal festers as crisis drags on', Iraq Oil Report, 24 August 2011.349 'Oil experts debate a new state oil company', Iraq Oil Report, 16 January 2011.350 'Parliament releases official draft oil and INOC laws', Iraq Oil Report, 24 August 2011.

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of Iraq's model technical service contracts, which stipulates that contractors should allocate a minimum of US $5 million annually to the country's Training, Technology and Scholarship Fund (TTSF),351 although this demand was reduced to $1 million for contracts awarded in Iraq's third licensing round.352

Oil and Gas Licensing RoundsIraq's First Licensing Round (2009)Oil Minister Hussein Shahristani launched Iraq's first licensing round in 2008. Bids on more barrels of oil in a single bid round than at any other time or place in history were made open to international oil companies353, who had not had any significant activity in oil operations in Iraq since nationalisation in 1974. Some 22 companies took part in the licensing round.354

In the end only one field, Rumaila, was awarded in the auction process itself, though two other fields, Maysan and West Qurna Phase 1, were subsequently awarded in bilat-eral negotiations.355

ProcessBy early 2008 companies were invited to pre-qualify for an auction process. Many ex-perts in resource transparency regard auctions as the best way to manage both the danger of corruption and asymmetry of information between governments and com-panies at the production award stage356.

On the 18 February 2008 the government announced some 35 international compan-ies, including many of the so-called 'majors', had passed the pre-qualification stage, out of a total of 140 companies who applied. They were evaluated on five criteria: technical, financial, legal, training, and HSE (Health, Safety and Environment).357

Between February 2008 and April 2009, the Ministry of Oil undertook a number of oth-er preparatory measures common for auctions, such as publishing packages of geolo-gical and other data for companies to review, running a roadshow to present the auc-tion opportunities in London and a workshop to explain the auction process358. The

351 'Model Producing Oil Field Technical Service Contract ('PFTSC')', 23 April 2009.352 'Gas Fields Bid Round In Iraq: Success With Risk', Middle East Economic Survey, 27 December 2010.353 'First Oil Bid Round: The Greatest Show On Earth', Wikileaks, 22 June 2009.354 'The Results', Iraq Oil Forum, 5 February 2009.355 'Oil Companies Making Moves In Iraq', Investopedia, 18 January 2010.356 'Managing the Curse of Natural Resources - a charter for politicians', Guardian, 5 February 2009357 'Iraq's First Licensing Round - qualification', Iraq Oil Forum, October 2008.358 'Iraq's First Petroleum Licensing Round', Petroleum Contracts and Licensing Division, retrieved 2

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government also published model contracts for oil359 and gas360 and invited company comments, which were then absorbed into a revision process in May 2009.361.

Evaluation criteriaThe government announced there would be two main criteria on which all bids would be judged:

Firstly, the production plateau offered by a consortium for any given field, where the higher the production they were guaranteeing the better. The government itself set a minimum production level it was prepared to accept for each field based on its re-serves and historic production, which varied between 2.75 million barrels per day (bpd) for Rumaila and 450,000 bpd at Maysan.

The second set of criteria related to the remuneration fee the consortium would ac-cept per barrel it produced once it reached the plateau - the lower the fee, the higher the companies would score. It was on this question that there were wide discrepancies between maximum remuneration fees set by the government, and offers made by the companies themselves. In the case of Rumaila, BP offered the lowest bid with an offer of $3.99 a barrel, but that was still double the maximum the government specified of $2 per barrel.362 At other fields the gaps were even wider. At Maysan, for example, the consortium led by CNOOC accepted a fee of $2.30 in later bilateral negotiations, having originally proposed a fee of $21.40.363

ResultsThe only award made as a direct results of the the auction round was to BP, in associ -ation with Chinese CNPC, for the Rumaila field, although the award was not immediate and bilateral negotiations continued until a deal was announced in November 2009.364

The other oil fields offered were Kirkuk, Zubair, Maysan, West Qurna Phase 1 and Bai Hassan. The gas fields of Akkas and Mansuriyah, which were included in the first li -censing round, were due to be offered again in the third round, due in September 2010.

The fact that only one award was announced in July 2009 out of so many bids and con-tract areas led some analysts to classify the process as failure365. In a leaked US diplo-matic cable during the period it was reported that the results were not a complete vic-tory and that Iraqi leaders said they would accelerate the second bid round and look at

August 2010.359 'The Model Producing Oil Field Technical Service Contract (PFTSC): An Overview', MEES, 6 July 2009.360 'Key legal issues in the third licensing round in Iraq's gas fields', Lexology, 2 August 2010.361 'Iraq Contract Revisions Clear Obstacles To Oil Expansion', MEES, 4 May 2009.362 'Iraq’s First Petroleum Licensing Round Rumaila Contract Area – Bidding Results', Petroleum Contracts and Licensing Directorate, 30 June 2009.363 'Iraq to Develop Maysan Oil Fields with Chinese Firms', Investors in Iraq, 3 October 2010.364 'BP in Ira'q, BP, retrieved 9 January 2012.365 'Iraq Oil Bidding in Shambles', Wall Street Journal, 1 July 2009.

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ways to make it "more effective" than the first round.366

Iraq's Second Licensing Round (2009)The second round of auctions offered by the Ministry of Oil took place over the 11-12 December 2009.367 The terms and process of the second round were similar to the first.368 The lead time to complete the auction process was faster for the second round than the first because the preliminary work had been done.369

Ten major oilfields were up for bid in the second round, which produced deals for sev-en of those fields. The fields receiving successful bids were Halfaya, Majnoon, Qayara, Badra, Garraf, Najmah and West Qurna 2. The three fields receiving no bids were East Baghdad, the Eastern Fields and Middle Furat.367

ProcessIn all, a total of 40 companies pre-qualified for the bidding round370 after submitting data proving they met the Iraqi Oil Ministry's criteria.371 The second round followed the same procedures as the first round with few deviations.

ResultsThere were 17 bidding consortia in total, and the seven winning consortia gained ac-cess to fields with proven reserves of 32 billion barrels of oil, or over a quarter of Iraq's proven reserves. The production projections from the companies winning bids in the second round had the potential to add about 4.8 million barrels of oil to its daily pro-duction total.372

The table below shows the make-up of the consortia, along with agreed per-barrel re-muneration fees and the agreed level of plateau production they should reach: 373

366 'Iraq,s First Oil Bid Round: Too Hard A Bargain'?, Wikileaks, 1 July 2009.367 '2nd Round of Bidding On Iraq’s Oil Fields Ends As A Success', Musings on Iraq, 14 December 2009.368 'Take Two: Iraq's All-Important Licensing Round', Offshore Technology 7 December 2009.369 'Iraq's Second Petroleum Licensing Round', Iraq Oil Ministry, retrieved 2 August 2010370 'Iraq’s Second Oil Bidding Round Bolstered by Exxon, Eni Deals', Bloomberg, 10 December 2009.371 'Announcement', Petroleum Contracts and Licensing Directorate, retrieved 8 December 2011.372 '2nd Round of Bidding On Iraq’s Oil Fields Ends As A Success', Musings on Iraq, 14 December 2009.373 'Second Licensing Round Bidding Results', Petroleum and Contracts Licensing Directorate, 12 December 2009.

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Field Company Home country Company type

Share in field

Service fee per barrel

($)

Production increase

(bpd)

Halfaya CNPC China State 50% 1.40 535,000

Petronas Malaysia State 25% 1.40 535,000

Total France Public 25% 1.40 535,000

Majnoon Shell UK/The Neth-erlands

Public 60% 1.39 1.8 million

Petronas Malaysia State 40% 1.39 1.8 million

Qayara Sonangol Angola State 100% 5 120,000

Najmah Sonangol Angola State 100% 6 110,000

Badra Gazprom Russia State 40% 5.50 170,000

Kogas South Korea State 30% 5.50 170,000

Petronas Malaysia State 20% 5.50 170,000

TPAO Turkey State 20% 5.50 170,000

Garraf Petronas Malaysia State 60% 1.49 230,000

Japex Japan Public 40% 1.49 230,000

W. Qurna 2 Lukoil Russia Public 85% 1.15 1.8 million

Statoil Norway State 15% 1.15 1.8 million

Iraq's Third Licensing Round (2010)Iraq held its third bid round on 20 October 2010374 for three gas fields: Akkas, contain-ing an estimated 158 billion cubic meters (bcm) of natural gas; Mansuriyah, containing approximately 130 bcm; and Siba, containing about 31 bcm.375

The Akkas and Mansuriyah fields had been included in the first round of licensing, but Mansuriyah received no bids and Akkas received only one bid that failed. Siba had ori-ginally been included in the second bid round, but was removed from the list before bidding began. Subsequently, the government had indicated that all three fields would be developed by national efforts, but then decided to offer the fields for auction in the third round after all.374

374 'Gas Fields Bid Round In Iraq: Success With Risk', Middle East Economic Survey, 27 December 2010.375 'Iraq inks final deal SKorea's KOGAS', Yahoo! News, 13 October 2011.

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ProcessThe contracts awarded in the third licensing round eliminated signature bonuses, a significant departure from the first two rounds. Additionally, the required annual commitment to the Training, Technology and Scholarship Fund,374 by which contract-ors facilitate on-the-job training in petroleum operations for Iraqi nationals and pro-mote research in oil and gas technology,376 was reduced from $5 million to $1 mil-lion.374

The conversion factor for converting natural gas volume deliveries into barrels of oil equivalent (boe) was also reduced from about 225 cubic meters to about 170, allowing companies to register larger volumes of gas production.377

ResultsAs a result of the third round, contracts were awarded to Korea's Kogas, Turkey's TPAO and Kuwait Energy Company (KEC). The table below shows the make-up of the consortia, along with agreed per-barrel remuneration fees and the agreed level of plateau production they should reach:

Field Company Home country

Company type

Share in field

Service fee per barrel ($)

Production in-crease (m. feet3/day)

Akkas Kogas S. Korea State 100% 5.50 400

Mansuriyah TPAO Turkey State 50% 7 320

KEC Kuwait Public 50% 7 320

Majnoon Kogas S. Korea State 20% 7 320

Siba KEC Kuwait Public 60% 7.50 100

Siba TPAO Turkey State 40% 7.50 100

Unlike the first two rounds, the third round was dominated by regional companies, with major international oil companies absent. Of the IOCs favoured by the Oil Min-istry, only Total submitted bids. They may have been repelled by tough payment terms and an uncertain security situation in Iraq, according to the Cyprus-based Middle East Economic Survey (MEES). Another suggested reason for the absence of some majors was their relative lack of exposure in Iraq and their reluctance to over-stretch their involvement under current circumstances.377

MEES also suggested that the regional and geographical proximity of the above firms, specifically TPAO and Kuwait Energy, played a role in their winning of the contracts. With its stake in the Siba and Mansuriyah fields, TPAO strengthened its foothold in the Iraqi upstream sector since it already had minority stakes in Badra and in the Maysan

376 'Model Service Development and Production Contract', North Oil Company, 23 April 2009.377 'Gas Fields Bid Round In Iraq: Success With Risk', Middle East Economic Survey 27 December 2010.

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group of oilfields. Kuwait Energy's involvement in Iraq, meanwhile, could help revive the export of Iraqi gas to Kuwait. According to MEES, there had been talk of reactivat -ing a pipeline from Rumaila to Kuwait that was operational in the mid 1980s.378

Iraq's Fourth Licensing Round (2012)Iraq's fourth licensing round took place on 30-31 May 2012, with twelve areas on offer, covering a total of 80,700 square kilometers.379 The bidding round included both unex-plored areas380 and newly discovered fields that had not yet been exploited.381

Seven of the twelve blocks included in the round were gas prone, while the rest have oil potential,382 containing a combined 29 billion cubic meters (bcm) of gas and 10 bil-lion barrels of crude oil.383

Iraq did not necessarily plan to begin development or production from any oil fields discovered, using them instead to maintain and boost reserves, according to Ab-dul-Mahdy al-Ameedi, head of the Petroleum Contracts and Licensing Directorate (PCLD). Reserve increases could offset expected depletion in other fields and strengthen Iraq's case in convincing OPEC to set an export quota for the Iraqi industry. Companies discovering gas, on the other hand, would be allowed to produce it.384

The twelve sites offered lie in the provinces of Nineveh, Diyala, Wasit, Basra, Muthanna, Qadisiya and Babil,383 as well Najaf, Karbala, Samawa, Diwaniya and Anbar, which were not included in the previous rounds.385 Eight of the twelve blocks are situ-ated in the west of the country along the Iraq-Syria and Iraq-Saudi borders.386

ProcessThe fourth round of licensing was the first to offer exploration contracts compared to the technical contracts offered in the first three rounds.386

The auction had originally been scheduled for November 2011, but was delayed re-peatedly, first to January 2012382 and then to 7-8 March before finally taking place in May.387 As for the cause of the delay, an Iraqi parliamentary committee had requested that the Oil Ministry defer the bid round and not sign any more contracts until a new

378 'Gas Fields Bid Round In Iraq: Success With Risk', Middle East Economic Survey, 27 December 2010.379 'Fourth Licensing Round in Iraq, results announced June 2012', Deloitte, June 2012.380 'Iraq 4th bidding round offers new opportunities for IOCs', Evaluate Energy 12 May 2011.381 'Iraq sets date for oil and gas licensing round', Al-Shorfa, 3 December 2011.382 'The Forthcoming Exploration Blocks Bid Round In Iraq: Issues For Consideration', Middle East Economic Survey, 6 June 2011.383 'Iraq Offers 12 New Oil Blocks in 4th Round', Iraq Business News, 25 April 2011.384 'Iraq reworks fees to bolster 4th energy auction', Reuters, 13 September 2011.385 'Iraqi Oil Ministry Prepares 4th Licensing Round', Iraq Business News, 21 March 2011.386 'Launch of the 4th Licensing Round in Iraq 2011', Deloitte Petroleum Services, 21 March 2011.387 'Iraq delays 4th energy auction to March next year', Reuters, 10 October 2011.

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hydrocarbon law had been approved.388 But Oil Minister Abdul Kareem al-Luaibi rejec-ted this request during a meeting in May 2011,389 and the cause of the eventual delays to the auction round were technical, according to the PCLD.390

The fourth bid round included 47 international oil companies (IOCs).391 All companies that qualified for the previous three rounds of licensing automatically qualified for the fourth, whether or not a contract was signed in previous rounds.392 The US oil firms Hess and ExxonMobil were excluded from participating in the fourth licensing round because of contracts they signed with the Kurdistan Regional Government (KRG),393 which the central government in Baghdad considers illegal.394

Changes to model contract and criteriaThe contract models used for the fourth auction round featured several changes com-pared to earlier rounds.395 The remuneration fee, or the amount the government pays to the companies for each barrel of oil produced,396 was calculated differently under the new contracts. Under the new formula companies were not paid for oil they pay subcontractors to produce. Instead the Iraqi government deducts the cost of subcon-tracts from total production and then pays remuneration on the remaining produc-tion. In other words, if total production is 1 million barrels and the contractor has spent the value of 300,000 barrels on a subcontractor, the contractor will receive pay-ment only for the remaining production, or 700,000 barrels. This new formula was aimed at cutting the cost of subcontracts395 and effectively ties companies' compensa-tion to their cost-efficiency.397

Another change from previous rounds was the criteria on which bids were judged. Previous rounds took into account not only the remuneration fee each bidder would charge, but also the amount of oil they agreed to produce. In the fourth round, with many of the bidding areas yet to be explored and with actual production therefore less certain, the remuneration fee was the only criterion. Under the new deals, contractors also faced restrictions on their ability to pump oil and gas in order to avoid over-sup-plying the market and overwhelming Iraq's underdeveloped infrastructure.397

ResultsThe fourth bidding round was seen by many in the industry as a failure, having failed

388 'The Forthcoming Exploration Blocks Bid Round In Iraq: Issues For Consideration', Middle East Economic Survey 6 June 2011.389 'Iraq MPs to Ask Parliament to Delay New Energy Round, Saad Says', Bloomberg 17 May 2011.390 'Iraq delays 4th energy auction to March next year', Reuters, 10 October 2011.391 'Fourth Licensing Round in Iraq, results announced June 2012', Deloitte, June 2012.392 'Iraq 4th bidding round offers new opportunities for IOCs', Evaluate Energy 12 May 2011.393 'Iraq’s Fourth Oil and Gas Licensing Round', Mayer Brown, 19 September 2012.394 'Exxon Mobile Threatens Its Oil Interests In Southern Iraq With Kurdish Deal', AK News, 24 November 2011.395 'Iraq reworks fees to bolster 4th energy auction', Reuters, 13 September 2011.396 'China initials Halfaya contract', T.D Asset and Trust, 7 January 2010.397 'Ministry unveils tough terms for 4th bid round', Iraq Oil Report, 14 September 2011.

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to attract the expected interest. Following the bidding round the Iraqi government began to speak of making changes to its contracts. Deputy Prime Minister for Energy Shahristani said in late 2012 that the plateau production target would be "slightly ad-justed" and the period for reaching the plateau was likely to be extended, giving in-vestors longer to recoup their investment and make a profit.398

The table below shows the make-up of the consortia which submitted bids, along with agreed per-barrel remuneration fees: 399400

Block Acreage (sq km)

Company Home country Company type

Share in block

Service fee per barrel

($)

Block 1 7300 no bids n/a n/a n/a n/a

Block 2 8000 no bids n/a n/a n/a n/a

Block 3 7000 no bids n/a n/a n/a n/a

Block 4 7000 no bids n/a n/a n/a n/a

Block 5 8000 no bids n/a n/a n/a n/a

Block 6 9000 no bids n/a n/a n/a n/a

Block 7 6000 no bids n/a n/a n/a n/a

Block 8 6000 Pakistan Petroleum

Pakistan State 100% 5.38

Block 9 900 KEC Kuwait Private 40% 6.24

TPAO Turkey Public 30% 6.24

Dragon Oil UAE Public 30% 6.24

Block 10 5500 Lukoil Russia Public 60% 5.99

Inpex Japan Public 40% 5.99

Block 11 8000 no bids n/a n/a n/a n/a

Block 12 8000 Petro Vietnam

Vietnam State 30% 9.85

Premier Oil UK Public 40% 9.85

Bashneft Russia Public 30% 9.85

398 'Will Iraq be the next oil superpower?'. Petroleum Economist, 12 December 2012.399 'Results of Fourth Licensing Round', Iraqi Petroleum Contracts and Licensing Directorate, retrieved 5 December 2012.400 'Fourth Licensing Round in Iraq, results announced June 2012', Deloitte, June 2012.

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Regional DynamicsIran-Iraq

SnapshotIran and Iraq have a long and complicated history in which factors of economic, reli -gious and military nature are often intertwined.401 The two countries fought the longest conventional war of the 20th century between 1980 and 1988 when Saddam Hussein invaded Iran after the Iranian Islamic Revolution.402

Iraq and Iran developed extensive economic ties following the fall of Saddam Hussein in 2003, with trade between the two states increasing tenfold between 2003 and 2010, according to Iranian officials.403 According to the United States Institute of Peace, Tehran has wielded substantial political influence in Iraq since 2003 and enhanced its 'soft' power in the economic, religious and informational domains. They also claim that Iran provided support to Shia insurgent groups and militias within Iraqi bor-ders.404

After visiting Iran in October 2010 and meeting with president Mahmoud Ahmedine-jad and Ayatollah Ali Khamenei, Iraqi Prime Minister Nouri al-Maliki described the two countries’ relationship as "strategic", saying "we ask Iran and our neighbors to support our reconstruction and to boost economic and commercial co-operation, which will help improve stability in our region."405

Iranian political influence in IraqUPI reports speak of Iran's "ceaseless efforts" to dominate its western neighbour polit-ically and economically since 2003. According to the reports, prior to US withdrawal from Iraq, Iran had been waging a clandestine war against US interests in Iraq and poured billions of dollars into building up a vast patronage and intelligence network in the country, giving them significant political influence. This trend was said to have accelerated since the withdrawal of American troops from Iraq in December 2011. 406 By uniting Iraq's three major Shi'ite political factions, the Islamic Supreme Council of Iraq (ISCI), the Dawa (Islamic Call) party and the Sadrists, Iran hoped to translate a Shi'ite demographic majority into political influence.404

401 'Iran-Iraq relations revisited: energy cooperation', The Gulf Research Unit, 21 February 2011.402 'Iran and Iraq: a history of tension and conflict', Guardian, 28 July 2011.403 'Iraq-Iran Foreign Relations', AEI Iran Tracker, 5 August 2011.404 'Iran and Iraq', United States Institute of Peace, retrieved 17 December 2011.405 'Iraqi PM courts Iran during visit', Al Jazeera, 19 October 2010.406 'OPEC: Iran-Iraq alliance weakens Saudis', UPI, 4 January 2013.

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This influence has been achieved with mixed success. Between 2003-2005, Iran helped assemble a Shia Islamist bloc, the United Iraqi Alliance, encompassing all three major Shia factions. The alliance won 128 of the 275 seats in the December 2005 Iraqi parlia-mentary elections, with senior Dawa leader Nouri al-Maliki selected as Prime Minister. The provincial elections in January 2009, however, were seen by US state organs to demonstrate the Iraqi public's rejection of Iran's political influence. Maliki's national-ist State of Law party made some gains, but the other two Shia political factions, the ISCI and the Sadrists, suffered setbacks.407

George Friedmann of US global security consultancy Stratfor said that "the possibility of Iraq becoming a puppet of Iran cannot be ruled out, and this has especially wide re-gional consequences."408

Cross-border fields and energy cooperationOil fields in border regions have long been a point of vital interest for both Iraq and Iran.409 After decades of contentious relations while Saddam Hussein was in power, culminating in the Iran-Iraq war from 1980-1988, Saddam's fall in 2003 provided a new opportunity for Iran and Iraq to re-embark on discussion of their shared frontier.410 Iraq and Iran have 23 joint oil fields in border regions, 411 including the Badra field and the Majnoon field, which geologists consider to belong to the same structure as Iran's Azadegan.412

The unitisation of these frontier fields, or agreement between entities on how to di-vide geological structures divided by a border, has the potential to create bilateral ten-sion, according to US diplomatic cables. Meetings between Iraqi and Iranian officials in 2009 helped negotiations on this issue gain some momentum, and as of March of that year the Iraqi Ministry of Oil was attempting to develop a model unitisation agree -ment to exploit the cross-border fields.412 In May 2010, Iraq and Iran agreed on a Mas-ter Development Plan (MDP) for the development of five shared, unnamed oilfields in the border region. Iran and Iraq have different legal and contractual systems to devel-op their oil and gas fields, but the MDP could be a step toward bringing shared field development onto the agenda, according to Iranian press sources.413

Iraq and Iran have also increased cooperation in the natural gas sector. In May 2011 the two sides signed a provisional agreement that would allow Iraq to import 25 mil-lion cubic meters (mcm) of Iranian natural gas per day and use it to power electric plants north-east of Baghdad.414 Then in July 2011 Iraq, Iran and Syria signed a $10 bil-lion deal in which the three states agreed to construct a natural gas pipeline from southern Iran through Iraq and extending to Syria; Iranian officials have indicated

407 'Iran-Iraq Relations', US Congressional Research Service, 13 August 2011.408 'OPEC: Iran-Iraq alliance weakens Saudis', UPI, 4 January 2013.409 'Iran-Iraq relations revisited: energy cooperatio'n, The Gulf Research Unit, 21 February 2011.410 'Iraq-Iran Foreign Relation's, AEI Iran Tracker, 5 August 2011.411 'Iran, Iraq Reach Deal on Joint Oilfields', Iraq Business News, 10 January 2011.412 'Iraqi Oil Ministry Negotiating Unitization Of Cross-border Fields', Wikileaks, 1 March 2009.413 'Iran, Iraq to Develop 5 Oilfield's, Iran Daily, 5 May 2010.414 'Iraq seeks Iranian gas for power generation', Bloomberg Businessweek, 23 May 2011.

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that the pipeline would eventually extend to the Mediterranean Sea through Lebanon. Under the deal, Iraq would initially receive about 20 mcm of natural gas per day.415

'Reserve wars' and the OPEC quota issueBoth countries are members of the Organization of Petroleum Exporting Countries (OPEC) which supplies about 40 percent of the world’s oil. 416 Estimates of proven re-serves are a sensitive issue among OPEC member states, as reserves are a main consid-eration behind the production quota each member is entitled to.417

Iraq and Iran have a history of conflict over the OPEC quota. During the Iran-Iraq war of the 1980s, for example, Iraq demanded an output quota equal to Iran's. As of late 2012 Iraq was still exempt from a quota as it recovered from years of war. 418 After Baghdad signed landmark agreements with international oil firms in 2009 to dramatic-ally raise its oil output, Iraq and Iran began a series of 'reserve wars' in which each side successively revised up its proven oil reserve estimates. In late 2010, Iraq raised its proven crude oil reserve estimates to 143.1 billion barrels, a rise of 25 percent. Weeks later Iran said its own oil reserves now stood at 150.31 billion barrels, a 9 per-cent rise over the previous estimate.417

If Iraq succeeds in its planned oil production increase from 2.7 million barrels per day (bpd) in December 2011419 to to 12 million bpd by 2017.420 the increased oil supply could cause global oil prices to drop. OPEC could then be forced to slash other member states' quotas, thereby reducing their global market share, in order to accommodate Iraq's new capacity and temper the drop in oil prices. In this case, Iran could be the hardest hit, according to industry analyst Samuel Ciszuk. He notes that Iran barely managed to break even fiscally on oil prices at 2010 levels, and permanent loss of its global market share could be a heavy blow.421 According to the International Business Times, Iran and Iraq's successive claims of higher reserves are a politically motivated attempt to build up a long-term defense of their respective OPEC quotas. Issam al-Chalabi, a former Iraqi Oil Minister, told Reuters news agency that both Iraqi and Irani-an claims of higher reserves were "unreliable" and unsubstantiated by proper evid-ence.421

Despite this warring period, UPI reported in early 2013 an emerging alliance between the two countries within OPEC, highlighting that an Iran-Iraq agreement, creating a strategic zone that produces at least one third of the world's oil supplies, could have immense geopolitical implications.422

415 'Iran inks gas pipeline deal with Iraq and Syri'a, AFP, 25 July 2011.416 'Iran, Iraq Reach Deal on Joint Oilfields', Iraq Business News, 10 January 2011.417 'WRAP: Iran's oil reserves revised up to 150.31 billion barrels', Platts, 11 October 2010.418 'Iran increases oil reserves estimate, passes Ira'q, Daily Star, 12 October 2010.419 'Bloomberg View: Why Iraq's Oil Flows Slowly; Speaking More Clearly at the Fed', Bloomberg, 15 December 2011.420 'Iraqi Oil Ministry Prepares 4th Licensing Round', Iraq-Business News 21 March 2011.421 'Middle East’s new oil war: Iran, Iraq gloat over reserve siz'e, International Business Times, 14 October 2010.422 'OPEC: Iran-Iraq alliance weakens Saudis', UPI, 4 January 2013.

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Saudi Arabia-Iraq

SnapshotA New York Times article in 2007 stated that a deep rift had emerged between Sun-ni-majority Saudi and its predominantly Shi'ite neighbour Iraq since the fall of the Ba'athist regime in 2003.423 In fact, relations between the two countries have oscillated between shared strategic interest - Saudi Arabia supported Iraq during its 1980-88 war with Iran - to military confrontation - Saudi Arabia hosted the US-led response to Sad-dam Hussein's invasion of Kuwait in 1990 and contributed its own troops to the war ef-fort.

In early 2012 Saudi Arabia named its first Ambassador to Iraq in more than two dec-ades, restoring normal diplomatic relations between the two for the first time since the invasion of Kuwait. According to New York Times this could signal Saudi Arabia's desire for a stronger presence in Iraq in order to buttress agains the influence of Iran in the country. Relations had become particularly strained since the 2003 US-led inva-sion of Iraq, leading to a Shi'ite-led government which cultivated closer relations with Iran and Iranian-supported political movements inside Iraq.424

In response to increasing Saudi interference in internal Iraqi politics, a leaked US dip-lomatic cable from 2009 revealed that Iraqi Prime Minister Nuri Kamal al-Maliki was so concerned about the meddling that he asked US President Barack Obama to stop the Saudis from intervening. He complained that Saudi's effort to rally the Sunnis were heightening sectarian tensions in the country.425

Fears that Iraq could regain its oil production quota within the Organisation of Petro-leum Exporting Countries (OPEC) had also led to complicated regional dynamics, since further growth of the Iraqi (and Iranian) economies could weaken Saudi influence on regional geopolitics.426

OPEC rivalryOver 2012 press reported rising tensions within OPEC between the Saudis and the Ir-aqis, a result of disagreements over how much oil to pump and what level to target for global oil prices. Competing ambitions arise because while the Saudis would prefer high oil prices to fund US $600 billion in planned social programs, the Iraqis are more focused on boosting production. Energy markets strategist Julius Walker notes that "ultimately there will need to be an agreement between the two as to how to balance these ambitions."427

423 'Saudis’ Role in Iraq Frustrates U.S. Officials', New York Times, 27 June 2007.424 'Saudis Pick First Envoy to Baghdad in 20 Years', New York Times, 21 February 2012.425 'Meddling Neighbors Undercut Iraq Stability', New York Times, 5 December 2010.426 'US withdrawal from Iraq: The kingdom betrayed', The Sunday Times, 31 July 2011.427 'Iraq's Oil Surge Could Threaten the Saudis', Bloomberg, 20 December 2012.

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The rising profile of Iraq is testing Saudi Arabia's usual role as "swing producer", the country within the group with enough spare capacity to tap in times of shortage and rich enough to withhold when the market is flooded.427 An emerging alliance between former foes Iran and Iraq in OPEC could also undermine Saudi Arabia, historically the oil cartel's dominant force.428

Baghdad-based oil expert Ruba Husari had stated that Iraq's rise as an oil producer would take "an important balancing act within OPEC to preserve the cohesion within the organisation while at the same time satisfy Iraq's huge needs which are bigger than any other member's", adding that "Iraq's potential return as a major oil producer undoubtedly creates a challenge for Saudi Arabia more than any other member in OPEC."429

Export infrastructureThe Iraq Pipeline through Saudi Arabia (IPSA) was constructed in the 1980s to trans-port Iraqi oil to the Saudi Red Sea port of Mu'ajiz.430 It ceased to be used during the Ir-aqi invasion of Kuwait in 1990 and was expropriated by Saudis in June 2001 as com -pensation for debts owed by Baghdad.431 They claimed that Iraq had not paid transit fees for many years.432

However in June 2012 the IPSA pipeline was reopened by Saudi Arabia in a move to off-set Iranian threats to close the Straits of Hormuz. This route would allow the Saudis to bypass Gulf shipping lanes and transport its crude from Red Sea terminals in case of such a move.431 The following month Iraqi officials called on Saudi Arabia to reverse a decision banning Iraq from exporting crude through the pipeline. Government spokesman Ali al-Dabbagh said that Riyadh does not have the right to ban Iraqi oil ex-ports through the line according to international law.432

Kuwait-Iraq

SnapshotAs of mid-2011, Iraqi-Kuwaiti relations remained politically charged and contentious, with disputes lingering over several contentious issues, including: the development oil and gas fields near or crossing the border; agreement on a land and sea boundary, which has been unclear since Iraq's 1990 invasion of Kuwait; and agreement to a price

428 'OPEC: Iran-Iraq alliance weakens Saudis',UPI, 4 January 2013.429 'Iraq to rival Saudi Arabia in OPEC oil stakes: Analysts', The Daily Star Lebanon, 24 December 2009.430 'Pipelines bypassing Hormuz open', Financial Times, 15 July 2012.431 'Saudi Arabia reopens oil pipeline with Iraq to counter Iran Hormuz threa',t Al Arabiya News, 29 June 2012.432 'Iraq says Saudi Arabia should allow oil exports through east-west pipeline', Platts, 19 July 2012.

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tag for reparations for Saddam Hussein-era grievances.433

Relations between Baghdad and Kuwait have made substantial progress in some areas. Kuwait re-opened its embassy in Iraq in 2008 after nearly 19 years of broken diplomat-ic relations between the two countries, while the Consulate of Iraq was opened in Kuwait in 2010. Nevertheless, the outstanding problems continue to lead to periodic tensions in the bilateral relationship.434

Cross-border fields and territorial disputesCross-border fieldsOne of the immediate stated reasons for Iraq's invasion of Kuwait in August 1990 was Saddam Hussein's allegation that Kuwait was drilling horizontally across the agreed international borders of the Rumaila oil field, effectively stealing Iraq’s oil.435

As of late 2012 there remained potential for disagreement over access to fields in bor-der zones. The Iraqi government announced in December 2011 that there were 10 oil fields in frontier regions that still needed an international boundary drawn between them, and that oil would be extracted from these fields only after finding joint mech-anisms between the countries.434 There has never been unitisation of these fields, meaning that the Iraq and Kuwait have never agreed to an equitable division of the fields' oil based on a technical assessment of how much of the reservoirs lie under each country.436 A high rate of production on one side of the border essentially sucks the oil from the other side and damages the reservoir,437 and unitisation of these fields would preserve the life of the reservoirs and allow both sides to recover more of the resources, according to US officials in a leaked diplomatic cable from 2009. 436 The Iraqi Oil Ministry formed a Border Committee in 2007 to examine all fields and structures adjacent to and crossing Iraq's borders, including those with Kuwait,438 but the lack of agreement on this issue remains a sore point, according to the cables.436

Territorial disputesAmong the fundamental border issues between Iraq and Kuwait is the latter's desire for the Iraqi government to formally recognise the international border as demarcated by the United Nations in 1993.439

Maritime issues are a major point of friction between the two sides. Access to Iraq's only significant commercial port, at Basra’s Umm Qasr, is via the narrow northern Persian Gulf and through the Khor Abdullah waterway, which Iraq shares with Kuwait. Over three quarters of Iraq's oil exports flowed through pipelines in this area as of

433 'Unresolved disputes mar Iraq-Kuwait relations', Iraq Oil Report, 14 July 2011.434 'Oil fields on Iraqi-Kuwaiti border await demarcation', AK News, 4 December 2011.435 'The Invasion of Kuwait', The Finer Times, retrieved 18 December 2011.436 'Iraq-kuwait: Cross-border Issues Affecting Iraq's Economy', Wikileaks, 2 July 2009.437 'Kuwait signs oil pact with Iraq', The National, 22 December 2010.438 'Iraqi Oil Ministry Negotiating Unitization Of Cross-border Fields', Wikileaks, 1 March 2009.439 'Port rivalry tests Iraq-Kuwait relation's, Financial Times, 14 September 2011.

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mid-2009, and Iraq's efforts to strengthen its economic lifeline have been hampered by the lack of agreement with Kuwait on a maritime boundary.440

Tensions were raised when Kuwait began building its $1.1 billion Mubarak al-Kabir port on Bubiyan Island, just a few kilometres from Iraq’s planned $4.6 billion Grand al-Faw terminal. The Mubarak port will directly compete and limit the traffic flow to al-Faw, and congestion could affect oil tankers sailing to Iraq's nearby Basra and Khor al-Amaya oil terminals.441 As of late-2011 there were concerns in Iraq that the Mubarak project could cause the country to lose up to 60 percent of its maritime traffic – mostly the larger cargo ships that already struggle to dock in Umm Qasr, the country’s only deep-water port.442

Though the Mubarak port officially lies within Kuwaiti borders, its location has angered Iraqi politicians, workers and tribal leaders, with Transportation Minister Hadi al-Ameri saying in mid-2011 that the Mubarak Port "demonstrates the clear in-tention of Kuwait to block shipping lanes from Iraqi ports."441 The construction of the port has prompted militant groups in southern Iraq to threaten to attack targets in-side Kuwait. In August 2011 the Iraqi Shia militia Kata'ib Hezbollah fired rockets into Kuwait, and warned further attacks would follow if work on the port continued. The leader of Iraq's Ghatarna tribe, meanwhile, warned that if the Kuwaiti project went ahead, “the clans will take the law into their own hands”.442

Reparations for 1990 invasionKuwait claims over $20 billion in reparations owed from Iraq's 1990 invasion. Iraq has agreed to continue setting aside 5 percent of its oil sales for this purpose, but has ar-gued that the $20 billion figure is excessive.441 The United Nations' Chapter VII sanc-tions on Iraq, which had supervised and enforced the compensation fund, expired on 30 June 2011443 and the two sides failed to subsequently establish a new mechanism for the payments. According to Iraq Oil Report, without an agreement Kuwait could take advantage of the absence of legal protection for Iraq's funds, which were removed when sanctions ended, and try to seize the funds in court.441

Remaining issues to be resolved before Iraq can be considered for full relief from Chapter VII sanctions, as of December 2011, include: the restitution of stolen property from Kuwait's national archives,444 the identification and repatriation of citizens who died as a result of the occupation,445 and an official statement by Iraq that it would not attack Kuwait in the future.444

Kuwaiti Airlines was also owed US $1.2 billion by Iraqi Airlines for planes and parts a

440 'Iraq-kuwait: Cross-border Issues Affecting Iraq's Economy', Wikileaks, 2 July 2009.441 'Unresolved disputes mar Iraq-Kuwait relations', Iraq Oil Report, 14 July 2011.442 'Iraqis Fear Impact of New Kuwait Port', Institute for War & Peace Reporting, 9 November 2011.443 'Full Details of UN Statement on Ira'q, Iraq Business News, 15 December 2010.444 'France attentive to pending Kuwaiti demands, urges Iraqi progress', Dinar Guru, 16 December 2011.445 'Kuwait signs oil pact with Iraq', The National, 22 December 2010.

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court ruled Iraq had stolen in the 1990s,446 a row which was part of the broader dis-pute. However in October 2012 the two countries reached an agreement under which Iraq would pay Kuwait $300 million in cash and invest $200 million in a joint airline venture in return for Kuwait lifting legal actions against Iraqi Airways.447

Turkey-Iraq

SnapshotAmerica's NPR reported in 2010 that Turkey is vying with Iran to be the most influen-tial regional power in Iraq and that Northern Iraq has become the 'staging ground' for Turkey's bid for economic dominance. Regional specialist Greg Gause went so far as to say that "the Turks have predominant influence of any foreign power, even rivaling the US, and they have done it through a clever and low-key strategy,". This is said to be in line with Turkey's aspirations to become an energy bridge between Europe and Asia.448

Turkey's Trade Ministry estimates that the trade volume between Turkey and Iraq ex -ceeded US $6 billion in 2010, up from only $940 million in 2003, boosting Iraq from Turkey's tenth largest trade partner to the fifth largest. As of 2011 there were over 117 Turkish companies working on energy, agriculture and industrial projects in Iraq. En-ergy is a key feature of bilateral relations between the two countries. In the third round of licensing in 2010, Turkey's state-owned TPAO was among the companies to sign deals for gas fields in the south, and Turkish companies are also active in the Kur -dish oil sector.449

However relations soured over the course of 2012, partly as a result of the expulsion and sentencing to death of Vice President Tariq al-Hashemi and Turkey's subsequent refusal to hand him over to Iraqi authorities when he took refuge in the country.450 An analyst at the Carnegie Endowment commented that "Turkey increasingly is seen as nurturing the Sunnis", and the souring relations led to the mayor of Basra encour-aging companies from other countries to compete against Turkish companies for con-tracts.451

Historical relationsFollowing World War II Turkey was a key ally of the West in the Middle East in order to contain those countries seen as 'Soviet clients', including Iraq. But during the 1990s Iraq was Turkey's lead trading partner, with the Turkish port of Ceyhan receiving oil

446 'Unresolved disputes mar Iraq-Kuwait relation's, Iraq Oil Report, 14 July 2011.447 'Kuwait clears Gulf War Iraqi airline settlement', Reuters, 23 October 2012.448 'Turkey Flexes Economic, Political Muscle In Iraq', NPR, 31 December 2010.449 Turunc, Hasan, 'Turkey and Iraq', 2011.450 'Tariq al-Hashemi: Turkey 'will not hand over' Iraq VP', BBC, 11 September 2012.451 'A Newly Assertive Turkey Dominates Trade With Ira:q, Wall Street Journal, 2 August 2012.

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by pipelines from Iraq's northern fields. However UN sanctions on Iraq took their toll on Iraqi-Turkish trade relations.

Since the 2003 invasion and the deep structural changes it triggered in the Middle East, contemporary Iraq has been the subject of competing power plays between Saudi Arabia, Iran and, to a lesser extent, Turkey. Turkey meanwhile gained international acclaim for pursuing a 'zero problems with the neighbours policy', a policy nurturing positive ties with neighbouring countries.452 However the crisis in neighbouring Syria from 2011 onwards, along with its closer relations between Ankara and Iraq's Sunnis and Kurds, raised doubts about the 'zero problems' policy. Prime Minister al-Maliki went so far as to claim that Turkey was stirring up ethnic divisions in the country.453

Turkish position on Kurdish IssueTurkey's attitude towards the Kurdistan Regional Government (KRG) has shifted since 2005. Despite increasingly strong economic ties, bilateral engagement between Iraq and Turkey has been constrained in the past by Turkey's rejection of rising Kurdish autonomy and the presence of PKK (Kurdistan Workers' Party) bases in northern Iraq, according to Oxford University's Hasan Turunc.452

However Turkey dominates the economy of the KRG region. The KRG estimates that in 2011 trade between Kurdistan and Turkey totalled US $8 billion454 and Turkish imports account for an estimated 80 percent of food and clothes sold. Private Turkish compan-ies have made significant investments in the region and Turkish energy companies such as Pet-Oil and Genel Energy have won bids to develop oil and gas fields in north-ern Iraq.455 Iraq Oil Report reported in November 2012 that a new Turkish state oil and gas company was negotiating with the Kurdish authorities to take stakes in several ex-ploration blocks.456

Turunc comments that Turkey attaches a great deal of importance to Iraq's stability and territorial integrity and sees those matters as crucial to its own security and sta-bility. In particular the future status of ethnically mixed Kirkuk, home to some of Iraq's largest oil reserves, is of great concern to the Turks. According to his analysis Turkey's principal anxiety is that the oil riches of Kirkuk will only encourage the KRG to seek greater autonomy, which could spill over and spark unrest amid Turkey's own Kurdish population. In his words, 'energy, economy and infrastructure form the crux of Turkish involvement in Iraq.'452

According to the Economist in 2009, the US encouraged the two sides to rebuild rela-tions and US officials telephoned Turkish president Abdullah Gul to praise "the grow -ing Turkish-Iraqi relationship", in the hope that friendship with Turkey would enable

452 'Turkey and Iraq', Academia, 2011.453 'Problems with the neighbours', Economist, 28 January 2012.454 'Kurdistan eyes major role in Turkish gas market', Petroleum Economist, 13 December 2012.455 'Erasing the Frontier:Turkey’s Trade and Investment in Iraqi Kurdistan', Tufts Global Leadership, 2011.456 'Turkey preparing major Kurdistan oil entry', Iraq Oil Report, 21 May 2012.

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Iraq's Kurds to export their oil and gas and check Iran's influence in the region.457 Genel Energy's Tony Hayward believes that by 2020 Kurdish gas exports could meet a fifth of Turkey's fuel import needs.458 In April 2012 the KRG halted exports to Turkey following a dispute with Baghdad, however in the same year Kurdistan and Turkey held discussions over the construction of an export pipeline which would bypass the central government's control. In a politically controversial move, the Kurds also began to export crude by truck over the border to Turkey in July 2012, in defiance of Bagh -dad.459

Export infrastructureTurkey's dependence on energy imports, particularly oil and gas, has grown fast as a consequence of high economic growth. In 2011 it consumed about 700,000 barrels of oil a day (bpd) but produced only 50,000 bpd460.

Turkey is also located geographically in close proximity to around 72 percent of the world's proven gas reserves and 73 percent of oil reserves.461 According to Khaled Al-Sharikh of Tufts University, Turkey's ruling Justice and Development Party (AKP) seeks to become a regional energy transit point and to diversify the source of its oil and gas imports. According to his analysis, Turkey is a geographically pivotal though energy-poor nation surrounded by energy-rich neighbors, and hopes to increase its weight in the international community through pipeline projects. In light of this, Tur-key is said to be eagerly searching for opportunities in Iraqi oil and gas.462

The vehicle for Iraqi oil exports to Turkey is the Kirkuk-Ceyhan oil pipeline, one of the country's most significant operational export links.463 But outside of this network, the likeliest route for gas to be transported directly from Kurdistan would take Kurdish gas to Fish Khabur, close to the Turkish border, from where Turkey could build the in -frastructure to take supplies to the domestic market.458

Iraqi gas is also of some importance to Turkey as a possible source of gas for the 'Southern Corridor' pipeline project to supply gas to Europe.464 The Petroleum Economist reported in September 2011 that Iraq was looking to export gas found in the blocks on offer in its fourth licensing round to Europe by pipeline through Turkey. Deputy Oil Minister Al-Shamma said that gas exports would only begin if sufficient gas supplies were found and that associated gas would not be exported by pipeline, as supplies are not as stable as 'free gas'. He also commented that Iraq did not need the Nabucco pipeline to deliver gas to Europe.465

457 'An unusual new friendship', Economist, 19 February 2009.458 'Kurdistan eyes major role in Turkish gas marke't, Petroleum Economist, 13 December 2012.459 'Turkey’s oil diplomacy with Iraqi Kurd's, Financial Times, 30 July 2012.460 'Turkey - U.S. Energy Information Administration', retrieved January 9, 2013.461 'Turkey's Energy Strategy', Turkish Ministry of Foreign Affairs, January 2009.462 'Erasing the Frontier:Turkey’s Trade and Investment in Iraqi Kurdista'n, Tufts Global Leadership, 2011.463 'Oil Export Routes - Iraq Looks for a Way Out', Petroleum Economist, 14 December 2010.464 'Northern Iraq looks to export gas via Turkey and Nabucco', Hurriyet Daily News, 5 July 2010.465 'Iraq Eyes EU Gas Exports Through Turke'y, Petroleum Economist, 8 September 2011.

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Common environmental concernsIraq faces the threat of desertification at an average rate of 0.5 percent a year. This desertification is also expected to impact Turkey. For example, in Turkey's Konya basin around 80 percent of water depletion has occurred over the last decade and the basin faces the prospect of complete desertification by 2030.466 The regional water crisis is thought to be influenced significantly by exploration activities in the oil sec-tor.467

According to Muhammad Amin Fars, General-Director of Kurdistan’s Irrigation and Water department 696,000 hectares of Iraqi agricultural land are now facing drought because of Turkish dams.468 There is also some disagreement over national allocation of water from the Euphrates and Tigris rivers, with Iraq asking for 65 percent of the water potential of the Euphrates and 92 percent of the Tigris, and Turkey planning to use around 52 percent of the Euphrates and 14.1 percent of the Tigris. According to Turunc, 'few commentators believe that water alone can become the cause of war between Turkey and Iraq; nevertheless its destabilizing impact is apparent'. 466 Greg Muttit of campaign group Platform also highlights that greater regional diplomacy with neighbouring Turkey is needed regarding their construction of upstream dams, in order to make progress on the water crisis.469

The 'Southern Corridor' Gas Transit Route to Europe

OverviewEurope has for many years relied on Russian natural gas imports to supply its energy needs, but particularly following the dispute over prices between Russian Gazprom and transit country Ukraine in 2009,470there have been moves to diversify the supply routes to Western Europe.471

Owing to its environmental benefits and the growing unpopularity of nuclear power, natural gas is becoming a preferred fuel in the European energy market. Germany in particular, a major consumer of Russian gas, is bound to rely more on natural gas as it plans to phase out nuclear power by 2022. EU officials noted in 2011 that Europe’s an-nual gas consumption was around 500 billion cubic metres (bcm) per year, of which 125 bcm per year was from Russia.472 The EU's efforts to establish a 'southern gas cor-

466 'Turkey and Ira'q, Academia, 2011.467 'Iraq may suffer clean water crisis in 15-20 years', Reuters, 21 September 2011.468 'Water conflict threatens regional relations', Niqash, 5 May 2009.469 'Mission Accomplished for Big Oil?',Huffington Post, 23 August 2012.470 'Russia shuts off gas to Ukraine', BBC, 1 January 2009.471 'Azerbaijan-Turkey gas-deal key to Caspian Supply', Petroleum Economist, 1 January 2009.472 'Taking a Second Look at the Southern Gas Corridor', Oil Price, 10 May 2012.

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ridor' are part of a energy supply diversification project aimed at freeing Europe from its dependence on Russian gas.473

Commenting on the geopolitical implications of the pipeline politics in Europe, in-dustry commentator Pepe Escobar asserts that the new 'Great Game' of the twenty first century is over energy and that it is being played out on the 'immense chessboard called Eurasia'. In its most simplified form it has been Nabucco (a pipeline project sup-ported by the US) versus South Stream (supported by Russia), and revolves around European countries trying to circumvent Russia in securing energy supplies. Accord-ing to Escobar, Nabucco and the Baku-Tbilisi-Ceyhan pipeline have never been seen simply as infrastructure projects but as a 'creature of Washington'.474

Source of suppliesGas volumes for Nabucco and other pipelines could come from a variety of producing countries, including Azerbaijan, Turkmenistan and Kazakhstan as well as Iran, Iraq and potentially other Persian Gulf producers. A report by the Oxford Institute for En-ergy Studies suggested that political instability in the Middle East has reduced the op-tions to Central Asian suppliers.475 However Turkish Energy and Natural Resources Minister Taner Yildiz said in late 2012 that Turkey is ready to act as a gas supply cor -ridor from northern Iraq to Europe along the 'corridor'.476

Supplies from Turkmenistan and Kazakhstan would rely on the construction of the proposed Trans-Caspian Pipeline (TCP).475

European pipeline selection processBelow are brief outlines of the two pipeline projects still on the table for transporting gas from Azerbaijan and Central Asia to Europe as of July 2012. The South-East Europe Pipeline (SEEP) project was the final option to be eliminated from the selection pro-cess, when in June 2012 the consortium operating the Shah Deniz field preferred the Nabucco West option.477 SEEP, a lower cost and lower capacity export option extending from Bulgaria to Central Europe, was dropped by its initial backers BP.478

Nabucco (Nabucco West)The Nabucco project was initiated in 2002 and was actively promoted by the EU under its Trans-European Energy Networks initiative. It was initially projected to carry 8-13 bcm of gas per year, the volumes rising to 31 bcm per annum by 2020. In May 2008 the

473 'Trans-Caspian pipeline talks progressing', UPI, 16 March 2012.474 'Jumpin' Jack Verdi, It's a Gas, Gas, Gas: Iran and the Pipelineistan Opera', Truthout, 1 October 2009.475 'Kazakhstan’s Gas: Export Markets and Export Routes', Oxford Institute for Energy Studies, November 2008.476 'TANAP project to accelerate Nabucco project implementation', Natural Gas Europe, 26 December 2012.477 'Nabucco West and TAP go head to head', Petroleum Economist, 2 July 2012.478 'BP-led consortium rules out SEEP pipeline', Financial Times', 28 June 2012.

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construction cost of the Nabucco pipeline was estimated at €7.9 billion ($12.3 billion).479

The initial project was conceived to run 3,893 kilometres (km) from the Georgi-an-Turkish border to Baumgarten in Austria.480 Whereas 'Nabucco West' is a revised version of the original Nabucco pipeline, and was chosen by the BP-led consortium op-erating the Shah Deniz Gas Field as the 'northern route' candidate for the pipeline, to compete head-to-head with the 'western route' option, the Trans-Adriatic Pipeline.481

According to the Petroleum Economist, the consortium's decision to opt for Nabucco West gave a boost to the project, which in its original form was unable to attract suffi-cient gas supplies and deemed too expensive.477 Over its lifetime the project faced such repeated delays that Gerhard Roiss, CEO of OMV commented that the pipeline “will be pronounced dead 100 times, but it will be alive again 101 times.”480

The revised route would instead begin at the Bulgarian-Turkish border and run 1,312 kilometres to Baumgarten, carrying 10 bcm per year. The segment of the original Nabucco route crossing Turkey was made unnecessary when Azerbaijan and Turkey agreed in late 2011 to build the Trans-Anatolian Pipeline (TAGP/TANAP). Partners in the project include Turkish BOTAS, Bulgarian Energy Holding, Hungarian FGSZ, Austri-an OMV, Germany RWE and Romanian Transgaz.482

Trans Adriatic Pipeline (TAP)The TAP proposed to take 10 billion cubic metres (bcm) per year of natural gas across Greece and Albania, continuing underneath the Adriatic sea to the heel of Italy's boot, its backers claiming that these volumes of gas could later be doubled. The TAP consor-tium comprises of German E.ON (15 percent stake), Swiss EGL (42.5 percent) and Nor-wegian Statoil (42.5 percent). In February 2012 the Shah Deniz consortium indicated a preference for the TAP over the rival Interconnector Greece-Turkey-Italy (ITGI) option as the 'western-route' candidate ahead of making a final decision.482

According to the Financial Times Statoil and other bakers of the TAP route have urged that commercial decisions should govern the final decision, based on a neutral stance by the EU, despite historical EU support for Nabucco.483

North and South StreamRussia's answer to the Nabucco and the other EU-backed options is the South Stream pipeline, a US $15 billion project stretching for 1,200 kilometres under the Black Sea from Russia to Bulgaria. The pipeline is scheduled to be completed in 2015, and from Bulgaria one branch would run south through Greece to Southern Italy, while the oth-

479 'Kazakhstan’s Gas: Export Markets and Export Routes', Oxford Institute for Energy Studies, November 2008.480 'Nabucco West Selected As Potentaial Route For Azeri Gas', Bloomberg, 28 June 2012.481 'Nabucco West in pipeline 'final'', Asia Times Online, 7 July 2012.482 'Nabucco West in pipeline 'final'', Asia Times Online, 7 July 2012.483 'BP-led consortium rules out SEEP pipeline', Financial Times', 28 June 2012.

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er would run north through Siberia and Hungary towards northern Italy. 484 Nord Stream will be capable of carrying 63 billion cubic metres (bcm) per year.485

The $9.1 billion Nord Stream pipeline would take natural gas from Western Russia un-der the Baltic Sea to Germany. Russian energy firm Gazprom holds a controlling 51 percent interest in the project, with German and Dutch companies holding the re-mainder. The chairman of the board is former German Chancellor Gerhard Schroeder.483 Nord Stream would have a capacity of 55 bcm per year.485

484 'Jumpin' Jack Verdi, It's a Gas, Gas, Gas: Iran and the Pipelineistan Opera', Truthout, 1 October 2009.485 'Taking a Second Look at the Southern Gas Corridor', Oil Price, 10 May 2012.

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International EntitiesOperating Environment in Iraq

Southern IraqBetween 2008 and early 2010 Iraq awarded a dozen contracts to international oil com-panies (IOCs), including Royal Dutch Shell, BP, ExxonMobil, Lukoil and CNPC of China to develop the reserves in the south of the country.

According to Maria van der Hoeven of the International Energy Agency (IEA), the prin-cipal obstacle for companies operating Iraq are the legal questions raised by the gov-ernment's failure to pass a hydrocarbons law to regulate the industry. Other obstacles are an immature oil field services industry, complex geology,486 infrastructure bottle-necks and ongoing security concerns.487 Corruption is also an obstacle to operations (in 2012, Transparency International ranked Iraq as only the 175th most transparent country in the world).

From the perspective of IOCs, the technical service contracts offered in the south are increasingly seen as less attractive than the production sharing contracts (PSCs) offered by the KRG to the north. Eni's CEO, for one, commented in 2012 that "our ad-renaline rush now is not what it was when we entered Iraq. Iraq is more complex than we thought." The Petroleum Economist's Derek Brower suggested that the Technical Ser-vice Agreements (TSAs) may prove more attractive to national oil companies (NOCs), particularly those from Asia, which seek the stability of a per-barrel arrangement rather than the lucrative but higher risk production sharing agreements (PSAs) offered elsewhere.488

While security conditions have improved since the days of the civil war, occasional at-tacks remind companies that they could become targets. Bombings of pipelines and other facilities have subsided but are still a feature of the security environment. In early 2010 a note was found in a discovered weapons cache in Basra which threatened foreign oil companies, and in 2012 four employees of Athens-based Consolidated Con-tractors Company (CCC) were kidnapped in Basra.489 Even once security issues are re-solved, local issues presented by communities around the oilfields living in poverty have presented problems, according to security firm Control Risks.488

486 'As Kurdistan oil booms, deal-making accelerates', Iraq Oil Report, 3 December 2012.487 'IEA predicts boom in Iraq oil production', Financial Times, 9 October 2012.488 'Will Iraq be the next oil superpower?', Petroleum Economist, 12 December 2012.489 'Oil workers kidnapped in Basra', Iraq Oil Report, 17 May 2012.

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Iraqi KurdistanThe first companies to invest in the semi-autonomous Kurdistan region in the north of Iraq were smaller, less well-known outfits such as Norwegian DNO and Turkish PetOil. They were followed by mid-tier majors such as Marathon and Hess, and over the course of 2012 by super-majors ExxonMobil, Total, Chevron and Gazprom.490 However Baghdad considers the deals signed directly with the Kurdistan Regional Government (KRG) as illegal and the moves have led to ongoing disputes between the centre and the periphery.491

A senior KRG official estimated that in 2012 there were around 45 to 50 contractors op-erating in the region, but according to Iraq Oil Report the Kurdistan region witnessed a flurry of mergers and acquisitions in 2012, a process actively encouraged by Natural Resources Minister Ashti Hawrami. This may result in a smaller number of players be-ing involved in the coming years as the remaining blocks are snapped up and smaller companies struggle to raise the financing required and get squeezed out.490

While reserves are smaller in Kurdistan than in the south, many investors are attrac-ted by other favourable conditions. Aside from the more attractive contract regime used by the KRG, fewer delays are experienced at customs for imports of parts and ma-terials than going through Basra. This has resulted in many companies operating in the south importing their materials via Kurdistan, according to the Petroleum Econom-ist. Power supplies and other infrastructure in Kurdistan is also superior, according to the Iraq Energy Institute, and security conditions are more favourable.492

BPType Public Limited Company

Traded as LSE:BP

Founded 1909 (as Anglo-Persian Oil), 1954 (as British Petroleum)

Headquarters London, UK

Key people Carl-Henric Svanberg (Chairman), Bob Dudley (CEO)

Revenue US $386.5 billion (2011)493

Profit US $26.1 billion (2011)493

Total assets US $293.1 billion (end 2011)493

490 'As Kurdistan oil booms, deal-making accelerates', Iraq Oil Report, 3 December 2012.491 'IEA predicts boom in Iraq oil production', Financial Times, 9 October 2012.492 'Oil workers kidnapped in Basra', Iraq Oil Report, 17 May 2012.493 'Annual Reporting 2011', BP, 2012.

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Total equity US $112.5 billion (end 2011)493

Employees 83,400 (end 2011)494

Website www.bp.com

Global snapshot BP is a British global energy company headquartered in London, ranked in 2010 by Platts as the second largest energy company in the world based on financial perform-ance, trailing ExxonMobil. It improved its position from fourth in the rankings in 2008.495

BP began business as Anglo-Persian Oil in 1909,496 which exported its first cargo of oil in March 1912 from Abadan in Iran. From 1914 until the 1980s, the British government were the company's principal stockholder and since then BP have acquired the Stand-ard Oil Company in 1987, merged with US company Amoco in 1998 and acquired At-lantic Richfield and Burmah Castroland in 2000.497

At the end of 2011 BP had total proven global reserves of 17.75 billion barrels of oil equivalent (boe) and produced 2.35 million barrels of oil per day (bpd) through the year.494

However, BP has since 2010 been dealing with the aftermath of the Macondo oil spill in the Gulf of Mexico, the US's largest ever oil disaster. The Deepwater Horizon oil well explosion killed 11 workers and is estimated to have affected around 1,000 miles of shoreline, 200 miles of which were thought to be 'heavily oiled'. However, the exact extent of the spill has been disputed by different parties.498 The company made the de-cision to sell none-core assets in order to pay for the clean-up operation and to com-pensate victims. In October 2011, BP finally received authorisation to resume drilling at the site499 and in November 2012 the company settled all claims with the US Depart-ment of Justice and the Securities and Exchange Commission for $4.5 billion.500

BP operations in IraqHistory BP's relationship with Iraq dates back as far as 1927, when along with Exxon, Total and Shell, it had a 23.75 percent share in the Iraq Petroleum Company (IPC). 501 Following

494 'BP at a glance', BP, retrieved 17 December 2012.495 'Platts Top 250 Global Energy Company Rankings', Platts Energy, retrieved 25 October 2011.496 'Business: The Company File From Anglo-Persian Oil to BP Amoco', BBC News, 11 August 1998.497 'BP PLC', History.com, retrieved 25 October 2011.498 'Deepwater Horizon and the Gulf oil spill - the key questions answered', The Guardian, 20 April 2011.499 'Oil giant BP reaches 'turning point'', BBC News, 25 October 2011.500 'Record $4B Settlement For BP On Criminal Charges Regarding Macondo Accident', Forbes, 15 November 2012.501 'Oil Giants Return to Iraq', The Independent, Friday, 20 June 2008.

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contracts signed in the 1930s, the IPC gained full control over Iraq's oil502 and thus kept Iraq's oil reserves under foreign control for more than 40 years.501

BP continued working in Iraq for many years and helped to discover the super giant field Rumaila, located 32 kilometers from the Kuwaiti border, in 1953503 before closing its representative office there due to the war with Kuwait in 1990504. BP restarted work in Iraq, more specifically on Rumaila, in April 2005 after signing a service agreement with Iraq's Oil Ministry.505.

Activities and contracts

Rumaila

BP was the first oil major to secure a long-term contract in post-2003 Iraq. 506507 In a venture with China National Petroleum Company (CNPC), BP made a successful bid for a service contract in the Rumaila oil field, Iraq’s largest, in the first postwar contract licensing round in June 2009.508 BP and CNPC won the bid after agreeing to cut their re-quested remuneration fee from US $3.99 per barrel to $2 per barrel. 506 BP holds a 38 percent stake in the venture, while CNPC holds 37 percent and Iraq takes the remain -ing 25 percent.509

BP wrote in its 2009 Annual Review that it intended to increase production in Rumaila from approximately 1 million barrels per day (bpd) to 2.85 million bpd510 and together with CNPC plans to spend around $15 billion at Rumaila511 by 2017, according to the Defence Report website.512 At the end of March 2010 the company announced that it had awarded $500 million in contracts to drill wells at Rumaila513 and over the course of 2010, BP and CNPC drilled 41 out of the 70 wells originally planned.514 BP’s former head of production Andy Inglis suggested in April 2010 that the field may become the world’s second-largest by 2015.511 The Wall Street Journal wrote in March 2010 that if successful, the effort to expand production at Rumaila, along with other fields in Iraq's south, could mark one of the largest expansions of oil production ever achieved.513

The Guardian newspaper in July 2011 reported that BP had secretly renegotiated its ser-

502 'BP – Stealing Iraq’s Futur ', Shareholder Briefing by PLATFORM, April 2008. 503 'Rebirth of Rumail ', O&G Next Generation Magazine, February 2010 edition.504 'BP-Led Consortium Wins Iraq Oil Deal', CBS News, 17 October, 2009 505 'BP in Rumaila', from speech by Michael C Daly, BP Head of Exploration, on 16 February 2010. 506 'BP's Iraq oil deal faces court battle', 23 January 2010.507 'BP and CNPC sign first major oil deal with Iraq in almost 40 years', The National, 8 October 2009.508 'Iraq, Oil and Gas Legislation, Revenue Sharing, and U.S. Policy', Middle Eastern Affairs, 3 November 2009. 509'BP-China National Group Signs Pact for Iraq Oil Field ', Wall Street Journal, 4 November 2009.510 'BP's Annual Review', BP, 2009. 511 'BP to Be Paid in Crude for Iraq Investment Costs ', Bloomberg, 28 April 2010. 512 'Growing British investment in Iraq threatened by Russian competition', Defence Report, 2 November 2012.513 'BP Begins Big Push to Revive Iraq's Oil ', Wall Street Journal, 31 March 2010.514 'Petrofac JV snags Rumaila job', Oil Online, 29 June 2011.

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vice contract for the Rumaila field, in which the Baghdad government agreed to pay the firm even when Rumaila oil is not being produced. Under the new terms BP would be immediately compensated for civil disruption or government decisions to cut pro-duction. The story quoted critics who see this as a major step away from the original terms of the deal signed in the summer of 2009, including author Greg Muttitt, who called the renegotiation "a backroom deal that gave BP a stranglehold on the Iraqi economy, and even influence over the decisions of OPEC."515

Kirkuk

Reuters reported in April 2012 that Iraq's central government in Baghdad wanted BP to revive the ageing Kirkuk oil field in northern Iraq, which is suffering from massive production declines. Reuters cited industry sources saying that the government was seeking to strengthen its position in a dispute with semi-autonomous Kurdistan over ownership of northern Iraqi fields, and that bringing BP into Kirkuk could allow the Ir-aqi government to counter ExxonMobil's move into Kurdistan. The story indicated that BP was actively considering Kirkuk, but that this was in the early stages and nego-tiations had not yet begun.516

Chevron CorporationType Public Limited Company

Traded as NYSE:CVX

Founded 1984517

Headquarters San Ramon, California.518

Key People John Watson (Chairman and CEO)519

Revenue US $244.4 billion (2011)520

Net income US $ 26.9 billion520

% change on previous year +41.4%520

Total Assets US $209.5 billion (end 2011)520

Employees 57,376 (end 2011)520

Website www.chevron.com

515 'BP 'has gained stranglehold over Iraq' after oilfield deal is rewritten', The Guardian, 31 July 2011.516 'Iraq wants BP to revive northern Kirkuk oilfield', Reuters, 17 April 2012.517 'Company Profile', Chevron, retrieved 22 January 2012.518 'A Brief History Of Major Oil Companies In The Gulf Region' University of Virginia, retrieved 22 January 2012.519 'Corporate Officers', Chevron, retrieved 22 January 2012.520 '2011 Annual Report', Chevron, 2011.

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Global snapshotAs of 2011 Chevron was the second largest integrated oil firm headquartered in the USA, following ExxonMobil.521 The company can trace its history back to an oil discov-ery at Pico Canyon, north of Los Angeles, in 1879, which led to creation of the Pacific Coast Oil Company. The company was subsequently renamed the Standard Oil Com-pany of California, which emerged from the breakup of Rockefeller's Standard Oil. and later became Chevron when it acquired the Gulf Oil Corporation in 1984, at the time the largest merger in US history.522

At the end of 2011 Chevron had net proven oil reserves of 4.3 billion barrels and net proven gas reserves of 25,229 billion cubic feet (7.14 billion cubic metres). Daily li -quids production was 1.85 million barrels per day (bpd) and gas production was 4.94 billion cubic feet (1.4 billion cubic metres) per day.523

In late 2011 Chevron was banned by Brazilian regulators for drilling on their territory after they suffered an oil spill off the Atlantic coast.524 Chevron was reported to be nearing a settlement in late 2012 for around US $144 million, in order to move towards restarting output.525

Chevron operations in IraqHistoryDuring the period of international sanctions on Saddam Hussein's regime, Chevron was one of the companies that purchased crude from the regime as part of the UN Oil-for-food program designed to bring humanitarian aid to the Iraqi people. In November 2007 Chevron agreed to pay $30 million to settle charges brought against it under the Foreign Corrupt Practices Act (FCPA), but did not admit or deny the allegations made by the Securities and Exchange Commission (SEC). The charges related to approxim-ately $20 million in illegal kickback payments made to Iraq in 2001 and 2002.526

In a leaked US diplomatic cable from 2010, Chevron's country manager for Iraq ex-pressed the company's eagerness to invest in post-Saddam Iraq, but "not at any price". According to the cable, Chevron expressed strong interest in a bid round for explora-tion blocks, which it considered to be politically and economically attractive, however the cable described Chevron's approach towards Iraq as more cautious than other in-ternational oil companies (IOCs). Chevron was included on the list of pre-qualified

521 'Chevron Corporation', Hoovers, retrieved 22 January 2012.522 'Company Profile', Chevron, retrieved 22 January 2012.523 '2011 Annual Report', Chevron, 2011.524 'Chevron Banned From Drilling In Brazil After Oil Spill', Forbes, 23 November 2011.525 'Chevron nears settlement in Brazil spill case', Reuters, 14 December 2012..526 'Chevron to Pay $30 Million to Settle Charges For Improper Payments to Iraq Under U.N. Oil For Food Program', Securities and Exchange Commission, 14 November 2007.

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companies to participate in the first licensing round527 and the company was French Total's original partner for both bidding rounds in 2009, but ultimately refused to join the bidding, regarding the remunerations fees offered as unreasonably low.528

Activities and contracts

Rovi and Sarta (Kurdistan)

On the 19 July 2012 Chevron announced that its subsidiaries in Iraq had completed a deal to acquire an 80 percent interest in two blocks in the northern Kurdistan Region, the Rovi and Sarta blocks. The remaining 20 percent interest was taken by OMV subsi-diaries. under the framework of a production sharing contract (PSC). The blocks lie north of Erbil, covering a combined area of approximately 1,124 square kilometres. 529 In retaliation for the contracts signed with the KRG, later that month Iraq's federal government 'blacklisted' Chevron, banning them from bidding for exploration li-censes in future licensing rounds. The central government considers contracts signed directly with the KRG as illegal.530

China National Offshore Oil Corporation (CNOOC)

Type State-owned

Traded as SEHK: 0883 ; NYSE: CEO

Founded 1982

Headquarters Beijing, China

Key People Fu Chengyu (Chairman), Yang Hua (CEO)531

Revenue RMB 240.9 billion (approx. US $38.6 billion ), 2011.532

Net Income RMB 70.3 billion (approx. US$11.3 billion), 2011.532

% change on previous year +29.1%532

Total Assets RMB 384.3 billion (approx. US$61.6 billion), end 2011.533

527 'Oil Ministry Announces Qualification Results', Wikileaks, 15 April 2008.528 'Chevron On Ioc Investing In Iraq', Wikileaks, 20 February 2010.529 'Chevron Acquires Interest in Kurdistan Concession's, Chevron, 19 July 2012.530 'Iraq bans Chevron over Kurdistan deal', Financial Times, 24 July 2012.531 'Annual Report 2010', CNOOC, 2011.532 'Annual Report 2011', CNOOC, 2011.

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Total Equity RMB 262.9 billion (approx. US$42.2 billion), end 2011.533

Employees 5,377 (end 2011)534

Website www.cnoocltd.com

Global snapshot CNOOC Ltd is the listed unit of the China National Offshore Oil Corporation535 and is lis-ted on the New York and Hong Kong stock exchanges.

The CNOOC Group is China's largest producer of offshore crude oil and natural gas and mainly engages in exploration, development, production and sales of oil and natural gas. The Group has four major producing areas in offshore China and has overseas as-sets in Indonesia, Australia, Nigeria, Argentina and the US, among others. As of December 2010, the company's overseas proved reserves and production accounted for approximately 25.4 percent and 20.1 percent of operations respectively. 536 At the end of 2011 the CNOOC Group owned net proven reserves of approximately 3.19 billion barrels of oil equivalent (joe) and average daily net production was 909,000 barrels per day (bpd).

In 2005 CNOOC withdrew an $18.5 billion takeover bid it had made for US oil and gas producer Unocal in the face of strong political opposition in the US. However, the company said that its bid had been based on purely commercial objectives.537

CNOOC operations in IraqHistory The technical service contract signed in 2010 for the Maysan oil fields, located about 350 kilometers southeast of Baghdad, marked the start of CNOOC's operations in Iraq.538

Activities and contracts

Maysan

In May 2010 CNOOC signed a technical service contract with the Iraqi government 539 to

533 'Annual Report 201'1, CNOOC.534 'About us', CNOOC, retrieved 18 December 2011.535 'Cnooc bags oil field deal in Iraq', China Daily, 18 May 2010.536 'Annual Report 2010', CNOOC, 2011.537 'Chinese oil firm drops Unocal bid', Guardian, 2 August 2005.538 'CNOOC Ltd. Announces the Signing of Technical Service Contract for Missan Oil Fields in Iraq', CNOOC Limited, 17 May 2010.539 'CNOOC Ltd. Announces the Signing of Technical Service Contract for Missan Oil Fields in Iraq', CNOOC Limited, 17 May 2010.

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develop the Maysan oilfield complex along with Turkish state-run TPAO. CNOOC's ori-ginal partner for developing the fields, Sinochem, pulled out of the deal when CNOOC decided to reconsider its original offer and accept the Iraqi government's proposed re-muneration fee of US $2.30 per barrel of oil produced. TPAO then joined the venture to fill the gap. CNOOC and TPAO set a production plateau target for the fields at 450,000 barrels per day (bpd). CNOOC holds a 63.75 percent stake in the venture, while TPAO holds 11.25 percent 540 and the Iraq Drilling Company (IDC) holds a 25 percent stake.541

Chairman Chengyu commented that "it is a pleasure for CNOOC to participate in re-building of the oil industry in Iraq" and analysts told the China Daily that the move un-derlines domestic oil companies' focus on developing oil resources in Iraq, saying that "the country remains one of the few regions in the world where Chinese companies can still find big opportunities".542

China National Petroleum Corporation (CNPC)

Type Government-owned Corporation

Founded 1988

Headquarters Beijing, PR China

Key people Jiang Jiemin (President)

Revenue US $352.3 billion (2011)543

Net Income US $16.3 billion (2011)543

% change on previous year +13.6%

Total assets US $481.1 billion543

Total equity US $240.5 billion543

Employees 1,668,072 (2012)543

Website www.cnpc.com.cn

Global snapshot Government-owned CNPC is China's largest integrated oil and gas company, with ex-ploration and production projects in China and 30 other countries. It is an oilfield ser-vices provider in 50 countries and operates some older refineries and a gas pipeline

540 'Iraq in deal with CNOOC, TPAO for Maysan oilfields', Best Growth Stock quoting Reuters, 12 May 2010.541 'International Activities', TPAO, retrieved 13 December 2011.542 'Cnooc bags oil field deal in Iraq', China Daily, 18 May 2010.543 'Global 500: China National Petroleum', CNN Money, retrieved 18 December 2012.

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network in China (including 70 percent of the country's crude oil pipelines). The CNPC has a network of 18,000 gas stations across China.544

The organisation was established in 1998 and reorganised in 1998 to become an integ-rated company.545 CNPC is the controlling shareholder of Petrochina Company Lim-ited.546 In 2009 the company completed more than 1,900 exploration wells and repor-ted proved reserves of more than 1 billion metric tons of oil equivalent.544

In 2012 CNPC was ranked 6th on CNN's Global 500 list of the world's largest corpora-tions.547 CNPC's 2010 Annual Report notes that CNPC has been seeking a greater inter-national role over the past five years.548 According to the Fortune Global 500, part of CNPC's strength comes from its partnerships with governments of oil-rich countries and the multinational companies that operate there. In 2011 CNPC was working with Russia, Venezuela, Iraq and Qatar, and had partnered with oil majors BP, Total and Shell.549

CNPC operations in IraqHistory CNPC's involvement in Iraq dates back to 1997, when CNPC signed a deal with Saddam Hussein's government to develop the Ahdab oilfield.550 The deal was between al-Waha Petroleum Company, (a joint venture between the CNPC and China North Industries Corporation) and the Iraqi government at the time. However, this agreement was postponed due to the UN sanctions on Iraq and the subsequent US-led invasion of the country in 2003.551 CNPC renegotiated the deal for the Ahdab oil field with Iraq's Min-istry of Oil in 2008.552 Since then CNPC has also won contracts as part of two separate consortia to develop the Halfaya and Rumaila oil fields.

Activities and contracts

Ahdab

Under the terms of the service contract renegotiated in 2008,553 oil output from Ahdab is expected to rise to 110,000 barrels per day (bpd), up from the 90,000 bpd forecast in the original deal; and total investment in the project would be about US $3 billion.554

544 'China National Petroleum Corporation: Company Description', Hoovers, retrieved 8 December 2011.545 'History', CNPC, retrieved 18 December 2012.546 'Investor Relations', Petrochina, retrieved 18 December 2012.547 'Global 500: China National Petroleum', CNN Money, retrieved 18 December 2012.548 '2010 Annual Report', CNPC, 2010.549 'Fortune 500: China National Petroleum Corporation', CNN Money, retrieved 9 December 2011.550 'The Chinese National Petroleum Company ', The International Resource Journal, March 10 2010. 551 'CNPC in Iraq ', CNPC Worldwide, retrieved January 2011.552 'China's CNPC seals $3bn Iraq deal ', BBC News, 28 August 2008.553 'CNPC in Iraq', CNPC, retrieved 14 November 2012.554 'China's CNPC seals $3bn Iraq deal ', BBC News, 28 August 2008.

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CNPC began work on the field in March 2009, despite protests from local farmers,555 and in June 2011 announced that it had completed construction of the first phase of the project.554

Halfaya

In 2009 CNPC led a consortium which won the contract to develop Halfaya, with CNPC holding a 37.5 percent stake in the project. Total and Petronas held 18.75 percent each and Iraqi state-run South Oil Company (SOC) held the remaining 25 percent stake.556.

Rumaila

In June 2009 CNPC was part of a BP-led consortium which won a service contract to de-velop the Rumaila oil field, Iraq’s largest.557 The long term contract secured by the BP-led consortium was the first in post-2003 Iraq;558 CNPC holds a 37 percent stake in the venture, with BP holding 38 percent and the Iraqi state the remaining 25 percent.559BP has said that together with CNPC they will spend around US $15 billion at Rumaila.560 CNPC received a 2 million barrel cargo of crude as its first payment for developing Ru-maila in May 2011.561

West Qurna 2

Bloomberg reported in August 2012 that CNPC was in talks with Russia's Lukoil about joining the company’s West Qurna 2 project, according to energy intelligence group Nefte Compass. The energy group reported that Lukoil was seeking a partner for a 30 percent stake in the project following Statoil’s exit, citing Andrei Kuzyaev, head of Lukoil Overseas.562

Discount oil salesReuters reported in November 2012 that Iraq was struggling to find buyers for all its 2013 oil output on term contracts because of the variable quality of Iraqi oil, official prices that buyers believed were too high and the availability of cheaper spot supplies. CNPC was offering barrels at up to an US $0.80 discount to Iraq's official prices; Reuters quoted an Iraqi official as saying "we are not happy about this." The official said that CNPC and other companies such as BP are paid in crude for their development con-tracts, and are entitled to re-sell the oil provided they "officially inform" SOMO.563

555 'CNPC completes Al-Ahdab Iraq oilfield construction', Arabian Oil and Gas, 27 June 2011.556 'Iraq : CNPC's Halfaya project in Iraq to start operation in H2' , The Free Library, 9 March 2010. 557 Blanchard, Christoper M, 'Iraq, Oil and Gas Legislation, Revenue Sharing, and U.S. Policy', 3 November 2009. 558 'BP's Iraq oil deal faces court battle ', Telegraph, 23 January 2010. 559 'BP-China National Group Signs Pact for Iraq Oil Field', Wall Street Journal, 4 November 2009. 560 'BP to Be Paid in Crude for Iraq Investment Costs', Bloomberg, 28 April 2010. 561 'CNPC Gets First Oil Payment for Rumaila', Iraq Business News, 30 May 2011.562 'CNPC in Talks With Lukoil on West Qurna-2, Nefte Compass Says', Bloomberg, 9 August 2012.563 'Iraq struggles to sign up oil buyers for 2013 term deals', Reuters, 7 November 2012.

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DNO InternationalType Public Limited Company

Traded as OSE:DNO

Founded 1971

Headquarters Oslo, Norway

Key People Helge Eide (President and MD), Berge Larsen (Chairman)

Revenue NOK 2.1 billion, (approx. $369.3 million), 2011.564

Net Income NOK 653.2 million (approx. US $116.7 million)564

% change on previous year 330.9%564

Total Assets NOK 5 billion (approx. US $899.4 million), end 2011.564

Total Equity NOK 2.2 billion (approx. US $385.3 million), end 2011.564

Website www.dno.no

Global snapshot DNO International ASA is a Norway-based oil and gas exploration and production com-pany. It was founded in 1971 and was the first Norwegian oil company to be listed on the Norwegian stock exchange. Initial exploration and production activities were in the British and Dutch territories of the North Sea.565 However more recently Its operat-ing activities have been primarily undertaken in the Middle East, Africa and in the UK. The company holds oil and gas assets in Yemen, the Kurdistan region of Iraq, the North Sea, Mozambique and Equatorial Guinea. The company is also active on the Nor-wegian Continental Shelf.566

At the end of 2011 DNO held total remaining proven and probable reserves (2P) of 371.9 million barrels of oil equivalent (boe). This represented a 91.5 percent year-on-year increase since 2010, largely due to the upward revision of recoverable reserve es-timates at the Tawke field in Iraqi Kurdistan.567 Gross production in 2011 was 64,185 million barrels of oil equivalent (boe) per day.568

564 'Annual Report and Accounts 2011', DNO, 2011.565 'History', DNO, retrieved 18 December 2012. 566 'DNO International ASA', Reuters, retrieved 22 December 2011.567 'DNO International Releases Annual Statement of Reserves', DNO International, 30 April 2012. 568 'Annual Report and Accounts 2011', DNO International, 2011.

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DNO operations in IraqHistoryDNO's activities in Iraq began in 2004, when DNO signed a production sharing contract (PSC) for the Tawke field with the Kurdistan Regional Government (KRG).569 DNO has PSCs for three contract areas in the Kurdistan region: Tawke, Dohuk, and Erbil.570 DNO has a local office in Erbil, while its activities in Kurdistan are managed from another office in Dubai.570

The KRG temporarily suspended DNO's oil contracts in September 2009 after a docu-ment issued by the Oslo Stock Exchange implied that KRG Natural Resources Minister Ashti Hawrami was involved as a benefactor in the sale of DNO shares to Genel Energy in October, allegations that the KRG denied and responded two by suspending DNO's contracts for six weeks.571

DNO has been involved in two controversies regarding the hiring of senior US officials to promote its activities in Kurdistan.572 In 2005, Peter Galbraith was paid by DNO in an advising role even as Galbraith in his official capacity as a US diplomat was advising on constitutional arrangements, which resulted in the KRG authorities claiming support for regional management of the oil industry.573 Then in mid-2010, former US ambas-sador to Iraq Zalmay Khalilzad was nominated for the board of DNO, though he later declined to fill the post.574

Activities and contracts

Tawke (Kurdistan)

The Tawke contract area, in which DNO has a 55 percent working interest, 575 is located in northern Iraq near the Turkish and Syrian borders. After signing the initial PSC in 2004, DNO first discovered oil at the Tawke field in 2006, with test production of oil commencing by 2007. By 2009 the field had been connected to the existing northern pipeline system through Iraq, and international export from the field began in 2011.576

As of November 2011 the field had a production capacity of 70,000 barrels per day (bpd) but actually produced about 50,000 bpd.575 A dispute between the KRG and Bagh-dad over oil exports caused production to slow to 17,000 bpd in the second quarter of 2012, but DNO managing director Helge Eide said in August 2012 that the company was

569 'Kurdistan region of Iraq', DNO International, retrieved 14 November 2012.570 '2010 Annual Report', DNO International, retrieved 30 November 2011.571 'KRG suspends DNO oil contracts', United Press International, 22 September 2009.572 'The Khalilzad DNO affair and the Galbraith parallels', Gulf Analysis, 24 June 2010.573 'DNO Pays Galbraith and Keeps Business in Kurdistan', Rudaw, 11 October 2010.574 'Khalilzad won't join DNO', Iraq Oil Report, 12 August 2010.575 'DNO to Boost Capacity at Iraq’s Tawke Oil Field', Iraq Daily Times, 15 November 2011.576 'Kurdistan region of Iraq', DNO International, retrieved 14 November 2012.

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on track to increase production at Tawke to 100,000 bpd by the end of the year.577

Erbil (Kurdistan)

Drilling at the Erbil contract area just north of the KRG capital city of the same name, in which DNO has a 40 percent working interest,578 began in 2011.579 In November 2012 DNO announced that new quantities of oil were discovered at the Benenan-3 well, which the company said is expected to more than double the Benenan field's gross oil-in-place volumes from 300 million barrels to an estimated 600-700 million barrels.580

Dohuk (Kurdistan)

The Dohuk contract area, in which DNO has a 40 percent working interest,581 is about 80 kilometers north of the city of Mosul; drilling at Dohuk began in 2010582 and as of November 2012 it remained an exploration area.583

Dragon OilType Public Limited Company

Traded as ISE:RDSA LSE:DGO

Founded 1971584

Headquarters Dubai (UAE)

Key People Mohammed Abdullah Ahmed Al Ghurair (Chairman), Abdul-Jaleel

Al-Khalifa (CEO)

Website www.dragonoil.com

Global snapshotDragon Oil was established in 1971 as Oliver Prospecting & Mining Co. Limited, incor-porated and registered in Ireland, and in 1993 changed its name to Dragon Oil plc. It has a primary listing on the Irish Stock Exchange and since the 6 April 2010 is also lis-ted on the London Stock Exchange. Its corporate headquarters are in Dubai. 584 In 1999 the Emirates National Oil Company (ENOC) became the major shareholder when it ac-

577 'Charges in Iraq's Kurdistan cause DNO to slide into the red', Ekurd.net, 23 August 2012.578 'DNO to Boost Capacity at Iraq’s Tawke Oil Field', Iraq Daily Times, 15 November 2011.579 '2010 Annual Report', DNO International, retrieved 30 November 2011.580 'DNO International Taps Additional Oil in Kurdistan', DNO International, 6 November 2012.581 'DNO to Boost Capacity at Iraq’s Tawke Oil Field', Iraq Daily Times, 15 November 2011.582 '2010 Annual Report', DNO International, retrieved 30 November 2011.583 'Assets in Kurdistan', DNO International, retrieved 14 November 2012.584 'Dragon Oil At A Glance', Dragon Oil, retrieved 5 December 2012.

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quired 69.4 percent of shares, and in the same year the head office was moved to Dubai.585

Dragon's principal producing asset is in the Cheleken contract area in offshore Turk-menistan. It also has operations in offshore Tunisia, Iraq584 and in December 2012 was part of a winning consortium for a bid to develop two blocks in Afghanistan. 586 As of the 31 December 2011 the company had proved and probable reserves of 65.8 million barrels of oil and condensate, 1.5 trillion cubic feet (tcf) of gas reserves and 1.4 tcf of gas resources.584

Dragon Oil operations in IraqHistoryDragon Oil invested in Iraq for the first time in 2012.

Activities and contracts

Block 9

In 2012 Dragon Oil participated with a 30 percent stake in a consortium that won rights to explore in one of the few blocks awarded in Iraq's fourth licensing round. Other partners in the consortium were Kuwait Energy Company (40 percent) and Turkish TPAO (30 percent).

According to the UK's Financial Times, this move was part of Dragon's strategy to in-crease its exploration base, which is concentrated in the Caspian region, with CEO Ab-dul Jaleel al Khalifa commenting that "entry into Iraq has been under consideration for some time and so represents a strategic move for Dragon”.587 Geologists believe that Block 9, awarded to the consortium, could include part of the large Azadegan oil -field in neighbouring Iran.588

EniType Public Limited Company

Traded BIT:ENI NYSE:ENI

Founded 1953

Headquarters Rome, Italy

585 'Company Overview: Dragon Oil' Rigzone, retrieved 5 December 2012.586 'Dragon Oil consortium wins two blocks in Afghan tender', Proactive Investors, 5 December 2012.587 'Dragon consortium wins Iraq oil fields bid', Financial Times, 4 June 2012.588 'Dragon Oil wins exploration rights in Iraq', The National, 31 May 2012.

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Key people Roberto Poli (Chairman), Paolo Scaroni (CEO)

Revenue €109.6 billion (approx. US $144.7 billion), 2011.589

Net Income €7.8 billion (approx. US $10.3 bil-lion), 2011.589

% change on previous year +5.7%

Total assets €142.9 billion (approx. US $188.9 billion), end 2011.589

Total equity €60.4 billion (approx. US $79.8 bil-lion), end 2011.589

Employees 79,000 (2011)589

Website www.eni.it

Global snapshot Eni is one of Italy’s largest companies and the worlds nineteenth largest oil company by production in 2012.590 It operates in the oil and natural gas, petrochemicals, and oil field services industries, and has expanded into power generation. The Italian govern-ment holds a share of more than 30 percent in the company591, which operated in more than 70 countries worldwide as of 2011.592

At the end of 2011 Eni had estimated net proven reserves of 7.09 billion barrels of oil equivalent (boe),593 and in 2012 the company was producing 2.2 million barrels per day (bpd) globally.594

Eni operations in IraqHistory Eni began carrying out engineering studies in various oilfields on behalf of the Iraqi Ministry of Oil in the 1980s. In 1992 the Oil Ministry signed production sharing agree-ments (PSAs) with several international oil companies (IOCs) to develop oilfields in the country. Eni negotiated a PSA for the Nasiriyah oilfield and in 1997 signed a memor-andum of understanding (MoU) regarding the field; but this agreement was never fol-lowed through due to UN sanctions imposed on the country.595 Eni began operating in

589 'Annual Report 2011', Eni, 2011.590 'The World's Biggest Oil Companies', Forbes, 16 July 2012.591 'Eni SpA Company Profile'. Yahoo Finance, retrieved 4 October 2011.592 'ENI SPA'. Bloomberg Business Week, retrieved 4 October 2011.593 'Oil and Natural Gas Reserves', Eni, retrieved 18 December 2012.594 'The World's Biggest Oil Companies', Forbes, 16 July 2012.595 'Iraq: Exploration and Production', Eni, retrieved 9 December 2011

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Iraq once again when awarded a service contract for the Zubair deposit during the 2009 bidding rounds, following Saddam Hussein's fall from power in 2003.596

In August 2012, Eni CEO Paolo Scaroni said the company did not plan to compromise its business in Iraq by making energy deals with the country's semi-autonomous Kur-distan region.597 Nevertheless, in October 2012 the Wall Street Journal reported that Scaroni said Eni was less enthusiastic about Iraq than when it first began operations in the country, and that the government in Baghdad should consider why some global companies are going to Kurdistan. "Our adrenaline rush now is not what it was when we entered Iraq," Scaroni was quoted as saying by the Wall Street Journal. "Iraq is more complex than we first thought." Scaroni added that Eni's issues with Iraq are its high levels of bureaucracy, limited energy infrastructure and the political situation with the Kurdistan region, which follows its own policy when it comes to hydrocarbon activities.598

As of October 2012 Eni had invested between US $4 billion and $5 billion in its Iraqi activities out of the planned $18 billion.598

Activities and contracts

Zubair

The Zubair contract area is located in Maysan province about 20 kilometres south-west of the city of Basra in southern Iraq.599 In 2009 Eni was part of a consortium in-cluding Occidental Petroleum and Kogas which won the contract to develop Zubair. Eni holds a 32.81 percent stake, while Occidental holds 23.44 percent, Kogas 18.75 per-cent and Iraq's state-run Maysan Oil Company the remaining 25 percent.600

Production at the Zubair field increased from 183,000 barrels per day (bpd) to more than 201,000 bpd in 2010.601 In November 2011 Eni signed a preliminary agreement for a US $240 million project to drill 22 oil wells and more than double production at Zubair, pending approval from the Iraqi Oil Ministry.602 Zubair was pumping oil at an average rate of 270,000 bpd in August 2012.603

The service contract has a duration of 20 years, and as part of the contract the consor-tium was due to pay the Iraqi Oil Ministry US $300 million as a refundable five-year loan, instead of paying a signature bonus as was the case in other deals made in the second licensing round in December 2009.600 Development of Zubair pushed up Eni's estimates for global investment to approximately US $72 billion in the 2010−2013 time frame, an increase of 8 percent from the 2009−2012 plan,604 with target production ex-

596 'Eni awarded the license for the Zubair giant field in Iraq', Eni , retrieved 15 November 2012.597 'Eni has no plans for Kurdistan oil deals: CEO', Reuters, 20 August 2012.598 'Eni's CEO: Enthusiasm Waning for 'Bureaucratic' Iraq', Wall Street Journal, 31 October 2012.599 'Zubair' Iraq Energy, retrieved 14 November 2012.600 'Eni Consortium Finalizes Deal to Develop Iraq Oil Field', Wall Street Journal, 25 January 2010.601 'ENI chief meets Iraq's prime minister', UPI, 27 September 2011.602 'Eni Signs $240 Million Iraq Oil-Wells Agreement, Official Says', Bloomberg, 3 November 2011.603 'Eni awards $359m pipeline contract at Zubair', ArabianOilandGas.com, 18 September 2012.604 'Eni Gains Momentum in Ira',q Zacks Investment Research, 26 May 2010.

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pected to be progressively reached by 2016 and maintained for seven years there-after.605

The deal has the potential to be extended to 25 years and the consortium plans to in -crease the field's production to 1.2 million bpd.600 Eni had originally proposed a remu-neration fee of over $4 a barrel, but agreed to accept $2 a barrel after BP accepted the same for the Rumaila field in November 2009. A November 2009 article in Business Week reported that an Eni representative said that clarifications from Iraq on tax-re-lated issues were critical in the decision to accept a lower price.606

Nasiriyah

During a 2011 meeting with Iraqi PM Nouri al-Maliki, Eni CEO Paolo Scaroni commen-ted that his company was interested in participating in the upcoming bidding round for development of the Nasiriyah field, according to UPI.601

ExxonMobilType Public Limited Company

Traded as NYSE:XOM

Founded 1999

Headquarters Texas, USA

Key people Rex Tillerson (Chairman and CEO)

Revenue US $486.4 billion (2011)607

Net income US $41.1 billion (2011)607

% change on previous year +34.8%607

Total assets US$ 349 billion (end 2011)607

Total equity US$ 154.4 billion (end 2011)607

Employees 82,100 (end 2011)607

Website www.ExxonMobil.com

Global snapshot In 2012 ExxonMobil topped the Fortune 500 list of the largest American corporations ranked by revenue.608 It began life as the Standard Oil Company in 1882 and became ExxonMobil in 1999 as an alliance between two of the direct descendants of John D.

605 'Eni Consortium to Redevelop Zubair Field in Iraq', Rigzone News, 22 January 2010.606 'Why Oil Majors Are Coming Back to Iraq', Business Week, 4 November 2009.607 '2011 Summary Annual Report', ExxonMobil, 2011.608 'Fortune 500: ExxonMobil', CNN Money, retrieved 18 December 2012.

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Rockefeller's Standard Oil Company, Exxon and Mobil.609 The company has several di-visions and hundreds of affiliates with names including ExxonMobil, Exxon, Esso or Mobil.610

At the end of 2011 the company held global proven reserves of 24.9 billion barrels of oil equivalent (boe)611 and average global net production over 2011 was 4.51 million boe per day.607

In 2008, on the back of soaring global oil prices, ExxonMobil became the world's most valuable firm when shares soared by over 40 percent in a year.612 In 2010 they acquired XTO Energy, a leading developer of unconventional resources including shale oil and shale gas, which requires advanced drilling techniques.613 In August of 2011, Exxon se-cured a $3.2 billion joint venture with Rosneft on high risk deep-sea exploration in the Arctic and Russian Black Sea.611

ExxonMobil operations in IraqHistoryIn the first half of the 1900s, ExxonMobil held a 23.75 percent share (held in two equal parts by the then-separate companies of Exxon and Mobil) in the Iraq Petroleum Com -pany (IPC) along with Total, Shell and BP.614 Exxon and the other foreign oil majors' as-sets in Iraq were taken over by the Iraq National Oil Company (INOC) after they were nationalised by Iraq's Ba’athist government in June 1972.615

ExxonMobil restarted operations in Iraq in 2009 after winning a contract, as part of a consortium, to rehabilitate and redevelop the West Qurna Phase 1 field in southern Iraq.616 However later in November 2011 the company signed contracts for six explora-tion blocks with the Kurdistan Regional Government (KRG). The Iraqi central govern-ment in Baghdad claims all contracts with the KRG are illegitimate,617 and as of October 2012 ExxonMobil was attempting to sell its stake in West Qurna Phase 1 as it prepared to start drilling in Kurdistan.618

Exxon's move into the Kurdistan region has broad geopolitical implications, according to the Petroleum Economist, and Kurdish President Massoud Barzani compared Exxon's investment in the region to "the equivalent of ten military divisions".619 On the back of escalating tensions in late 2012 over disputed territories between the KRG and the

609 'Our History', ExxonMobil, retrieved 7 October 2011.610 'ExxonMobil Corporate Profile', Reuters, retrieved 7 October 2011.611 'Exxon Mobil clinches Arctic oil deal with Rosneft', Wall Street Journal, 23 February 2012.612 'The age of oil', The Economist, 24 February 2005.613 'Exxon Mobil to buy XTO Energy in big U.S. gas bet', Reuters, 14 December 2009.614 'Oil Companies Hold Down Production in Iraq', Global Policy, retrieved 30 January 2013.615 'Iraq Opening to BP, Exxon Mobil, Shell for First Time Since 1972', Bloomberg, 3 March 2010.616 'Our operations in Iraq', ExxonMobil Iraq, retrieved 15 November 2012.617 'Exxon signs Kurd exploration contracts', Financial Times, 10 November 2011.618 'Exxon Nears Sale of South Iraq Stake', Wall Street Journal, 18 October 2012.619 'Will Iraq be the next oil superpower?', Petroleum Economist, 12 December 2012.

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central government, a high-ranking military officer told the Washington Post that if an oil company were to begin working in the disputed areas it would be considered "a de-claration of war". According to the report Exxon's contracts are the most controver-sial of those signed with the Kurds because of the company’s iconic stature and the location of its exploration blocks, on the southernmost edges of Iraqi Kurdistan’s in-terpretation of its territory.620

Activities and contracts

West Qurna Phase 1

In 2009 the company formed part of a consortium alongside Shell which won the con-tract to develop West Qurna Phase 1, a field which holds holds 8.7 billion barrels (bbl) in proven oil reserves,621 thus ensuring their position as one of the largest players in postwar Iraq.622 This agreement was formalised in January 2010 when ExxonMobil Iraq Limited, an affiliate of ExxonMobil, signed an agreement with the Iraqi Ministry of Oil. The agreement designated ExxonMobil as the lead contractor with a 60 percent in-terest in the consortium, with the Iraqi state-owned Oil Exploration Company (OEC) holding a 25 percent interest, and Shell holding a 15 percent interest.623

ExxonMobil's signing in November 2011 of exploration contracts with the KRG, which the government in Baghdad considers illegal,624 put its field development contract at West Qurna Phase 1 at risk, said Abdul Mahdy al-Ameedi, head of Iraq's Petroleum Contracts and Licensing Directorate (PCLD). Al-Ameedi told Dow Jones Newswires that Exxon could be replaced at West Qurna 1 by Shell, which holds a minority (15 percent) interest in the development contract, or potentially any other company. In the after-math of the KRG contract signing the Iraqi government also considered imposing sanctions on ExxonMobil, according to Deputy Prime Minister for Energy Hussein Shahristani, though it was not clear under what legal authority it might do so.625

Reuters reported in November 2012 that the company was in advanced stages of talks to sell its stake in West Qurna Phase 1, to enable it to focus on its deal for exploration blocks in Kurdistan, 626. Shahristani told Iraq Oil Report that a deadline of the end of 2012 had been set to conclude the deal, however transfer of operations was likely to take longer.627 The Wall Street Journal quoted a source saying that the project was never expected to be lucrative under the best of circumstances, and that the $1.90 license fee would barely be enough to cover the company's costs.628

620 'In Iraq, Exxon oil deal foments talk of civil war', Washington Post, 18 December 2012.621 'Exxon Consortium OKs Iraq Contract Changes', Rigzone, January 19, 2010. 622 'ExxonMobil wins $50bn contract', The Guardian, 5 November 2009. 623 'ExxonMobil Signs Agreement with Iraq', Business Wire, 25 January 2010. 624 'Exxon may face sanctions from Kurdistan deal', The Globe and Mail 22 November 2011.625 'Exxon may face Iraq sanctions, lose West Qurna', ArabianOilandGas.com 22 November 2011.626 'UPDATE 3-Exxon to pick W.Qurna buyer soon -Iraq's Shahristani', Reuters, 14 November 2012.627 'Q&A: Hussain al-Shahristani', Iraq Oil Report, 18 December 2012.628 'Exxon Nears Sale of South Iraq Stake', Wall Street Journal, 18 October 2012.

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Bashiqa, al-Qush, Arbat East, Betwata, Pirmam and Qara Hanjeer (Kurdistan)

In November 2011 ExxonMobil became the first oil major to sign an oil and gas explor -ation contract with the Kurdistan Regional Government (KRG),629 in a deal that in-cludes six exploration agreements.625 The six blocks in the contract include Bashiqa and al-Qush, located on the south-western border of KRG-controlled territory; Arbat East, located in the Zagros Mountain area near the Iranian border; Betwata and Pirmam, north-east of Erbil; and Qara Hanjeer, which spans the border between the KRG and disputed areas in Kirkuk.630

Before ExxonMobil made this move, large international oil companies (IOCs) had re-frained from signing deals with the KRG631 because, as of October 2012, the KRG re-mained locked in a feud with the Iraqi central government in Baghdad over land and oil rights. Three of the blocks included in the ExxonMobil-KRG contracts are in areas disputed by the KRG and Baghdad.628 The Financial Times wrote at the time of the sign-ing that the deal could prove a catalyst for oil development in Kurdistan,632 and indeed, as of November 2012 several firms - Total., Chevron and Gazprom - had flouted Bagh-dad's wishes and signed contracts with the KRG.633

Iraq Oil Report quoted an Iraqi official in October 2012 as saying that the company had spent somewhere between $200 million and $250 million in Kurdistan so far. Over the course of the contracts, Exxon committed to a cumulative $500 million work plan, which includes drilling five exploration wells in at least five of the six blocks, and two-dimensional (2D) seismic testing in the four blocks that have yet to undergo the pro-cess. The Bashiqa and al-Qush had undergone 2-D seismic testing before Exxon took control, according to Iraq Oil Report, and drilling is to start there first. An Iraqi official told the website that ExxonMobil would "start moving dirt in December [2012]".634

As a result of its contracts with the KRG, the Iraqi Ministry of Oil excluded ExxonMobil from its fourth licensing round for oil contracts, held in May 2012.635

Other activities

Water Injection Project

Abdul Mahdy al-Ameedi of the Petroleum Contracts and Licensing Directorate (PCLD) announced in April 2010 that ExxonMobil had been picked to lead a multibillion-dollar water injection project along with other international oil companies (IOCs) with con-tracts in southern Iraqi oilfields.636 The water injection project aims to provide water to maintain reservoir pressure, and thereby improve oil recovery, in fields such as Ru-

629 'Exxon's Kurdistan move set to trigger raft of oil mergers', Telegraph 13 November 2011.630 'Exxon to start drilling in disputed Kurdish blocks', Iraq Oil Report, 18 October 2012.631 'Iraq Criticizes Exxon Mobil on Kurdistan Oil Pursuits', New York Times 12 November 2011.632 'Exxon signs Kurd exploration contracts', Financial Times, 10 November 2011.633 'Iraqi Government and Kurdistan at Odds Over Oil Production', New York Times, 14 November 2012.634 'Exxon to start drilling in disputed Kurdish blocks', Iraq Oil Report, 18 October 2012.635 'Iraq Confirms 4th Oil Bid Round For May; Exxon Excluded', 4-Traders 19 April 2012.636 'ExxonMobil to lead Iraq water injection project', Bloomberg Business Week, 4 March 2010.

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maila, West Qurna Phases 1 and 2, Zubair and Majnoon. After disputes over costs delayed the project for months, the Iraqi government and the oil companies came to an agreement in October 2011 to build the plant.637 Al-Ameedi said the project would process some 10 to 12 million barrels of water a day from the Persian Gulf for injection into the oil fields, with the project taking two to three years, ramping up as the south-ern oil fields increase production.638

But ExxonMobil was was removed from the project in February 2012. Dhiya Jafaar, head of the state-run South Oil Company (SOC) said the removal of Exxon from leader-ship of the project was not connected with the company's Kurdish deals, and instead blamed poor coordination and project economics submitted by Exxon, according to Reuters.639 In October 2012 Bloomberg reported that the SOC had awarded CH2M Hill a $170 million consultancy contract to take part in the project, effectively replacing Ex-xonMobil.640 Jaafar said the South Oil Company would be the leader of the project.641

GazpromType Public Limited Company

Traded as RTS:GAZP LSE:OGZD

Founded 1989642

Headquarters Moscow, Russia

Key people Victor Zubkov (Chairman), Alexei Miller (Vice-Chairman and CEO)

Revenue US $117.6 billion (2011)642

Net Income US $31.7 billion (2011)642

Total assets US $302.6 (end 2011)642

Employees 393,000 (2012)642

Website www.gazprom.com

Global snapshot Moscow-based Gazprom is primarily engaged in the operation of gas pipeline systems and gas supply to European countries but is also involved in oil production and refin-ing activities. In 2012 Gazprom was the second largest oil company in the world by

637 'Iraq, Oil Majors Agree To Build Oil Field Water Injection Plant', Wall Street Journal, 19 October 2011. 638 'Exxon Spearheads Iraqi Water-Injection Project', Rigzone quoting Dow Jones, 10 April 2010.639 'Iraq seeks firms to manage oilfield water injection', Reuters, 14 May 2012.640 'Iraq Awards CH2M Water-Injection Oil Project, Replacing Exxon', Bloomberg, 10 October 2012.641 'Iraq chooses water contractor', Al Bawaba, 11 October 2012.642 'Gazprom', Forbes, retrieved 19 December 2012.

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production643 and the world's fifteenth largest publicly listed company.642 It was also the world's largest gas producer, with average daily production standing at 9.7 million barrels of oil equivalent (boe) per day.643 Via its subsidiaries and affiliates, the com-pany has operations established in the UK, Serbia, Uzbekistan, Kyrgyzstan, Tajikistan, Vietnam, India, Iraq, Algeria, Libya, Equatorial Guinea, Bolivia and Venezuela, among others.644

Russia's significant share of the world's gas makes it the an important asset for the country and the Economist magazine suggests that this makes Gazprom arguably its most important company.645 Founded in 1989, Gazprom grew out of the USSR's Gas In-dustry Ministry and was part-privatised from 1993 with the large-scale sale of state as-sets in post-Soviet Russia. The Russian Government holds a controlling stake of just over 50 percent and former Russian president Dmitri Medvedev previously occupied the post of Gazprom Board Chairman.646 In total the company operates around 70 fully-owned subsidiaries, including one whose shareholder committee Chairman is former German Chancellor Gerhard Schroder. In addition Gazprom also owns a bank, newspa-pers, radio stations, television stations, film studios, cinemas and real estate.647

Gazprom accounts for 18 percent of the world's gas reserves, 70 percent of Russian gas reserves and 15 percent of global gas production. In 2011 Gazprom also presided over 161,700 kilometres (km) of gas pipelines, the largest gas transportation system in the world.648

Gazprom operations in IraqHistory The beginning of Gazprom's work in Iraq was marked by the contracts signed in 2009.

Activities and contracts

Badra

In 2009, during Iraq's second post-war licensing round, Gazprom participated in a con-sortium also involving Kogas, Petronas, and TPAO which won a contract to develop the Badra oilfield in south-east Iraq. Gazprom holds a 40 percent stake in the consortium, with Kogas holding another 30 percent, Petronas 20 percent and TPAO a further 10 percent.649 In December 2009 Boris Zilbermints, the Deputy Chief Executive for Explor-ation and Production of Gazprom Neft, the oil arm of Gazprom, said that the company would invest $2 billion in developing Badra and that they expected to pump the first

643 'The World's 25 Biggest Oil Companies', Forbes, 16 July 2012.644 'Gazprom OAO', Reuters, retrieved 10 October 2011.645 'Russia's energetic enigma', The Economist, 6 October 2005.646 'Gazprom reports quarterly profits of $16bn', The Guardian, 30 August 2011.647 'In Thrall to Gas: The City Where Gazprom Is King', Spiegel Online, 2 March 2011.648 'Annual Report 2010', Gazprom, retrieved 10 October 2011.649 'Iraq signs deal with Gazprom group for Badrah', Reuters, 28 January 2010.

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crude from the field within three years.649

In May 2011 Gazprom Neft announced that a 3D seismic survey had been completed at the Badra deposit, carried out by the Iraqi Oil Exploration Company (OEC). The survey was intended to give a better understanding of the structure of the deposit and to aid with the assessment of reserves.650 In November 2011 the company announced they had commenced drilling at the first appraisal well at Badra and that they expected to start commercial production of 15,000 barrels per day (bpd) at the field in August 2013.651

Garmian and Shakal (Kurdistan)

In August 2012 Gazprom Neft became the third oil major (following moves by Exxon-Mobil and Total) to conclude deals with the semi-autonomous Kurdistan Regional Gov-ernment (KRG) when it signed two contracts for two of the southernmost exploration blocks in the region, the Garmian and Shakal blocks. Iraq Oil Report considers that ma-jors such as Gazprom were emboldened by Exxon's move, when it signed contracts directly with the KRG, considered illegal by the central government, putting at risk substantial producing assets in the South. Furthermore the Shakal block extends into areas that are internationally recognised as disputed territories between the central and regional authorities.

At the Garmian block, Gazprom took a 40 percent stake, while Canadian company WesternZagros and the KRG retained stakes of 40 percent and 20 percent respectively. Once the exploration phase is completed Gazprom will become the operator. At Shakal Gazprom became the operator with an 80 percent stake and the KRG retained its 20 percent stake.652

In November 2012 the BBC reported that the Iraqi government was pressuring Gazprom to give up their oil deals in Kurdistan or face losing their contract for the southern Basra field.653 In an interview with Iraq Oil Report, Deputy Prime Minister for Energy Hussein Shahristani commented that the company will be forced to decide between their contracts in the north and the south, just as ExxonMobil had.654

Genel EnergyType Public Limited Company

Traded as LSE:GENL

Founded 2011

Headquarters Ankara, Turkey

650 'Gazprom Neft completes seismic survey in Iraq', Gazprom Neft, 17 May 2011.651 'Gazprom Neft to begin oil output in Iraq in 2013', Reuters, 25 November 2011.652 'Gazprom makes Kurdistan entrance, risking Badra', Iraq Oil Report, 25 November 2011653 'Iraq pressures Russia's Gazprom to quit Kurdistan', BBC, 9 November 2012.654 'Q&A: Hussain al-Shahristani', Iraq Oil Report, 18 December 2012.

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Key People Tony Hayward (CEO), Mehmet Sepil (President)655

Revenue US $24 million (2011)656

Net Income US $2.6 million (2011)656

Total Assets US $4 billion (end 2011)656

Total Equity US $3.84 billion (end 2011)656

Employees Over 500 (2011)657

Website www.genelenergy.com

Global snapshot Genel Energy plc is incorporated in Jersey and has offices in the UK, Turkey and Kur-distan. It was formed following the merger of Vallares PLC and Genel Energy Interna-tional Limited in November 2011. The company's primary assets are oil and gas li-censes located in the Kurdistan region of Iraq.658

The company engages in exploration, appraisal, development and production of oil fields and has over 500 direct and seconded employees located in the Kurdistan region and Ankara.658 Genel's CEO is Tony Hayward, former head of British BP. The company's president Mehmet Sepil commented to the New York Times in 2012 that “Tony is run-ning the whole company. I am helping him with the politics — to understand the re-gion.”659

At the end of 2011 Genel held 412 million barrels of 2P reserves and had an average daily production over the year of 42,000 barrels per day (bpd).660

Genel operations in IraqHistoryBefore the merger with Vallares in 2011, Genel Energy was a private Turkish company under the control of Mehmed Sepil. In 2002, while working as a contractor in Kur-distan Sepil was approached by Jalal Talabani, Kurdish politician and later president of Iraq, about developing the Taq Taq oil field. Sepil began drilling at Taq Taq and also took stakes in other Kurdish fields.659 The Production Sharing Contract (PSC) for ex-ploitation of the PSC was reinstated and signed by the KRG and Genel Energy Interna-

655 'Message' Genel Energy, retrieved 19 December 2011656 'Annual Report and Accounts 2011', Genel Energy, 2011.657 'About Us' Genel Energy, 22 November 2011.658 'About Us' Genel Energy, retrieved 19 December 2011659 'Tony Hayward Gets His Life Back' New York Times, 1 September 2012.660 'Annual Report and Accounts 2011', Genel Energy, 2011.

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tional Limited in 2004.661

The merger and expansion followed and by 2012 Genel came to be the leading oil pro-ducer in Kurdistan, producing 40,000 barrels per day (bpd) in 2012.662

The company was also expected to bring on stream 4 billion cubic metres (bcm) per year of gas from its Kurdistan fields by 2015.663 However exporting the oil produced has caused problems because of sporadic disputes between the Kurds and Baghdad over pipelines.

According to Tony Buckingham, founder of Heritage Oil, because Genel are so heavily identified with the KRG's energy policy as it is, when it makes deals with the KRG it does not constitute such a "slap in the face" to Baghdad as those signed by Chevron and ExxonMobil, for example.662

Activities and contracts

Taq Taq and Tawke (Kurdistan)

Genel has stakes in two producing oil fields in Kurdistan. It holds a 44 percent working interest in the Taq Taq field664 (producing 90,000 barrels per day as of November 2011)665 and a 25 percent working interest in the Tawke licence areas, having acquired the latter in March 2009.664 As of 2012 these fields had estimated proven and probable (2P) reserves of 1.4 billion barrels (bbl) of oil and probable and possible reserves of 1.9 billion barrels of oil equivalent. The company is targeting to achieve total oil output of 140,000 barrels per day (bpd) from both fields by 2014.666

Ber Bahr, Dohuk, Miran and Chi Surkh (Kurdistan)

Genel's exploration interests lie in the Ber Bahr, Dohuk, Miran and Chia Surkh license areas, all acquired over the course of 2009.664 In August 2012 Genel announced a series of acquisition deals amounting to around US $860 million with the aim of strengthen-ing its position in Kurdistan.667 The company made a deal with British Heritage Oil to increase its stake in the Miran block to 51 percent.668 and analysts at Deutsche Bank suggested that the deal would eventually lead to it buying the remainder of Heritage's interests in Miran.669 In the same month Genel also acquired an additional 21 percent stake in the Bina Bawi block in the centre of the region from Hawier Energy.670

661 'KRG Ministry of Natural Resources Production Sharing Contracts', Kurdistan Regional Government , retrieved 5 December 2012.662 'Turkey's Genel Energy Takes Gamble in Iraq', Oil Price, 23 August 2012.663 'Kurdistan eyes major role in Turkish gas market', Petroleum Economist, 13 December 2012.664 'Company Profile', Genel Energy, retrieved 30 November 2011.665 'Tony Hayward moves into Kurdistan with Genel Energy as tensions rise', Telegraph, 17 November 2011.666 'Operations - Kurdistan Region', Genel Energy, retrieved 5 December 2012.667 'Tony Hayward Gets His Life Back' New York Times, 1 September 2012.668 'Turkey's Genel Energy Takes Gamble in Iraq', Oil Price, 23 August 2012.669 'Heritage receives $450m Genel boost' Financial Times, 21 August 2012.670 'Genel Energy Increases Stake in Bina Bawi', Iraq Business News, 6 August 2012.

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The oil produced by Genel that cannot be exported goes to Kurdish refineries for a price of about $60 per barrel, well below that achieved on world markets. However ac-cording to the New York Times as of 2012 Genel was still generating most of the cash needed to pay for its $200-$250-million-a-year exploration and development program in Kurdistan. It was also reported to be sitting on about $1 billion for acquisitions.667

Heritage OilType Public Limited Company

Traded as LSE:HOIL

Founded 1992671

Headquarters Jersey

Key People Michael Hibberd (Chairman), Tony Buckingham (CEO)

Revenue US $9 million (2011)672

Net Income (US $66.9 million), 2011673

Employees 139 (end 2011)674

Website www.heritageoilplc.com

Global snapshotHeritage Oil is an oil and gas exploration and production company listed on the Toronto and London stock exchanges. The company owns producing assets in Russia, exploration projects in the Kurdistan region of Iraq, the Democratic Republic of Congo, Malta, Pakistan, Tanzania and Mali, as well as an investment in Libya.675

The company was founded in 1992 and was initially formed to hold interests in off-shore Angola. In 1997 it was awarded interests in onshore Congo and went on to dis-cover the M'Boundi Field in 2001, which brought substantial gains.673 According to the UK's Independent newspaper, Heritage has a history of moving early into unstable, oil-rich regions that pose significant personal and operational risks, such as Uganda and Kurdistan. The company was thought to be the first foreign oil company to enter Libya after the 2011 uprising when it announced it had acquired small Benghazi-based ser-vices company Sahara for $19.5 million in October 2011.676

671 'Annual Report 2012', Heritage Oil, 2012.672 'Annual Report 2012', Heritage Oil, 2012.673 '2010 Annual Report', Heritage Oil, 2011.674 'Heritage Oil', Yahoo! Finance, 2011.675 'About Heritage', Heritage Oil, retrieved 22 December 2011.676 'Heritage plants UK flag in Libya with takeover of Sahara Oil', Independent, 5 October 2011. Libyan authorities later denied that the sale had taken place.

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Heritage Oil operations in IraqHistoryHeritage's activity in Iraq began in 2007, when it became one of the first companies to sign a Production Sharing Contract (PSC) with the semi-autonomous Kurdistan Re-gional Government (KRG).677

Activities and contracts

Miran (Kurdistan)

Heritage entered into a PSC with the KRG on 2 October 2007 for the Miran Block 678 in the south of Kurdistan. Heritage announced in April 2009 that Anglo-Turkish Genel Energy had entered the Miran Block as a third party participant,679 holding a 25 per-cent participating interest in the license while Heritage, the operator, held the re-maining 75 percent.680

Heritage announced in early 2011 the discovery of a large gas field with the Miran West-2 well which,681 containing up to 12.3 trillion cubic feet of gas,682 it believes to be the largest gas field to be discovered in Iraq in the last 30 years. The company has a 75 percent working interest in the Miran Block, though the KRG have a back-in right (whereby the KRG can choose to participate in a project once the contractor has re-covered their costs). If exercised, this could reduce Heritage’s interest to 56.25 per-cent. The first export production from the Miran Block is targeted for 2015 using planned regional infrastructure, according to the company's 2010 Annual Report.681

However in August 2012 Heritage moved to sell some of its assets in the Kurdistan re-gion in order to free up finances for a project in Nigeria. Heritage is due to receive US $156 million for transferring its 26 percent interest in the Miran gas field to Genel En-ergy, as well as a further $294 million loan which it can redeem through the transfer of its remaining 49 percent interest.683

Hunt OilType Private

Founded 1934684

677 'Operations - Iraq', Heritage Oil, retrieved 5 December 2012.678 'Heritage Notes KRG's Third Party Nominee in Miran License', Rigzone 9 April 2009.679 'Operations - Iraq', Heritage Oil, retrieved 1 December 2011.680 'Heritage Notes KRG's Third Party Nominee in Miran License', Rigzone, 9 April 2009.681 '2010 Annual Report', Heritage Oil, retrieved 1 December 2011.682 'Major Gas Field Found in Kurdistan', KRG Representation in Spain, 28 January 2011.683 'Heritage received $450 million Genel boost', Financial Times, 21 August 2012.684 'The Hunt Family of Companies', Hunt Oil, retrieved 29 March 2012.

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Headquarters Dallas, Texas (US)684

Key People Ray Hunt (CEO)685

Revenue US $4 billion (2011)686

Employees 4,700 (end 2011)686

Website www.huntoil.com

Global snapshotHunt Oil was founded in 1934, reportedly with H.L. Hunt's poker winnings.687 Together with its subsidiaries the company engages in oil and gas exploration and production in North America, South America, Europe, Australia, and the Middle East. It also engages in the construction and operation of liquefied natural gas (LNG) projects in Yemen and Peru.688

The company is headquartered in Dallas, Texas and operates as a subsidiary of Hunt Consolidated Inc. In 2011 Forbes magazine ranked Hunt Consolidated in 90th place on their annual list of America's largest private companies. Hunt Oil is the umbrella com-pany for several subsidiaries, but has no affiliation or ownership interest in Hunt Pet-roleum and its affiliated companies, which XTO Energy acquired in 2008. 689

Hunt Petroleum operations in IraqHistoryThe contracts signed by Hunt in 2007 mark the beginning of Hunt's operations in Iraq.

Activities and contracts

Ain Sifni (Kurdistan)

The production sharing contract (PSC) signed by Hunt in September 2007 was the first to be signed with the Kurdistan Regional Government (KRG) since the enactment of the Oil and Gas Law of the Kurdistan Region in August 2007. Hunt entered into the contract, which covered petroleum exploration activities in Kurdistan's Dohuk area, with Impulse Energy Corporation as its junior partner.690 Hunt and Impulse each held 50 percent working interests in the Ain Sifni block as of mid-2011.691 In July 2011, Lon-

685 'Selected Representatives', Hunt Oil, retrieved 29 March 2012.686 '#90 Hunt Consolidated/Hunt Oil', Forbes, retrieved 29 March 2012.687 'Hunt Consolidated Inc. Company Profile', Yahoo Finance, retrieved 29 March 2012.688 'Company Overview of Hunt Oil Company', Bloomberg, retrieved 29 March 2012.689 '#90 Hunt Consolidated/Hunt Oil', Forbes, retrieved 29 March 2012.690 'KRG signs oil and gas contract with US-based Hunt Oil', KRG, Retrieved 08 September 2007.691 'Oil & Gas – International E&P', Scotia Capital April 2010.

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don-based oil company Afren bought a 20 percent stake in the field. Hunt, as the field's operator, retained 60 percent and the KRG a 20 percent stake in the field.692

Leaked US diplomatic cables note that the US government discouraged companies from signing oil deals with the KRG until Iraq had enacted its regional hydrocarbons law. However a senior Hunt manager told a US official in Erbil that the area's high po-tential for oil production "trumped" the risks and legal ambiguities associated with its involvement in a disputed territory such as northern Nineveh.693

InpexType Public Limited Company

Traded as TYO:1605

Founded 1941694

Headquarters Tokyo (Japan)

Key People Naoki Kuroda (Chairman), Toshiaki Kitamura (President)695

Website www.inpex.co.jp

Global snapshotTokyo-based Inpex (International Petroleum Exploration Corporation) is a holding company established through the reorganisation of INPEX Corp and Teikoku Oil. The company manages subsidiaries that explore, produce and sell oil and natural gas.696

In 2012 Inpex had over 70 projects in 26 countries. This includes projects in Indonesia, Australia, Azerbaijan and Iraq and has a growing focus on Liquefied Natural Gas (LNG).696

Operations in IraqHistoryIn 2008 Inpex was included on the list of 35 countries which pre-qualified for the coun-try's first licensing round the following year.697 In 2010 Inpex was part of a consortium of Japanese firms which were negotiating a deal with the state-owned South Oil Com-pany for the development of the Nasiriyah field. However the talks failed to reach a

692 'Afren raises £113 million for Kurdistan acquisitions', Proactive Investors 28 July 2011.693 'Hunt Oil Signs Agreement With Krg Under Krg Oil Law', Wikileaks, 12 September 2007.694' History' Inpex, retrieved 5 December 2012.695' Inpex Corp' Bloomberg, retrieved 5 December 2012.696' Company Profile' Inpex, retrieved 5 December 2012.697' Oil Ministry Announces Qualification Results', Wikileaks, 15 April 2008.

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conclusion.696

Activities and contracts

Block 10

In Iraq's fourth licensing round in 2012, Inpex signed a deal to explore an area cover-ing the regions of Muthanna and Dhi Qar in Southern Iraq. Their partner in the deal was Russian Lukoil and together the two firms must invest at least $100 million to ex-plore a 5,500 square-kilometre block, under the terms of the contract. The agreed re-muneration fee was $5.99 per barrel.698

Japan Petroleum Exploration Company (Japex)

Type Public Limited Company

Traded as TYO:1662

Founded 1955

Headquarters Tokyo (Japan)

Key People Osamu Watanabe (President/CEO)

Revenue US $2.4 billion (2011)699

Net income US $120.6 million (2011)699

% change on previous year -44.2%699

Total Assets US$ 6.2 billion (end 2011)699

Employees 1,728 (end 2011)699

Website www.japex.co.jp

Global snapshot Japex is a Tokyo-based oil company established as a private company in 1970 and traded on the Tokyo stock exchange since 2003.700 The company's principal operating areas are, domestically, Hokkaido, Akita, Yamagata and Niigata in Japan, and overseas, Canada, the United States, Iran, Iraq, Indonesia, China, the Philippines, Russia and Libya.701

698' Iraq seals oil exploration deal with Lukoil, Inpex', Middle East Online, 7 November 2012.699 'Annual Report 2011', Japex, retrieved 19 December 2012.700 'About Japex', Japex, retrieved 18 December 2012. 701 'Japex Financial Analysis Review', Companies and Markets, 4 February 2010.

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The Japanese government owns a 34 percent share in Japex, which in 2011 had proved reserves of 272 million barrels of oil equivalent (boe).702

In September 2011 the Japanese government stated it was considering selling its stakes in Japex in order to use the funds for reconstructions of the north-eastern areas of the country that were devastated by the March 2011 earthquakes and tsunami. The stakes, which were held in a special account, were worth at the time approximately ¥ 700 billion in investments oil and gas-related developments.703

Japex operations in IraqHistory Japex’s relationship with the Iraqi Ministry of Oil dates back to March 2005 when they began to conduct evaluation studies of undeveloped oil fields jointly with the Min-istry’s engineers. Since 2007 Japex has worked with more than 450 trainee engineers dispatched from the Ministry of Oil. In 2008 Japex supplied 3D seismic survey equip-ment and software for the Ministry’s surveys of the Garraf oil field.704

Activities and contracts

Garraf

Together with Malaysian Petronas, Japex signed a contract in 2009 to explore and pro-duce oil from the Garraf oil field. The consortium is expected to invest up to $8 billion in the field705 and will be paid a remuneration fee of $1.49 a barrel under the 20-year long service contract.706 Japex will hold a 30 percent stake, Petronas a 45 percent stake and Iraq’s South Oil Company (SOC) will hold the remaining 25 percent stake in the field.707

In February 2011, Reuters reported that state-owned Japan Oil, Gas and Metals National Corporation (JOGMEC) would provide about $198 million of capital to the development of the Garraf oil field project. In return, JOGMEC would take a stake of less than 50 per -cent in Japex' wholly owned subsidiary,708 Japex Garraf Limited.709 -

702 'Japex Company Profile' ,Yahoo Finance, retrieved 25 December 2011.703 'Japan Government Mulls Selling Stakes In Inpex, Japex For Quake Reconstruction - Report', Fox Business , 6 September 2011.704 'Annual Report 2008' Japex, retrieved 25 December 2011.705 'Iraq: Petronas and Japex sign deal for Gharraf oil field', Energypedia News, Jan 18, 2010 706 'Iraq, Petronas, Japex in Gharaf oilfield accord', The Saudi Gazette, retrieved 25 December 2011.707 'JAPEX, Petronas to develop Iraq oil field', AME Info, 20 January 2010.708 'Japan's JOGMEC to invest in Gharraf Oilfield', Iraq Business News, 11 February 2011.709 'International Exploration and Production: Iraq', Japex, retrieved 9 January 2011.

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KazMunaiGas (KMG)Type State-owned

Traded as KASE:RDGZ LSE:KMG (KMG EP)

Founded 2002

Headquarters Astana, Kazakhstan

Key people Kiinov Lyazzat Ketebaevich (Chairman)710

Employees 70,121 (2011)711

Website www.kmg.kz

Global snapshot KazMunaiGas (KMG) is 100 percent owned by the government of Kazakhstan through the national welfare fund Samruk-Kazyna, an entity seen by Reuters as an extension of the government.712 It is the owner of 44 onshore oil and gas fields in the Mangistau and Atyrau regions of Kazakhstan and in 2011 accounted for 65 percent of all oil transport-ation, 100 percent of gas transportation and 50 percent of tanker transportation in Kazakhstan.713 The stated strategic goal of KMG EP up to 2029 is to become one of the world's top 20 oil and gas companies.714

One of the principal subsidiaries of KMG is KazMunaiGas Exploration and Production (KMG EP), established in 2004 following the merger of Uzenmunaigas JSC (UMG) and Embamunaigas JSC (EMG). The company's shares are listed on the Kazakhstan Stock Exchange (KASE) and its global depositary receipts (GDRs) on the London Stock Ex-change (LSE). KMG EP is the Kazakhstan's second largest oil producer, however in 2010 the Board of Directors approved the Company's participation in several projects out-side Kazakhstan. These included the White Bear project in the North Sea and a tender to develop the Akkas field in Iraq.714

According to an analysis by Reuters, KMG had a "highly leveraged" financial profile in 2012, with large debt due to large capital expenditures to upgrade refineries and the Kashagan field, in which it has a 16.8 percent stake.712 At the end of 2011 KMG EP's proven oil reserves (1P) stood at 561 million barrels, with proven plus probable plus possible reserves at 1.96 billion barrels (bbl). Production over the year was 58 million barrels, giving an average daily production of 158,904 barrels per day (bpd).715

710 'Management Board', KazMunaiGas, retrieved 19 December 2012.711 'KazMunaiGas: Participant Information', UN Global Compact, retrieved 9 December 2011.712 'TEXT-S&P summary: JSC NC KazMunayGas', Reuters, 30 November 2012.713 'KazMunaiGas O&G Company ex head Kairgeldy Kabyldin appointed head of KazTransOil', Tengri News, 11 October 2011.714 'Annual Report 2010', KazMunaiGas, 25 March 2011.715 'Resources Assesment', Bloomberg, 16 April 2012.

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KazMunaiGas operations in IraqHistoryIn December 2010 the Board of Directors of KMG's Exploration and Production subsidi-ary KMG EP approved the Company's participation in a tender to develop the Akkas field in Iraq.714 However after later pulling out of the the contract for the Akkas field, KMG was not participating in any projects in Iraq as of December 2011.

Activities and contracts

Akkas

Along with Korean Kogas, KazMunaiGas won the rights to develop the Akkas field dur-ing Iraq’s third energy bidding round in October 2010. Under the terms of the bid, Ko-gas was the operator of the project and the proposed remuneration fee was $7.50 per barrel of oil equivalent (boe) produced.716

According to KMG EP's CEO, the new project would be of benefit to the company's em-ployees, who would gain important experience in the area of gas field development, given that their specialists had not been fully engaged in gas production in the past, other than with 'associated gas'.717 In May 2011 however KazMunaiGas pulled out of the venture, leaving Kogas as the sole investor and operator and forcing the company to double its share in the project.718

Kogas (Korea Gas Corporation)Type Partially state-owned

Traded as KRX:036460

Founded 1983

Headquarters Seongnam, Gyeonggi, South Korea

Key People Gang Soo Joo (President, CEO)719

Revenue KRW 28,493.7 billion (approx US $26.6 billion), 2011.720

Net income KRW 174.7 billion (approx US $162.9 million ), 2011.720

716 'Bidding Results Overview for Licensing Round 3', Iraq Energy, retrieved 13 December 2011.717 'Annual Report 2010', KazMunaiGas, 25 March 2011.718 'Anbar, central governments poised for fight over Akkas', Iraq Oil Report, 1 June 2010.719 'Korea Gas Corporation', Reuters, retrieved January 2013. 720 'Consolidated Financial Statements', Kogas, retrieved 19 December 2012.

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% change on previous year -36.5%720

Total Assets KRW 36,010.5 billion (approx US $33.6 billion), end 2011.720

Total Equity KRW 8,043.9 billion (approx US $7.5 billion), end 2011.720

Employees 3,026 (Jan 2012)721

Website www.kogas.or.kr

Global snapshot Korea Gas Corporation (KOGAS) was established in 1983 by the Korean Government, who in 1999 began to privatise the company722. Consequently, Kogas is currently shared between the South Korean government, with a 27 percent stake, and the state controlled Korea Electric Power Corporation (KEPCO) with 25 percent, with the the re-maining equity split among local government and institutional investors.723

Kogas engages in the production and distribution of natural gas and in 2011 was the world's largest importer of liquefied natural gas (LNG). The company is the sole pro-vider of LNG to Korea, operating three terminals and a nationwide pipeline network. The company's business scope also includes natural gas exploration and production, with gas field development projects in Myanmar, Canada, Russia, Africa, Australia, In-donesia, Uzbekistan and others in 2011.724 In May 2010 Kogas revised its Articles of As-sociation and reported plans to enter into the new business of exploration, production and sales of crude oil, mainly targeting Iraq.725

Kogas operations in IraqHistory Contracts signed in 2009 marked the start of Kogas's work in Iraq.

Activities and contracts

Zubair

In 2009, Kogas formed part of a consortium along with fellow companies Eni and Occi-dental to develop the Zubair oil field in southern Iraq. Kogas holds an 18.75 percent share, Eni has 32.81 percent, Occidental holds 23.44 percent and Iraq's state-run Maysan Oil Company holds the remaining 25 percent. While the consortium planned

721 'Our Profile' Kogas, retrieved 19 December 2012.722 'Energy profile of South Korea', Encyclopedia of Earth, 20 September 2007.723 'South Korea Profile ', Energy Information Administration, June 2007 724' Korea Gas Corporation', Reuters, retrieved 15 December 2011.725 'KOGAS to Embark on Iraq Oil Business', Korea Times, 3 May 2010.

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to invest approximately $20 billion over the life of the project, Kogas itself has said it plans to invest around $6.5 billion in the field726

Badra

For Iraq's second licensing round, Kogas also formed part of a consortium to develop the Badra oil field, together with Gazprom, Petronas and TPAO. The relatives stakes held in the field are as follows: Gazprom (40 percent), Kogas (30 percent), Petronas (20 percent), TPAO (10 percent). Kogas has said that it will invest $1.05 billion in the pro -ject, with the consortium as a whole investing a total of $3.52 billion to pump 170,000 barrels of oil per day (bpd).727

Mansuriyah

When Iraq launched its third licensing round in 2010, Kogas was favored among 15 companies invited to bid for the Akkas, Mansuriyah, and Siba gas fields because of their experience in the industry, and was among 13 companies that registered for the auction round.728

Turkey's TPAO, Kuwait Energy Company and Kogas finalised deals in June 2011 to jointly develop the Mansuriyah field in eastern Iraq,729 which pays $7 per barrel of oil equivalent (boe) extracted.730

Akkas

In June 2011 Sabah Abdel Kadhim, an Iraqi Ministry of Oil official, stated that the min-istry had signed an agreement with Kogas to begin developing the Akkas natural gas field.731 But it was not until October of the same year that various delays were solved and a definitive deal was signed.729 By June, Kogas had agreed to double its stake in the project from 37.5 percent up to 75 percent, after its consortium partner KazMunaiGas withdrew unexpectedly from the project. The Iraqi state-owned North Oil Company (NOC) took the remaining 25 percent.731 The deal Kogas signed for the Akkas field in October 2011 pays the company a remuneration of $5.50 per boe extracted.729

Kirkuk-Baiji pipeline project

In October 2010 Kogas won a $127 million contract to build a 110-kilometre natural gas pipeline linking the Iraqi cities of Kirkuk and Baiji. The contract foresees that the pipeline will be built by 2014.732

726 'Eni Consortium Finalizes Deal to Develop Iraq Oil Field', Wall Street Journal, 25 January 2010.727 'Iraq signs deal with Gazprom group for Badrah oil field', Energy-pedia news, 28 January 2010 728 'Gas Fields Bid Round In Iraq: Success With Risk', Middle East Economic Survey, 27 December 2010.729 'Iraq inks final deal SKorea's KOGAS', Yahoo! News, 13 October 2011.730 'Mansuriyah Contract Area - Bidding Results', Petroleum Contracts and Licensing Directorate, 20 October 2011.731 'KOGAS Deal for Akkas Gas-Field Is Signed' Iraq Business News 1 June 2011.732 'KOGAS wins $127 million pipeline project from Iraq', Korea Times, 5 October 2012.

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Kuwait Energy CompanyType Private

Founded 2005

Headquarters Salmiya, Kuwait733

Key People Sara Akbar (CEO, Director), Mans-sour Aboukhamseen (Chairman)733

Revenue US $178.9 million (2011)734

Net Income US $34.8 million (2011)734

% change on previous year +58.9%734

Total Assets US $884.1 million734

Total Equity US $734.3 million734

Employees 464 (September 2011)735

Website www.kec.com.kw

Global snapshot Kuwait Energy Company (KEC) operates as an independent oil and gas exploration and production company. It engages in the exploration, production and development of oil and gas reserves in the Middle East, North Africa and Eurasia regions. Countries where KEC has operations include Kuwait, Egypt, Yemen, Iraq, Oman, Russia and Pakistan.

The company, formerly know as Zahra Oil and Gas, was founded in 2005 and is headquartered in Salmiya, Kuwait. The company operates as a subsidiary of the Zahra Group. CEO Sara Akbar said in November 2011 that the planned initial public offering (IPO) of the company was intended to help it in pursuing potential acquisitions in the Middle East and North Africa region.733

According to their annual report, the company's vision is to become the pre-eminent oil and gas company in the Middle East, and aims to be producing 75,000 barrels of oil equivalent (boe) per day by the end of 2015, with 400 million barrels of oil equiavalent (boe) of proved and probable reserves.735 As of September 2012 average daily produc-tion stood at 17,266 boe per day.734

733 'Kuwait Energy Company', Bloomberg Businessweek, retrieved 15 December 2011.734 'Corporate Profile', Kuwait Energy Company, September 2012.735 'Company Profile September 2011', Kuwait Energy Company, retrieved 15 December 2011.

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Kuwait Energy Company operations in IraqHistory The contracts signed in 2011 with the Iraqi government marked the beginning of KEC's operations in Iraq.

Activities and contracts

Siba and Mansuriyah gas fields

In June 2011 the KEC announced that it had been awarded 20-year gas development contracts for Siba and Mansuriyah gas fields in Iraq's third post-war bidding round.

The KEC jointly bid with the Turkish Petroleum Corporation (TPAO) for both gas fields. KEC became the operator of Siba, with a 45 percent share (TPAO 30 percent; state-owned South Oil Company 25 percent). At Mansuriyah, TPAO became the operator with a 37.5 percent majority share, (KEC 22.5 percent; Midland Oil Company 25 per -cent).736

Kuwait Energy Chairman Dr Manssour Aboukhamseen commented on the deals: “We are excited to start today a long-term partnership with Iraq for the development of their natural gas resources and look forward to applying our experience and techno-logy towards building gas production in Iraq that meets domestic needs and export opportunities. Kuwait Energy has been working towards obtaining such contracts for over three years, and today marks a significant milestone for Kuwait Energy.”737

Block 9

In May 2012 KEC announced that the consortium it led in Iraq's fourth licensing round had been successful in acquiring exploration rights for Block 9 in Basra. The other par-ticipants in the consortium were Turkish TPAO (30 percent) and Dubai-based Dragon Oil (30 percent), while KEC held an operating 40 percent stake. The accepted bid pro-posed a remuneration fee of $6.24 per barrel.738

After the Iraqi government expelled TPAO from the Block 9 consortium in November 2012, KEC was asked to take over the shareholding, which increase its holding to 70 percent.739

736 'Company Profile September 2011', Kuwait Energy Company, retrieved 15 December 2011.737 'Future Gas Exports From Iraq Fields Possible', Arab Times Online, 20 October 2011.738 'A Consortium led by Kuwait Energy awarded exploration and development contract for 'block 9', Basra, Iraq', Kuwait Energy Company, retrieved 5 December 2012.739 'Iraq Expels Turkey’s TPAO, asks Kuwait Energy to Replace', Iraq Business News, 7 November 2012.

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LukoilType Public Limited Company

Traded as LSE:LKOD; MCX:LKOH; FWB:LUK

Founded 1991

Headquarters Moscow, Russia

Key people Vagit Alekperov (CEO), Valery Grayfer (Chairman)740

Revenue US $133.7 billion (2011)740

Net Income US $10.4 billion (2011)740

% change on previous year +15%740

Total assets US $91.2 billion (end 2011)740

Total equity US $67.5 billion (end 2011)740

Employees 120,300 (end 2011)740

Website www.lukoil.com

Global snapshot Lukoil is a major Moscow-based international oil and gas company, accounting for 2.2 percent of global output of crude oil.741 In 2011 it ranked 69th in the Fortune Global 500 List of the most valuable companies in the world.742 and in 2012 was the 18th largest oil company in the world by production.743

The company was formed following the dissolution of the Soviet Union when three state-run western Siberian companies (Langepasneftegaz, Uraineftegaz and Kogalymneftegaz) merged and the initials of the original three companies were main-tained to form the new company name.744 The founder, and subsequent CEO and hold-er of 20 percent of shares, is former Soviet Deputy Oil Minister Vagit Alekperov 743 who, according to the New York Times, has kept an unusually low profile in Russian polit-ics.745

In 2011, Lukoil claimed proved reserves of more than 19.3 billion barrels of oil equival-ent (boe), the majority of which is located in Russia. It had operations in 60 regions in Russia and 25 other countries, and owned seven refineries and 6,750 gas stations. A significant 89.8 percent of the company’s proved reserves and 90.6 percent of market-

740 'Annual Report 2011', Lukoil. 2011.741 'General Information', Lukoil, retrieved 19 December 2012.742 'Global 500: Lukoil', CNN Money, retrieved 9 December 2011.743' The World's Biggest Oil Companies', Forbes, 16 July 2012.744 'OAO Lukoil History', Funding Universe, retrieved 19 December 2012.745 'Lukoil', New York Times Business, retrieved 19 December 2012.

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able hydrocarbon production are in Russia741, but the company also explores for oil and gas in Azerbaijan, Colombia, Egypt, Iran, Kazakhstan, and other areas in the Middle East and Central Asia.746 Average daily production as of 2012 was 2.2 million boe per day.743

In July 2010 US oil major ConocoPhillips sold its entire 20 percent stake in Lukoil, val -ued at around $9 billion. Lukoil agreed to buy back 7.6 percent of its stock from Cono-coPhillips for $3.44 billion.747

Lukoil operations in IraqHistory Lukoil was granted the rights to develop oilfields in 1997 by Saddam Hussein. The company held a 68.5 percent share in the consortium, a project which was then can-celled by Hussein's regime after Lukoil refused to violate UN sanctions against Iraq by drilling.748. Lukoil had been trying to revive the deal since 2003 after Moscow wrote off most of Iraq's $12.9 billion in debts749 and in April 2009 Lukoil’s CEO unsuccessfully lob-bied Iraqi Prime Minister Nouri al-Maliki to reinstate the contract from the Hussein era.750

Activities and contracts

West Qurna 2

After unsuccessfully bidding for the first phase of the West Qurna project, Lukoil and partner Statoil won rights in 2009 to develop the second phase of Iraq’s 'super giant' West Qurna crude deposit, the largest offered to foreign investors in the second round of bidding in Iraq.750 The consortium offered to develop the field in exchange for $1.15 for each barrel of oil it extracted, outbidding companies including BP and Total. Under the terms of the contract, Statoil would hold an 18.75 percent stake in the consortium, with Lukoil holding 56.25 percent and the Iraqi state's North Oil Company (NOC) hold-ing the remaining 25 percent.751 Lukoil announced in 2010 that they planned to invest US $4.5 billion at West Qurna 2 over the following 4-5 years and $300 million over 2010.752.

In November 2012 Lukoil CEO Vagit Alekperov suggested that Lukoil may look to "wade deeper into Iraq" by expanding through participation in the West Qurna-1 field. UPI reported that officials in Baghdad considered bringing Lukoil into the project to potentially replace ExxonMobil, who angered the central government by signing deals

746 'Lukoil Company Profile', Yahoo Finance, retrieved 9 December 2011.747 'ConocoPhillips to Sell Lukoil Stake After Posting Profit Gain', Bloomberg, 28 July 2010.748 'Iraq: Lukoil Chief Says Prewar Deal Still Valid', CorpWatch, 11 March 2004 749 'Russia's Lukoil Has Won Iraq's 'Crown Jewel' Oil Field', Business Insider, 29 December 2009. 750 'Lukoil, Statoil Win West Qurna ', Bloomberg, 12 December 2009 751 'Oil Field Project in Iraq Won by Lukoil and Statoil', New York Times, 29 December 2009.752 'Statoil, Lukoil ink Iraq oil contract', RiaNovosti, 31 January 2010

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directly with the semi-autonomous Kurdistan Regional Government (KRG).753

Reuters reported in November 2012 that Lukoil put its relationship with the central government at risk when its Geneva-based trading arm Litasco bought oil from Kur-distan, in defiance of Baghdad. An official from Iraqi state oil marketer SOMO dis-missed the claims.754

Marathon Oil CorporationType Public Limited Company

Traded as NYSE:MRO

Founded 1887

Headquarters Houston, Texas

Key people Clarence Cazalot Jr (President and CEO)

Revenue US $14.7 billion (2011)755

Net Income US $3 billion (2011)755

% change on previous year +14.7%755

Total assets US $31.4 billion (end 2011)755

Total equity US $17.2 billion (end 2011)755

Employees 3,322 (end 2011)755

Website www.marathon.com

Global snapshot Marathon Oil Company is a Houston-based international energy company engaged in exploration and production, oil sands mining and integrated gas. Its worldwide pro-duction operations are focused in North America, Africa and Europe.756

The company's origins lie in the purchase of the Ohio Oil Company by John D. Rocke-feller's Standard Oil Trust in 1889, but the company resumed independent production following its dissolution in 1911. The Ohio changed its name to the Marathon Oil Com-pany in 1962 in honour of its brand name motor fuel. Having been bought out by United States Steel in 1982, the steel business was finally sold off in 2001. 757 In May of 2011, Marathon's Board approved the spin-off of its downstream business, Marathon

753 'Lukoil may wade deeper into Ira',q UPI, 30 November 2012.754 'Russia's LUKOIL joins rush to export Kurdish oil',, Reuters, 28 November 2012.755 '2011 Annual Review', Marathon Oil Corporation, 2011.756 'About Us', Marathon Oil Corporation, retrieved 11 October 2011.757 'About Us: History', Marathon Oil Corporation, retrieved 11 October 2011.

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Petroleum Corporation.758

At the end of 2011 Marathon had proven reserves of 1.8 billion barrels of oil equivalent (boe).759 As of 2012 Marathon was developing strategic growth assets in US unconven-tional liquid-rich plays and deepwater Angola. Production in these assets was expec-ted to grow at a 25 percent annual growth rate through until 2015, with liquids ac-counting for around 70 percent of the mix.760

Marathon operations in IraqHistoryMarathon pre-qualified to participate in the central government's second licensing round in 2009, but eventually decided not to bid.761 Hence contracts signed with the Kurdistan Regional Government (KRG) in 2010 marked the beginning of Marathon's operations in Iraq.

Activities and contractsIn 2010 Marathon acquired a position in four exploration blocks in Kurdistan in Octo-ber 2010, under the framework of production sharing contracts (PSCs) signed directly with the KRG. These were the Harir (approximately 78,000 net acres) and Safen (ap-proximately 47,000 net acres) blocks, located north-east of Erbil, and the Atrush and Sarsang blocks, located north-west of Erbil.762

Harir and Safen

Marathon became the operator at the Harir and Safen blocks, while the KRG held a 20 percent interest.763 However in July 2012 the company agreed to 'farm down' these two blocks, reducing their stake to 45 percent.764 This was to make way for French oil major Total's entry into the region.765 As of 2012 the company remained the operator of the Harir block and the exploration operator of the Safen block. The first exploration well on the Harir block began drilling in July 2012 and the first exploration well on the Safen block is planned for the first half of 2013.762

758 'Marathon's Board Approves Spin-Off of Marathon Petroleum Corporation', OilVoice, 25 May 2011.759 'Marathon Oil Sets 2013 $5.2 Billion Capital, Investment and Exploration Budget', Offshore Source, retrieved 19 December 2012.760 '2010 Annual Review', Marathon Oil Corporation, retrieved 11 October 2011.761 'Iraq's Oil Bid Round 2: U.s. Firms' Participation', Wikileaks 21 December 2009.762 'Kurdistan Region of Iraq', Marathon Oil, retrieved 6 December 2012.763 'Marathon Acquires Positions in 4 Exploration Blocks in Kurdistan', Iraq Business News, 20 October 2011.764 'Kurdistan Region of Iraq', Marathon Oil, retrieved 6 December 2012.765 'Marathon Oil sells stake in oil fields in Iraq's Kurdistan', Reuters', 31 July 2012.

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Atrush

Marathon took a 20 percent working interest in the Atrush block. The remaining 80 percent was taken by joint-venture company General Exploration Partners (GEP).766. However in December 2012 GEP sold 53.2 percent of its interest in the block to Abu Dh -abi National Energy Company (TAQA).767 In April 2011 Marathon announced the dis-covery of oil at the Atrush site.768

Sarsang

At Sarsang the company has a 25 percent working interest.769

Occidental PetroleumType Public Limited Company

Traded as NYSE:OXY

Founded 1920

Headquarters Los Angeles, USA

Key people Ray R. Irani (Chairman), Stephen Chazen (President and CEO)

Revenue US $23.9 billion (2011)770

Net income US $ 6.6 billion (2011)770

% change on previous year +45.3%770

Total assets $60 billion (end 2011)770

Total equity $37.6 billion (end 2011)770

Employees over 40,000 (2011)770

Website www.oxy.com

Global snapshot Occidental Petroleum, often referred to as 'Oxy' due to its abbreviation on the NYSE stock exchange,771 has oil and gas operations consolidated in three core areas: the US, the Middle East and Latin America. In 2011 the company's US operations accounted for 59 percent of their worldwide production, the Middle East and North Africa 37 percent

766 'Atrush Well Delivers for Marathon Consortium', Rigzone, 14 April 2011.767 'TAQA Buys into Atrush Block', Iraq Business News, 3 December 2012.768 'Marathon Strikes Oil in Iraq', Zacks Equity Research 20 October 2011.769 'Kurdistan Region of Iraq', Marathon Oil, retrieved 6 December 2012.770 'Annual Report 2010' Oxy, retrieved 06 October 2011.771 'Occidental Petroleum Corp Profile', Reuters, retrieved 06 October 2011.

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and Latin America 4 percent.770

The company was founded in California in 1920. Chairman Ray Irani was elected on the death of Armand Hammer in 1990, who had headed the company since 1957.772

At the end of 2011 Oxy held 2.3 billion barrels of oil equivalent (boe) in reserves and average daily production was 428,000 barrels per day (bpd).770 According to a feature in Forbes magazine, the secret of the company's success is 'no wildcatting' and company president Steve Chazen, a former investment banker, commented in 2010 that "we're in the oil recovery business, not the oil discovery business".773

Occidental operations in IraqHistory The service contracts signed in 2009 marked the start of Occidental's work in Iraq. In a leaked US diplomatic cable from early 2010, the Iraq country manager for Chevron commented that, excluding state-controlled companies, "Occidental Petroleum was the only Western IOC that is not a former IPC (Iraq Petroleum Company) partner and that bid aggressively enough to be awarded a contract from Iraq's 2009 oil bid rounds."774

Activities and contracts

Zubair

Occidental originally bid for development of the Zubair field in Iraq's first post-war li -censing round, as part of a consortium with fellow companies Eni, Sinopec and Kogas, proposing a remuneration fee of $4.80 per barrel. However on this occasion no bids for the field were accepted as the per-barrels fees bid were considered too high by the Ir -aqi government.775 However following bilateral negotiations, in January 2010 Oxy an-nounced that the amended consortium had signed a contract with the state-owned South Oil Company (SOC) and Maysan Oil Company (MOC) to develop the field. The rel-ative stakes in the consortium were as follows: Eni (32.8 percent), Occidental (23.44 percent) and Kogas (18.75 percent).776

A US diplomatic cable from January 2010 claimed that the Eni/Occidental/Kogas con-sortium was the only consortium not to have accepted changes demanded by the Min-istry of Oil and suggested the companies may have gained some concessions on the changes demanded by the Ministry.777

772 'Corporate History', Oxy, retrieved 19 December 2012.773 'Occidental Petroleum's Path to Easy Oil', Forbes, 3 November 2010.774 'Chevron On Ioc Investing In Iraq', Wikileaks, 20 February 2010. 775 'Zubair Contract Area - Bidding Results', LA Times, 2 July 2009. 776 'Occidental Petroleum and partners to develop massive Iraqi oil field', LA Times, 23 January 2010.777 'All Oil Bid Round Contracts To Be Signed By January 31', Wikileaks, 19 January 2010.

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Pakistan PetroleumType State-owned

Founded 1950778

Headquarters Karachi (Pakistan)

Key People Asim Khan (CEO)779

Website www.ppl.com.pk

Global snapshotPakistan Petroleum (PPL)'s shareholding is divided between the government (71 per-cent), the PPL Employees Empowerment Trust (7 percent) and private investors (22 percent).

Within Pakistan, the company operates six producing fields and holds a working in-terest in 13 partner-operated producing fields. The company contributes around 24 percent of the county's total natural gas supplies. PPL has also expanded its operations internationally. As of 2012 it had an interest in a joint venture exploration license in Yemen, as well as having acquired an exploration block in Iraq.778

Pakistan Petroleum operations in IraqHistory The contracts signed following Iraq's fourth licensing round in 2012 marked the start of Pakistan Petroleum's work in Iraq.

Activities and contracts

Block 8

In 2012 PPL signed a gas exploration contract with the Iraqi government to explore for natural gas in Block 8 in Diyala and Wasit provinces in eastern Iraq. CEO Asim Khan commented that "we are planning to spend a minimum of $100 million to start explor-ation activities and we might need additional $400 million as investments."779

778 'Overview', Pakistan Petroleum Limited, retrieved 6 December 2012.779 'Iraq, Pakistan Petroleum Sign Final Gas Deal', Natural Gas Asia, 6 November 2012.

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PetronasType state-owned

Founded 1974

Headquarters Kuala Lumpur, Malaysia

Key People Shamsul Azhar Bin Abbas (CEO)

Revenue US $97.4 billion (2011)780

Net income US $21.9 billion (2011)780

% change on previous year +25.4%780

Total Assets US $157.4 billion (end 2011)780

Employees 43,860780

Website www.petronas.com.my

Global snapshot Petronas, short for 'Petroliam Nasional Berhad', was founded in 1974 and is Malaysia's state-owned national oil company and the country's most profitable company. The company is Malaysia's only representative in the Fortune 500781 and in 2012 was the 25th largest global oil company by production, at 1.4 million barrels per day (bpd).782

Petronas subsidiaries operate in more than 20 countries, primarily in Asia and Africa. In 2011 the company had reserves of more than 27 billion barrels of oil equivalent (boe) and was a major producer of liquid petroleum gas (LPG) and liquefied natural gas (LNG).783

In 2007, the Financial Times identified Petronas as one of the 'new seven sisters' - one of the most influential energy companies from countries outside the Organisation for Economic Co-operation and Development (OECD).784 In turn, the Economist refers to Petronas as 'a successful example of a national oil company' commenting that, in con-trast to Brazil's Petrobras, Malaysia has not made significant domestic oil discoveries in recent years. During the 1990s the company began expanding abroad, mostly in Africa and by 2007 had invested in 66 upstream projects in 22 countries.785

780 'Petronas', Forbes, retrieved 19 December 2012.781 'Malaysia's Petronas profit falls 23 percent ', The Boston Globe, 1 july 2010 .782 'The World's 25 Biggest Oil Companies', Forbes, 7 July 2012 .783 'Petronas', Hoovers, retrieved 15 December 2011.784 'The New Seven Sisters', Financial Times, 12 March 2007.785 'Drilling and nation-building', Economist, 8 October 2009.

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Petronas operations in IraqHistory The contracts signed by Petronas in 2009 marked the beginning of their operations in Iraq. Petronas was the most prolific bidder in Iraq's second licensing round that year, submitting five bids and winning four.786

Petronas operates in Iraq via fully owned subsidiary Petronas Iraq Garraf Ltd (formerly known as Petraonas Carigali Iraq Ltd), the head office of which is in Dubai.787 788

Activities and contracts

Garraf

A consortium led by Petronas submitted a bid for development of the Garraf field on the first day of bidding in December 2009. According to leaked US diplomatic cables, the undeveloped Garraf field was one of the first two fields offered, which received bids at 'stunningly low prices'. The partners in the winning consortium were Petronas (60 percent) and Japex (40 percent).786

Halfaya

Petronas held a 25 percent interest in the winning consortium bidding for the Halfaya field. Other partners were CNPC (the operator with 50 percent) and Total (25 percent). The remuneration fee offered was $1.40 per barrel. The contract was signed on the 27 January 2010.786

Majnoon

Petronas also signed a 20-year service contract to develop the Majnoon field, along with international oil company Shell. Shell is the lead operator in the consortium with a 45 percent stake. Petronas holds 30 percent and the Iraqi state holds 25 percent.789

Badra

Only one consortium, led by Gazprom, bid for the Badra contract area in the second li-censing round. The Oil Ministry announced in December 2009 that it had accepted a revised bid from the consortium, which comprised of Gazprom (30 percent), Korean Gas Company (22.5 percent), Petronas (15 percent) and TPAO (7.5 percent). The 25 per-cent Iraqi state partner was the Oil Exploration Company (OEC).790

786 'Oil Stampede: Iraq,s 2nd Bid Round Result',s Wikileaks, 14 December 2009.787 'Petronas', Dubai International Finance Centre, retrieved 6 December 2012.788 'Petronas Directory', Petronas, retrieved 6 December 2012.789 'Iraq Signs Majnoon Oilfield Agreement With Shell, Petronas', Bloomberg, 17 January 2010790 'Iraq’s Second Petroleum Licensing Round Badra Contract Area – Bidding Results', Iraqi Ministry of Oil, 2009.

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Community relationsAccording to Iraq Oil Report Petronas has experiences a serious of problems in its rela-tionship with the local community since beginning operations in the country in 2009.791

In 2010 tribal leaders near the Garraf field demanded that Petronas compensate them for developments in the region, causing the exploration unit to halt its work. Among the issues raised by the tribal leaders was the damage done by pipelines to local agri-culture, a claim refuted by local officials. Abdul Hussein Hadi Hajr, technical adviser to Dhi Qar's provincial council, said that tribal leaders had engaged in extortion using vi -olent threats against both Petronas and Iraqi state companies. An Oil Ministry spokes-man said that any attempt by the tribes to negotiate a compensation package directly with Petronas was against the law.792

In early 2012 security guards at the Garraf site staged a sit-in protest against the com-pany, demanding wage parity with security guards at the Ahdab oil field and compens-ation for landowners negatively affected by operations. In addition, locals have pro-tested about pollution levels at Garraf, accusing Petronas of not utilising a proper in-cinerator for disposing of test oil. State officials put the problem down to the heavy nature of the oil at the site, which creates more smoke, but Dhi Qar's Environment Dir -ector Raji Nu'eima Minshid commented that they should abide by pledges made in their environmental impact assessment (EIA) and threatened legal action by the Envir-onment Ministry.793

In a further blow to the company's operations, in November 2012 villagers from near the Garraf field stormed the field offices of Petronas and damaged much equipment. The unrest followed a dispute over Shi'ite religious observances, in what is a reli -giously conservative region of Iraq, sparked when Petronas employees allegedly re-moved flags hung to celebrate the start of the month of Muharram. As a result of the events, one Malaysian and one Iraqi were hospitalised.791

ShellType Public Limited Company

Traded as LSE:RDSA NYSE:RDSA

Founded 1907

Headquarters The Hague (Netherlands), London (UK)

Key People Peter Voser (CEO), Jorma Ollila

791 'Protestors storm Garraf oil field after religious dispute', Iraq Oil Report, 30 November 2012.792 'Tribal demands, alleged extortion stall oil development', Iraq Oil Report, 2 June 2010.793 'Beyond the Headlines: May 14, 2012', Iraq Oil Report, 14 May 2012.

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(Chairman)

Revenue US $484.5 billion (2011)794

Net Income US $31.2 billion (2011)794

% change on previous year +52.3%794

Total Assets US $345.3 billion (end 2011)794

Total Equity US $171 billion (end 2011)794

Employees 90,000 (end 2011)794

Website www.shell.com

Global snapshot Anglo-Dutch company Shell was ranked in first place on the 2012 Global Fortune 500 list of the world's most valuable companies.795 It engages worldwide in the upstream, downstream and corporate segments, and also has interests in chemicals and other energy-related businesses.796 In 2012 Shell was also ranked as the 7th largest oil com-pany worldwide by production, with average daily production of 3.9 billion barrels of oil equivalent (boe) per day.797

The company name and the corporate logo were decided upon due to founder Marcus Samuel's background in importing and exporting oriental shells. He and his brother renamed their oil transport company the Shell Transport and Trading Company in 1897. Royal Dutch was a company formed to develop oil fields in the Dutch East Indies and the two companies joined forces in order to protect themselves against competit-or Standard Oil. The full merger of the two companies came in 1907.798

According to CNN, as access to oil gets tighter Shell is looking to develop its alternat-ive energy assets and in 2010 signed an agreement with a Brazilian biofuel company called Cosan that makes ethanol from sugarcane. In 2011 Shell was also developing technology to build the first floating, liquefied natural gas (LNG) plant, which would give the company an edge over competition when it comes to accessing fuel in deep water. This will be particularly critical as Shell has signed off on new drilling projects in the Gulf of Mexico and off the coast of Brazil.795

Shell operations in IraqHistory Shell first entered Iraq before it was a sovereign country, as part of the Turkish Petro-

794 'Annual Review 2011', Shell, 2011.795 'Global 500:Royal Dutch Shell', CNN Money, retrieved 19 December 2012.796 'Royal Dutch Shell Profile', Reuters, retrieved 12 December 2011.797 'The World's 25 Biggest Oil Companies', Forbes, 7 July 2012.798 'The beginnings', Shell, retrieved 19 December 2012.

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leum Company (predecessor of the Iraq Petroleum Company). The company enjoyed monopoly rights to the country's oil fields and dictated the terms of production and development until 1972, when Iraq fully nationalised its oil sector and expelled the foreign oil companies.

After the US-led invasion in 2003, Shell was among the many international oil firms who returned seeking to explore Iraq's reserves, taking stakes in the West Qurna 1 and Majnoon fields.799 A 2012 report by Reuters suggested that Shell was exploring the pos-sibility of entering the Kurdistan region, a suggestion denied by government officials. A Shell spokesman said that "over time, we want to work in all of Iraq, but for the time being we've got three mega-projects on the go (in southern Iraq),". According to the report, Shell had come close to securing contracts in the Kurdistan region twice, but pulled back so as not to antagonise the government in Baghdad, which considers con-tracts signed by the KRG as illegal.800

Activities and contracts

West Qurna 1

Following Iraq's first post-war licensing rounds in 2009, in January 2010 Shell was the junior partner in the consortium that finalised a deal to develop the West Qurna field (Phase 1), after further negotiations with the Iraqi government. The senior partner in the consortium was ExxonMobil.801 ExxonMobil holds a 60 percent stake in the project, Shell holds 15 percent and the remaining 25 percent belongs to the Iraqi state.

Reports by Dow Jones newswire in November 2011 suggested that Shell might take over Exxon's stake in the field if their contract was terminated by the government as a con-sequence of the deals its signed with the Kurdistan Regional Government (KRG).802 As of November 2012 Exxon was progressing with the sale of its West Qurna assets, but it was not yet confirmed who the buyer would be.803

Majnoon

In Iraq's second post-war licensing round in 2009, Shell was part of a consortium in-cluding Petronas that won the contract to develop the Majnoon oil field. Shell holds a 45 percent share in the contract, Petronas 30 percentand an Iraqi state company holds the remaining 25 percent.804 The fee was set at $1.39 per barrel and the consortium pledged to increase output from the field to 1.8 million barrels per day (bpd), more than twice what Iraq had expected.805

799 'The secret history of the Shell gas deal', Iraq Oil Report, 21 January 2010800 'Iraq says Shell denies oil talks with Kurdistan', Reuters, 26 September 2012.801 'Exxon, Shell Sign Final Deal For Iraq’s West Qurna 1 Oil Field', Royal Dutch Shell, 25 January 2010.802 'Shell to Replace Exxon at West Qurna 1?', Iraq Business News, 21 November 2011.803 'Iraq says expects Exxon to finish West Qurna sale by December',Reuters, 9 November 2012.804 'Royal Dutch Shell plc welcomes Iraq Majnoon contract award', Shell, 11 December 2009. 805 'Iraq Oil Field Goes to Royal Dutch Shell and Petronas', New York Times, 11 December 2009.

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In October 2010 Shell CEO Peter Voser announced that the company had already raised production at the Majnoon field to 70,000 bpd, up from 45,000 bpd previously, how-ever acknowledging that the risk of operating in Iraq had increased in recent months.806 The company suffered a series of setbacks in the development of the field in achieving a production target of 175,000 bpd, the level required for the company to start recovering costs under its deal with the Iraqi oil ministry.807

According to Shell's director of media relations Diego Perez, 2,500 out of 3,000 Shell staff at the Majnoon field in 2012 were Iraqis.808

South Gas Utilisation Project

See also: South Gas Utilisation project

In September 2008, Shell signed a Heads of Agreement (HOA) with the Oil Ministry to capture some of the gas flared at Basra in the south, for a project which later came to be known as the 'South Gas Utilisation Project'.

SonangolType Parastatal

Founded 1976

Headquarters Luanda, Angola

Key People Manuel Vicente (President)

Revenue US $34 billion (2011)809

Net Income US $3.2 billion (2011)810

% change on previous year +32%810

Website www.sonangol.co.ao

Global snapshotSonangol UEE was established in 1976 following the nationalisation of 'Angol', the oil group that Angola's new rulers inherited from the Portuguese following independ-ence. Sonangol UEE became Sonangol EP in 1999.811809 The company claims that, des-pite having the government as its sole shareholder, Sonangol has always been gov-

806 'Shell Already Reports Success at Majnoon', Iraq Business News, 12 October 2010807 'Shell Expects To Meet Iraq Oil Field Target Despite Setbacks', Wall Street Journal, 19 September 2012.808 'Beyond the Headlines: Oct. 9, 2012', Iraq Oil Report, 9 October 2012.809' Sonangol: An economic octopus', Sonangol, 18 July 2012.810 'Sonangol’s $3.2bn profit shows NNPC’s model as broken', Business Day, 12 December 2012.811 'Our History', Sonangol, retrieved 19 December 2011.

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erned as a private company and is under strict performance standards to ensure effi-ciency and productivity.812

Sonangol EP engages in research, exploration, and production of oil and gas. Its activ-ities include prospecting, development and refining of hydrocarbons and their deriv-atives. The company also operates a network of gas and service stations and operates an airline, which provides air transportation to the oil industry through a fleet of air-planes and helicopters in Africa and internationally.813 It also has an expansive portfo-lio of interests in everything from infrastructure, banking and real estate to a football team.814

In 2012 Sonangol was producing around 100,000 barrels per day (bpd) but was looking to increase this fivefold to 500,000 bpd.814

According to a 2011 report by the Organisation for Economic Co-operation and Devel-opment (OECD), the revenues earned from oil and gas sales have made Sonangol the second largest company in Africa in terms of turnover and profits. The report also claims that Sonangol has been behaving like a sovereign wealth fund (SWF), using oil-based funds for investments in other countries, such as investments in West African iron ore mines.815

Transparency watchdog Revenue Watch has criticised the complexity and secrecy of Sonangol, which does not divulge all financial relations and sub-contracting proced-ures for assigning work.816

Sonangol operations in IraqHistoryThe contracts signed in 2009 marked the beginning of Sonangol's operations in Iraq.

Sonangol won two contract areas during Iraq's second round of licensing in 2009, Na-jmah and Qayara. Both lie in Nineveh province, known as one of Iraq's most troubled areas. "We know that the area where we are going is risky but we are also sure that with the cooperation with the Iraqi authorities we will be able to fulfil our comprom-ise and be able also to produce oil for Najmah and Qayara," said Gaspar Martins, Pres-ident and CEO of Sonangol.817

812 'About Sonangol EP', Sonangol, retrieved 19 December 2011.813 'Sonangol EP', Bloomberg Business Week, retrieved 19 December 2011.814 'Sonangol: An economic octopus', Sonangol, 18 July 2012.815 ' Sonangol EP', OECD Publishing, 3 May 2011, p70.816 'Angola: Transparency Snapshot', Revenue Watch Institute, retrieved 19 December 2012.817 'Angola's Sonangol sign Iraqi oilfield deals', ITN, 28 January 2010

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Activities and contracts

Qayara

At the Qayara field, Sonangol took a 75 percent stake in the venture. Sonangol said that it would invest IS $2 billion at the field.818 In March 2011 Sonangol started work at the Najmah field and was due to start to dig wells in April 2011.819

Najmah

Sonangol was the only company to bid for the Najmah contract area in the second li-censing round and the Oil Ministry announced on 12 December 2009 that the company had been awarded the contract area.820

Security problems

As of March 2012 Sonangol's projects in Iraq remained paralysed under 'force majeure' following an attack on facilities in 2011. This set back the company's international plans. Under current conditions it has been suggested that Sonangol would start pro-ducing at a rate of 50,000 barrels per day (bpd) from around 2013.821

StatoilType Partially state-owned

Traded as OSE:STL NYSE:STO

Founded 1972

Headquarters Stavanger, Norway

Key people Helge Lund (CEO), Svein Rennemo (Chairman)

Revenue US $119.6 billion (2011)822

Net Income US $6.3 billion (2011)823

% change on previous year +116.4%823

Total assets NOK 768.6 billion (approx. US $138.4 billion), 2011.822

818 'FACTBOX-Oil deals between Iraq and global majors', Reuters, 26 February 2010.819 'Sonangol to Start Work on Ninewa Oilfields', Iraq Business News, 14 March 2011.820 'Iraq’s Second Petroleum Licensing RoundNajmah Contract Area – Bidding Results', Ministry of Oil Petroleum and Licensing Directorate, 12 December 2009.821 'Sonangol's Iraq Field Still Under Force Majeure', Energia, 13 March 2012.822 'Annual Report 2011', Statoil, 2011.823 'Fortune 500: Statoil', CNN Money, retrieved 19 December 2012.

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Total equity NOK 285.2 billion (approx. US$51.4 billion), 2011.822

Employees 30,300 (end 2011).823

Website www.statoil.com

Global snapshot Statoil, formerly known as 'StatoilHydro', became the largest offshore operator in the world following its merger with Norsk Hydro in 2007.824 The Norwegian government is the largest shareholder in Statoil with 67 percent.825 However head of Statoil for Canada Stale Tungesvik has told press that Statoil behaves like a private company and the state has no role in its management.826 Statoil was also named the most transpar-ent of the world's 105 publicly traded companies by pressure group Transparency In-ternational in 2012.827

In Europe Statoil is the second-largest supplier of natural gas826 and internationally, Statoil has operations in 34 countries and is listed on the New York and Oslo stock ex -changes.828

At the end of 2011 Statoil had proven reserves of 5.43 billion barrels of oil equivalent (boe).829 As of 2012 the company was producing between 1.8 - 2.1 million boe daily, ac-cording to differing estimates,830831 but was aiming to increase this figure to 2.5 million boe per day by 2020 by ramping up its unconventional exploration and North Sea op-erations.831

Statoil operations in IraqHistory 2009 marked the beginning of Statoil's involvement in Iraq.

Activities and contracts

West Qurna 2

After unsuccessfully bidding for the first phase of the West Qurna field, Statoil and

824' Statoil to buy the natural gas and oil operations of Norsk Hydro for $28 billion', New York Times, 18 December 2006.825 'The World's 25 Biggest Oil Companies', Forbes, 7 July 2012.826 'Norway’s state-owned energy giant Statoil wants to be judged on its own actions', Financial Post, 15 October 2012.827 'Statoil tops, Gazproms flops in transparency ranking', Barents Observer, 10 July 2012.828 'Statoil in Brief' Statoil, retrieved 07 October 2011.829 'Annual Report 2011', Statoil, retrieved 12 December 2012.830 'The World's 25 Biggest Oil Companies', Forbes, 7 July 2012.831 'Shale to spur Statoil output drive', Petroleum Economist, 28 November 2012.

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partner Lukoil won rights in 2009 to develop the second phase of Iraq’s 'super giant' West Qurna crude deposit, the largest offered to foreign investors in 2009's second round of bidding832. The consortium offered to develop the field in exchange for $1.15 for each barrel of oil it extracted, outbidding offers from companies including BP and Total. Under the terms of the contract, Statoil was to hold an 18.75 percent share of the consortium, with Lukoil holding 56.25 percent and the state-owned North Oil Com-pany (NOC) holding the remaining 25 percent.833 Peter Mellbye, Statoil's Head of Inter-national Exploration and Production said in 2010 that the company would invest $1.4 billion over the following 4 to 5 years.834

However, after receiving the approval of the Iraqi Oil Ministry in March 2012, Statoil began selling off its stake in the field, leaving Russian Lukoil as the sole foreign part-ner in the project. Reuters reported that the company was looking to turn its attention to less risky assets elsewhere, such as Norway and the US.835

Talisman EnergyType Public Limited Company

Traded as TSX:TLM NYSE:TLM

Founded 1992

Headquarters Calgary, Canada

Key People John Manzoni (CEO, President)

Revenue US $8.3 billion (2011)836

Net Income $776 million (2011)836

Total Assets $24.2 billion836

Employees 3,695 (2012)836

Website www.talisman-energy.com

Global snapshot Talisman Energy is an upstream oil and gas company that engages in the exploration, development, production, transportation, and marketing of crude oil, natural gas, and natural gas liquids. It primarily operates in North America, the UK, Scandinavia, and south-east Asia. Talisman was created in 1992 when BP spun off its Canadian unit. CEO John Manzoni formerly worked for BP as head of the company's refining and market-

832 'Lukoil, Statoil Win West Qurna', Bloomberg, 12 December 2009. 833 'Oil Field Project in Iraq Won by Lukoil and Statoil', New York Times, 29 December 2009. 834 'Statoil plans to invest $1.4bn in Iraq oilfiel'd, Gulf Daily News, 9 January 2010.835 'Iraq OKs Statoil sale of oilfield stake -sources', Reuters, 9 January 2010.836 'Talisman Energy', Forbes, retrieved 19 December 2012.

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ing unit.837 The company is listed on the Toronto and New York stock exchanges.838

In 2012 Talisman Energy was ranked at number 624 in Forbes' Global 2000 list of the world's biggest public companies.836 Over 2011 average daily production stood at 426,000 barrels of oil equivalent (boe) per day and global proven reserves stood at 1.49 billion boe.839

Talisman Energy operations in IraqHistoryContracts signed with the Kurdistan Regional Government (KRG) in 2008 marked the beginning of Talisman's operations in Iraq.

Activities and contracts

Blocks K44, K39 and K9 (Kurdistan)

As of November 2011 Talisman held contracts in three oil fields in Kurdistan, 840. In 2008 the company acquired a 40 percent non-operated interest in Block K44 (Kurdamir Block), in partnership with Calgary-based Western Zagros (40 percent) and the KRG (20 percent)841. They also acquired a 60 percent operating interest in Block K39 and signed a Production Sharing Contract (PSC) for a 55 percent working interest in Block K9 in June 2009.842

In June 2008 Talisman announced that they would spend CAD $300 million to explore in the region. A company spokesman said that the company had performed a security assessment and thought that the region "stacks up with other areas in the world where it operates, such as Southeast Asia."843 In March 2012 the company announced that it had discovered light oil at one of its Kurdistan wells.844

In December 2012 Talisman's head of exploration Richard Herbert commented to the Petroleum Economist that capitalising on gas sales from its fields may offer a way of monetising its hydrocarbons in Kurdistan given the political constraints on oil ex-ports, which are controlled by the central State Oil Marketing Organisation (SOMO). This would allow them to recoup some of the money the firm had invested in the Kur-damir prospect.845

837 'BP sells $1.9B Colombian assets to Ecopetrol, Talisman', Colombia Reports, 3 August 2010.838 'About Our Company', Talisman Energy, retrieved 19 December 2011.839 'Annual Report 2011', Talisman Energy, 2011.840 'Bickering Over Oil and Gas Law Hurts Foreign Investment', Rudaw, 22 November 2011.841 'Iraq Kurdistan K44 oil reserves doubled to 2.2 billion barrels: audit', Platts, 20 July 2011.842 'The Role of the Private Sector in Peace and Development - Delivering for Results, Beyond Economics', Talisman Energy Report, 12 May 2011.843 'Talisman heads into Iraq with $300-million stake', Calgary Herald, 24 June 2008.844 'Talisman finds light oil at Iraq well', Reuters, 26 March 2012.845 'Kurdistan eyes major role in Turkish gas market, Petroleum Economist, 13 December 2012.

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TotalType Public Limited Company

Traded as Euronext:FP NYSE:TOT

Founded 1924

Headquarters Courbevoie, France

Key people Christophe De Margerie (CEO), Thierry Desmarest (Chairman)

Revenue €166.6 billion (approx. US $220.5 billion), 2011.846

Net Income €12.3 billion (approx. US $16.3 bil-lion), 2011.846

% change on previous year +16.1%846

Total assets €164.1 billion (approx. US $217.2 billion), end 2011.846

Employees 96,104 (end 2011)847

Website www.total.com

Global snapshotIn 2012 Total was the world's 13th largest oil company by production, with an average of 2.7 million barrels of oil equivalent (boe) produced per day.848 It had operations in more than 130 countries.847

The company has been through several name changes through its history. It was foun-ded as the Compagnie Francaise des Pétroles in 1924 and in 1927 it made its first dis-covery at the Baba Gurgur oil field in northern Iraq. The company renamed itself Total CFP in 1985 and later in 1991 the name was changed to Total. At this time the French government owned over 30 percent of the company's stock, but reduced this to less than 1 percent by 1996. When Total took over Belgian Petrofina in 1999 it became known as Total Fina and after merging Elf Aquitane in 2000 it was temporarily named TotalFinaElf.849

At the end of 2011 the company had proven reserves of 11.4 billion barrels of oil equi-valent (boe).847

846 'Form 20F 2011', Total, 2011.847' Group Presentation', Total, retrieved 19 December 2012.848' The World's 25 Biggest Oil Companies', Forbes, retrieved 19 December 2012.849' An illustrated history of Total', Total, retrieved 19 December 2012.

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Total operations in IraqHistory Total S.A. began its work in Iraq as part of the Iraq Petroleum Company (IPC) in the 1920s when it discovered the Kirkuk field, followed by further developments at the Buzurgan and Abu Ghirab fields in the 1970s.850.

Under Saddam Hussein’s regime in the 1990s, Total signed agreements to develop the Majnoon and Nahr Bin Omar fields in the case of the country being freed from sanc-tions. However after Hussein’s fall in 2003, the new administration announced that they would not recognise deals signed under the dictator. In 2007, it was reported that Total signed an agreement together with Chevron that would lead to the two compan-ies exploring and developing hydrocarbons from the Majnoon field once the country had put an oil law into place.851

However as of December 2012 the company's position in the country remained uncer-tain following the deals it signed in the summer of that year directly with the semi-autonomous Kurdistan Regional Government (KRG).852

Activities and contracts

Halfaya

In 2009 Total was part of the consortium that won the contract to develop the Halfaya oil field, with Total holding an 18.75 percent stake in the project, CNPC 37.5 percent, Petronas 18.75 percent and the Iraqi state-run South Oil Company (SOC) holding the remaining 25 percent stake.853. The contract stipulated a remuneration fee of $1.40 per barrel and the payment of a non-recoverable signature bonus of US $150 million 854 The consortium pledged to boost output at Halfaya to 535,000 barrels per day (bpd) from a 2010 level of 3,100 bpd855

Harir and Safen (Kurdistan)

In July 2012 Total purchased Kurdish assets from US-based Marathon Oil Corporation, acquiring a 35 percent stake in two blocks, at Harir and Safen and becoming operator of one license.852

Total CEO Christophe de Margerie had signalled earlier that year that the company would consider investments in Kurdistan given the more attractive fiscal conditions

850' Total and partners Petrochina and Petronas to develop the Halfaya oil field ', Total, 28 January 2010. 851 'Total sign Iraq oil contract for Majnoon Field', The Bush Agenda, 8 August 2007. 852 'Total faces ultimatum on Kurdistan deal', Financial Times, 13 August 2012.853 'Iraq : CNPC's Halfaya project in Iraq to start operation in H2', The Free Library, 9 March 2010. 854 'Iraq inks CNPC, Total, Petronas Halfaya deal', Iraq Oil Field, 30 January 2010.855 'CNPC says Iran, Iraq oil projects proceed well' Reuters, 21 April 2010.

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than in the south.856 A Paris-based industry analyst quoted by Reuters said that the challenge for Total in these blocks would be the transportation of the product, as Baghdad could block the use of its pipelines to the south.856

The UK's Financial Times reported that Hussein Shahristani, Iraq’s Deputy Prime Minis-ter for energy, presented Total with an ultimatum to roll back the deal with the KRG or give up its interests controlled by the federal government (the Halfaya field). How-ever these reports were not confirmed852 and later that year De Margerie described as "unclear" whether the central government would like Total to quit operations at Hal-faya.857

Türkiye Petrolleri Anonim Ortaklığı (TPAO)Type State-owned

Founded 1954

Headquarters Ankara (Turkey)

Key People Mehmet Uysal (CEO)

Revenue US $3.3 billion (2011)858

Net Income US $1.4 billion (2011)858

% change on previous year +6.1%858

Total Assets US $7.2 billion (end 2011)858

Shareholder Equity US $5.8 billion (end 2011)858

Employees 4,851 (end 2011)858

Website www.tpao.gov.tr

Global snapshotTPAO was established in 1954, when it took over from Turkey's State Minerals Explora-tion Institute (MTA).859

TPAO has approximately 5,000 employees throughout Turkey and at its branch offices abroad. According to official company literature, in a bid to improve regional energy security, TPAO conducts its international activities in the Caspian region, North Africa and the Middle East. As of 2011, exploration and production activities were being act -ively carried out in Azerbaijan, Kazakhstan, Libya and Iraq, and the company was searching for business opportunities in countries including Syria, Turkmenistan, Iran,

856 'Total's Kurdistan oil deal angers Iraq', Reuters, 31 July 2012.857 'Total says unclear if Iraq wants it to exit Halfaya', Iraq Business News, 17 November 2012.858 '2011 Annual Report', TPAO, retrieved 20 December 2012.859 'TURKEY - TPAO & Its Fields', All Business, 24 April 2000.

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Russia, Colombia, Sudan and Venezuela.860 As of late 2012 the company remained state-owned but Reuters reported in early 2011 that the Turkish government was preparing for the privatisation of TPAO.861

Turkey's oil and gas transportation company BOTAS was established as a subsidiary of TPAO in 1974.862 In November 2012 BOTAS signed an agreement with Azerbaijani state oil company SOCAR as shareholders of the Trans-Anatolian pipeline project (TANAP), one of the links in the chain of the Southern Corridor pipeline project aimed at bring-ing gas supplies into Eastern Europe and bypassing Russian territory. BOTAS will hold a 20 percent share in the project.863

TPAO operations in IraqHistoryTPAO began work in Iraq in 1994864 and has signed several contracts with the Iraqi gov-ernment since then to operate in southern Iraq.

However following a souring of relations between Baghdad and Ankara, TPAO was ex-pelled in late 2012 from Block 9, acquired during the country's third licensing round earlier that year.865 Iraq Oil Report reports an increasingly close relationship between the Turks and the Kurdistan Regional Government (KRG) as being a cause of the col-lapse in relations, however as of 2012 TPAO itself had no investments in the Kurdistan region.866

Activities and contracts

Badra

Following Iraq's second licensing round in 2009, TPAO was part of the consortium which won a contract to develop the Badra oilfield. The consortium, in which TPAO holds a 10 percent stake, (Gazprom 40 percent, KOGAS 30 percent and Petronas 20 per-cent)867 originally requested $6 per barrel of oil extracted from the field but later ac-cepted the Oil Ministry's offer of $ 5.50868.

Iraqi Oil Minister Hussein Shahristani said in 2009 that he was pleased that TPAO won the tender for Badra oilfield, adding that Iraqi authorities had been exerting efforts to

860 '2010 Annual Report', TPAO, retrieved 15 December 2011.861 'Turkey's plans to privatise TPAO at key stage', Reuters, 7 January 2011.862 'About Us', BOTAS, retrieved 20 December 2012.863 'SOCAR, Botas and TPAO establish company for TANAP pipeline', Azernews, 7 November 2012.864 'Eastern Promise', O&G Next Generation, retrieved 7 December 2012.865 'Iraq Expels Turkey’s TPAO, asks Kuwait Energy to Replace', Iraq Business News, 7 November 2012.866 'Baghdad blacklists TPAO without explanation', Iraq Oil Report, 8 November 2012.867 'Iraq signs deal with Gazprom group for Badrah', Reuters, 28 January 2010.868 'Russian energy giant Gazprom wins contract for Iraq's Badra oil field ', Taiwan News, 13 December 2009.

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boost political, economic and social relations with Turkey. The head of TPAO's Inter-national Projects Department Mehmet Ali Kaya also added in 2009 that the company regarded the tender as a first step for Iraq and that TPAO were eager to participate in other projects in Iraq.869

Maysan

In 2010 TPAO joined forces with Chinese CNOOC in a second deal to develop the Maysan oilfield complex.870 TPAO stepped in to take the place of Sinochem, which withdrew from the consortium during negotiations. CNOOC holds a 63.75 percent ma-jority stake in the group, while TPAO holds 11.25 percent and the Iraqi government the remaining 25 percent.871

President of the Executive Board and Director General of TPAO Mehmet Uysal said that "by winning two tenders, TPAO plans to produce 100,000 barrels of oil per day in the next three years in Iraq".872

Mansuriyah and Siba

When Iraq launched its third licensing round in 2010, three gas fields were tendered for development: Akkas, Mansuriyah, and Siba.873

A consortium of TPAO (50 percent), Kuwait Energy Company (30 percent) and Kogas (20 percent) finalised deals in June 2011 to jointly develop the Mansuriyah field in eastern Iraq,874 which pays $7 per barrel of oil equivalent (boe) extracted875

Kuwait Energy (60 percent operating stake) and TPAO (40 percent) won the bid to jointly develop the Siba field in the south and signed a deal that will pay them $7.50 per boe extracted.876

TPAO and its partners expected to invest approximately US $2.5 billion in the Mansur-iyah field and $1 billion in Siba. The regional and geographical proximity of TPAO and Kuwait Energy to Iraq played a role in their winning of the contracts, according to the Cyprus-based energy newsletter Middle East Economic Survey (MEES).873

Block 9

Following Iraq's fourth licensing round in May 2012, TPAO was part of the consortium

869 'Iraqi Oil Minister Glad TPAO Wins Oil Tender in Iraq', Turkish Weekly, 13 December 2009.870 'Iraq signs deal with Chinese, Turkish oil firms ', The Peninsula, 18 May 2010.871 'Iraq in deal with CNOOC, TPAO for Maysan oilfields', Reuters, 17 May 2010 .872 'Turkey's TPAO awarded second Iraq oil deal', World Bulletin, 18 May 2010. 873 'Gas Fields Bid Round In Iraq: Success With Risk', Middle East Economic Survey, 27 December 2010.874 'Kuwait Energy Bags Contracts For Siba, Mansuriya Gas Fields In Iraq', Arab Times, 20 October 2011.875 'Mansuriyah Contract Area - Bidding Results', Petroleum Contracts and Licensing Directorate, 20 October 2011.876 'Siba Contract Area - Bidding Results', Petroleum Contracts and Licensing Directorate, 20 October 2011.

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that was awarded the contract for the 900-square-kilometre Block 9. The relative stakes held were the following: Dragon Oil (30 percent), TPAO (30 percent) and Kuwait Energy (40 percent and operator). The accepted remuneration fee was $6.24 per barrel.

However in November 2012 the Iraq cabinet expelled TPAO from the consortium. Ab-dul Mahdi al-Ameedi, director of the Oil Ministry’s Petroleum Contracts and Licensing Directorate (PCLD) explained that "for reasons to do with non-technical issues and outside the responsibility of my office and me personally … the Turkish company TPAO was excluded from the consortium … this decision is final, there is no approval to sign the contract for Block 9 … the decision (to expel TPAO) is from the cabinet.“ The change would mean that Kuwait Energy's holding would rise to 70 percent. 877 Ac-cording to Iraq Oil Report, "it appears that regional politics are to blame" for the de-cision.878

Companies with contracts with the KRGA growing list of international energy companies have signed contracts with the KRG, despite the fact that the Iraqi government in Baghdad has declared any oil deals signed with the KRG illegal.879 A KRG official said in December 2012 that there were 45 to 50 contractors now working in the region.880

The following is a (non-exhaustive) list of the international firms with operations in the region, listed by country. The list was compiled from the relevant corporate web-sites, accessed in December 2012:

Companies with operations in KurdistanAustriaOMV: www.omv.com

CanadaGroundstar Resources: www.groundstarresources.com

Niko Resources: www.nikoresources.com

Shamaran Petroleum: www.shamaranpetroleum.com

Talisman Energy: www.talisman-energy.com

Vast Exploration: www.vastexploration.com

877 'Iraq Expels Turkey’s TPAO, asks Kuwait Energy to Replace', Iraq Business News, 7 November 2012.878 'Baghdad blacklists TPAO without explanation', Iraq Oil Report, 8 November 2012.879 'Iraq sees Exxon's interest in south larger than Kurd deal', Reuters, 19 November 2011.880 'As Kurdistan oil booms, deal-making accelerates', Iraq Oil Report, 3 December 2011.

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WesternZagros: www.westernzagros.com

ChinaAddax Petroleum: www.addaxpetroleum.com

HungaryMOL: www.mol.hu

IndiaReliance Industries: www.ril.com

NorwayDNO International: www.dno.no

Papua New GuineaOil Search: www.oilsearch.com

RussiaGazprom: www.gazprom.com

South KoreaKorea National Oil Company: www.knoc.co.kr

TurkeyDogan Enerji: www.doganholding.com.tr

Genel Energy: www.genelenergy.com

Petoil: www.petoil.com.tr

United Arab EmiratesAbu Dhabi National Energy Company (TAQA): www.taqa.ae881

United KingdomAfren: www.afren.com

881 'TAQA Buys into Atrush Block', Iraq Business News, 3 December 2012.

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Gulf Keystone Petroleum: www.gulfkeystone.com

Perenco: www.perenco.com

Sterling Energy: www.sterlingenergyuk.com

United StatesAspect Energy: www.aspectenergy.com (in process of divesting assets as of December 2012)881

Chevron: www.chevron.com

Hess: www.hess.com

Hunt Petroleum: www.huntoil.com

Murphy Oil Corporation: www.murphyoilcorp.com

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Iraqi EntitiesMinistry and its operating companiesMinistry of Oil

StructureThe Oil Ministry is the key institution in Iraq's hydrocarbons sector. 882 The Oil Minister is the functional head of the Iraqi industry, with several undersecretaries reporting directly to him. Under the umbrella of the Ministry are state-run companies which are functionally defined, each led by a Director General and other senior staff.883

The dissolution of the Iraq National Oil Company in 1987 led to the creation of 15 state owned oil companies directly under the Ministry of Oil. By 2013 this number had grown to 23 and the operating entities were as follows, each fulfilling a different role: Petroleum Research & Development Center (PRDC); Baiji Oil Training Institute (BaiOTI); Basra Oil Training Institute (BasOIT); Kirkuk Oil Training Institute (KOTI); Baghdad Oil Training Institute (BOTI); Heavy Engineering Equipments (HEESCO); South Refineries Company (SRC); Midland Refineries Company (MRC); North Refineries Com-pany (NRC); Gas Filling Company (GFC); South Gas Company (SGC); North Gas Company (NGC); Maysan Oil Company (MOC); South Oil Company (SOC); Midland Oil Company (MDOC); North Oil Company (NOC); Iraq Drilling Company (IDC); Oil Products Redistri-bution Company (OPDC); State Organisation for Marketing of Oil (SOMO); Oil Pipelines Company (OPC); Iraqi Oil Tanker Company (IOTC); Oil Exploration Company (OEC); State Company of Oil Project (SCOP).884

As of 2007 the Ministry had a total of 66,500 employees in total across all of its separ -ate entities.885 On 21 December 2010 Abdul Karim al-Luaibi became Oil Minister after the incumbent Hussein Shahristani moved posts to become Deputy Prime Minister for Energy.886

RoleThe Ministry is responsible for the day-to-day management of the oil industry, includ-

882 'Iraq Energy Outlook', International Energy Agency, 9 October 2012.883 'Iraq's Oil Sector: Issues and Opportunities', James A. Baker Institute for Public Policy, December 2006.884 'Ministry Establishments' Iraqi Ministry of Oil, retrieved 9 January 2012.885 'Case Study on Iraq’s Oil Industry', Baker Institute, March 2007.886 'Iraqi parliament approves new government', BBC, 21 December 2010.

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ing the overall implementation of oil policy, encouraging investments, coordination between the state-owned oil companies and training centers, and operation of infra-structure.887 It is also responsible for publishing information on revenue generation, which includes monthly data on production and exports.888 Negotiation of oil contracts is carried out through the State Oil Marketing Organisation (SOMO).889

The Ministry also receives and considers applications for the establishment of crude oil refineries after a governorate or province has given preliminary approval for their construction.890 And, inasmuch as it is the federal government's ministry in charge of oil and gas, it establishes guidelines for the measurement of hydrocarbon products.891

By means of the Oil Products Distribution Company (OPDC), the ministry provides and delivers the petroleum products needed for civilian, commercial and military activit-ies, as well as supplementing electricity needs in order to establish permanent power supplies.892 Additionally it commands its own police force, which is tasked with the se-curity of the country's oil infrastructure, preventing the smuggling of crude and fuel, and even the location and defusion of land mines.893

State Oil Marketing Organisation (SOMO)

RoleIraq's State Oil Marketing Organisation (SOMO) is an important actor in the Iraqi oil sector, deemed by the federal government to be the sole body invested with the au-thority to organise the sale and export of Iraqi oil. The proceeds of oil exported and marketed by SOMO go to the central government in Baghdad.889

SOMO is also responsible for covering local consumption needs by purchasing and im-porting oil products such as gasoline, gas oil, kerosene and liquid petroleum gas (LPG).894

SOMO's director as of 2012 was Falah al-Amri,895 who also served as Iraq's representat-ive to OPEC.896

887 'The Role of Government in Oil and Gas', National Investment Commission, retrieved 23 November 2011.888 'Domestic Consumption' Iraqi Ministry of Oil, retrieved 23 November 2011.889 'SOMO is sole marketer of Iraq oil – ministry', Zawya, 10 May 2009.890 'Instructions No. (1) of 2009', Iraqi Ministry of Oil, retrieved 18 November 2011.891 'Iraqi national code for measurements of hydrocarbon fluids', IAMB Iraq, retrieved 23 November 2011.892 'Ministry Services', Iraqi Ministry of Oil , retrieved 23 November 2011.893 'Twelve Reasons Why Iraq Will Not Be a Major Oil Exporter, Part One', We Meant Well, 6 May 2011.894 'About Us', SOMO, retrieved 11 January 2012.895 'Iraq Increases December Oil Exports by 1.9% From Month Earlier', Bloomberg, 18 December 2011.896 'Iraq facts and figures', OPEC Iraq, retrieved 8 January 2013.

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HistoryAfter the nationalisation of Iraqi petroleum resources in June 1972, the Iraqi govern-ment formed the General Directorate for Oil Marketing (GDOM) to manage and run all marketing operations related to crude oil and its refined products. The transformation of the petroleum sector led to the merger of Iraq's Oil Tankers Company with the GDOM, after which the Directorate became known as the State Oil Marketing Organisa-tion (SOMO). In 1998, SOMO became a public company registered at the Ministry of Trade under the name Oil Marketing Company. Despite its name change, the abbrevi -ation SOMO was preserved. SOMO's new identity as a publicly registered company gave it more flexibility and liberty to market Iraqi crude oil and refined products in surplus of Iraq's domestic needs, according to Iraq Energy Expo. Since the 2003 US-led invasion of Iraq, increase in domestic demand for some oil products led SOMO to gain authorisation to import oil products for domestic consumption.897

Official Website: www.somooil.gov.iq

Petroleum Contracts and Licensing Directorate (PCLD)

RoleThe Petroleum Contracts and Licensing Directorate (PCLD) is a structure under the Ir-aqi Ministry of Oil.898 The PLCD is responsible for: the announcement and pre-qualific-ation processes of licensing rounds; the preparation of initial drafts of contracts and specific technical information of exploration blocks; the reception of qualification documents of international oil companies (IOCs); closing the qualification process and declaring the results; the initial drafts of the contract and the initial tender protocol (ITP) and providing technical data; receiving and answering the IOCs inquiries; issuing the definitive model contract and final tender protocol (FTP); and, the bidding process itself.899

As of April 2012 the Director General of the PCLD was Abdul Mahdi al-Ameedi.900

Official Website: www.pcld-iraq.com

897 'Oil Marketing Company (SOMO)', Iraq Energy Expo, retrieved 11 January 2012.898 'Iraq to Uphold Accord With Exxon Mobil ‘For Now,’ Al-Ameedi Says', Bloomberg, 14 December 2011.899 '4th Licensing Round Schedule', Iraqi Ministry of Oil, retrieved 18 December 2011.900 'Abdul Mahdi Al-Ameedi', Iraq Oil Forum, 29 April 2012.

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North Oil Company (NOC)

RoleThe North Oil Company is a state company within the Iraqi Ministry of Oil which over-sees production in Iraq's northern fields,901 notably the supergiant Kirkuk field.902 The company's operation area spans the governorates of Kirkuk, Nineveh, Erbil, Baghdad, Diyala and part of Hilla and Kut.901

Operating in some of Iraq's least secure territory, the company has been subject to re-peated attacks by insurgents and organised crime since 2003. In July 2006 a director, Adel Qazzaz, was kidnapped in Baghdad903 and in September 2012 a car bomb at the company headquarters killed at least seven people and wounded 17 others.904

The NOC supplies crude oil of different types to Iraqi refineries and associated gas to the North Gas Company(NGC) units and to electric generation stations, as well as for export through a network of pipelines to Turkey and Syria.901 It had over 9,300 em-ployees on its books in 2007.905 It provides housing for many of its employees, main-tains a 200-bed hospital in Kirkuk as well as 11 clinics across its field of operations, a private telephone nework and a station and pipeline network to pump drinking water from the River Zab to installations at the Kirkuk field.906

In early 2013 Sameer Salman al-Taei was named new head of the NOC, replacing Ham-id al-Saedi, who had been Director General since 2010.907

HistoryThe North Oil Company was created following the dissolution of Iraq's National Oil Company (INOC) in 1987.905

When al-Saedi replaced Manaa Abdullah al-Ubaidi as head of the NOC in January 2010 the appointment proved controversial as he is a Shi'ite from the southern province of Maysan, despite having worked in the North Oil Company for many years. The outgo-ing Ubaidi lauded Saedi's experience but said his appointment was "not suitable for the special status of Kirkuk" and a local oil workers union sent a letter protesting the appointment to the city authorities in Kirkuk.908909.

901 'North Oil Company Profile', Iraqi Ministry of Oil, retrieved 30 December 2011.902 'Iraq names North Oil Company head', Trade Arabia, 4 January 2010.903 'Attacks on Iraqi pipelines, oil installations, and oil personnel', Institute for the Analysis of Global Security, retrieved 20 July 2010.904 'Car bomb at Iraq North Oil Company kills seven', Agence France Presse, 9 September 2012.905 'Case Study on Iraq’s Oil Industry', Rice University, March 2007.906 'Main Installations', North Oil Company, retrieved 20 July 2010.907 'Iraq Names New Deputy Oil Minister, North Oil Co Chief', Rigzone, 8 January 2013.908 'Iraq names new head of North Oil Company', Reuters, 4 January 2010.909 'Iraq names Shi'ite to head North Oil Company', Reuters, 4 January 2010.

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Official Website: www.noc.gov.iq

South Oil Company (SOC)

RoleWith production output of just over 2 million barrels per day (bpd) as of January 2012, Iraq's state-run South Oil Company (SOC) is one of the biggest producers in the world and, according to Iraq Oil Report, it is the dominant company in Iraq.910

The Basra-based company is run as an autonomous company with its own manage-ment structure which, according to the Baker Institute, increasingly responds to re-gional leadership.911 It has operatorship of Iraq's southern fields, including its biggest producing field at Rumaila.912 Other key fields include Zubair, Majnoon, West Qurna and Luhais.

The company plays a key role in expanding export infrastructure in order to support the production growth it hired the international oil companies (IOCs) to create. As of 2012 the SOC was progressing with plans to fix single-point moorings (SPMs), com-plete metering stations and pipelines in order to ease exports, with plans to repair and upgrade the existing al-Basra oil terminal (ABOT) to increase capacity as a second phase.910

In 2006 the SOC had a staff of 14,200 employees911 and as of early 2012 was headed up by Dhia Jaffar.910

HistoryDuring the 1970s the SOC was a subsidiary of the Iraq National Oil Company (INOC). 913 It grew throughout the 1970s as Iraq's oil industry expanded, reaching peak produc-tion levels of 2.75 million bpd of oil.914

The company's operations were badly damaged in the war of 1991 and again in the war of 2003. But by early 2004 the SOC had managed to restore production of over 2 million bpd.914

In July 2005 the General Union of Oil Employees, which comprises thousands of work-ers from the SOC, went on a 24-hour strike, demanding that a larger share of oil reven-ues be sent back to their local economy, after the governor of Basra Mohammed Mos-beh Al-Waeli called for the central government to give a fair share of oil money to his

910 'Q&A: South Oil Co. chief Dhia Jaffar', Iraq Oil Report, 15 February 2012.911 'Iraq's Oil Sector: Issues and Opportunities', James A. Baker Institute for Public Policy, December 2006.912 'Exploration and Production: Business Report Iraq', BP Magazine, 2010.913 'South Oil Company', Oil Voice, retrieved 10 January 2013.914 'About the Company', South Oil Company, retrieved 6 January 2012.

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region.915

In 2008, as plans for expansion of the Iraqi oil industry proceeded, the Maysan Oil Company was spun off from SOC.916

Company director Fayad al-Nema was removed from his post in July 2009 in what the government said was "restructuring". However according to the Arabian Oil and Gas website, it was widely believed that Nema was sacked because he opposed the auctions of service contracts for Iraqi fields to international oil companies (IOCs).917

Official Website: www.soc-basrah.com

Iraq Drilling Company (IDC)

RoleThe Iraq Drilling Company (IDC) is a state-owned company under the Iraqi Ministry of Oil which is located in Baghdad and Kirkuk and specialises in drilling and oil and gas well workovers. In 2006 it had 18 rigs in operation and employed 4,170 staff.915

The IDC is divided in two departments: the Northern Operations Department and the Southern Operations Departments.918

HistoryThe IDC was formed as such in 1987, when the Iraq National Oil Company (INOC) was disbanded.919

The first joint venture (JV) in the post-Saddam Iraqi oil industry occurred when a deal was finalised in 2009 between the IDC and the Mesopotamia Petroleum Company, from the United Kingdom.920 The IDC also signed a memorandum of understanding (MoU) for joint drilling and training opportunities with KCA DEUTAG, a British oil and gas service company, in 2010.921 Although the JV with Mesopotamia Petroleum Company eventually failed, in 2011 the IDC won a contract to drill in the Rumalia oil field togeth-er with Schlumberger, the world's largest oilfield services provider.922

915 'Iraq's Oil Sector: Issues and Opportunities', James A. Baker Institute for Public Policy, December 2006.916 'New Iraq oil firm aims to triple production in Maysan', Reuters, 28 June 2008.917 'Iraq Oil Ministry fires South Oil Company chief', Arabian Oil and Gas, 30 July 2009.918 'Iraq Drilling Company (IDC)', Iraq Energy Expo, retrieved 30 November 2011.919 'Iraq National Oil Company, An Historical And Political Perspective', Middle East Economic Survey 21 September 2009.920 'Iraq finalizes oil drilling joint venture with Mesopotamia Petroleum', Iraq Oil Report, 26 February 2009.921 'KCA DEUTAG establishes presence in Iraq', KCA DEUTAG, 14 October 2010.922 'IDC's Success Story', Iraq Oil Forum, 22 July 2011.

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In 2010 the IDC drilled 189 oil wells and planned to drill and rehabilitate 140 other wells over the course of 2011.923 In 2011 the IDC started to drill and repair wells in the Hamrin mountains for the first time in 21 years. The mountains, located to the north of Baghdad, had been a haven for insurgents, including al-Qaeda, following the 2003 occupation of the country.924

Maysan Oil Company (MOC)

RoleThe Maysan Oil Company (MOC) is responsible for fields in the Maysan province which includes six producing fields (Bazergan, Abu-Gharb, Fakka and Halfaya), as well as Ma-jnoon, which it operates in partnership with the South Oil Company (SOC). Maysan also holds five discovered but unproducing fields, including the Huweiza, al-Rafi’e, East Rafidan, Dujeila and Kumait fields.925

The company's headquarters are in the capital of Maysan province, Amara.926 Man-aging Director Ali Muarij was reported to have been removed from the post in June 2011 after being charged with bad administration and failure to achieve higher oil pro-duction results during his tenure.927 However as of mid-2012 press reports suggested he was still in his post as head of the company.928

HistoryMaysan Oil Company was spun off from the South Oil Company (SOC) in 2008 to deal with plans for expanded production in Maysan governorate.929

The Maysan Oil Company was created as part of a plan that aimed for each Iraqi province producing at least 100,000 barrels per day (bpd) to have its own state-run oil company to focus on developing its own oil fields. Total oil output from Maysan province was between 100,000 and 110,000 bpd when the company was created,929 and the company planned to increase output to 120,000 bpd by the end of 2011.930 The start-up capital of the company was US $8 million, according to government state-ments.786

Official Website: www.moc.oil.gov.iq

923 'Iraqi Drilling Company - 140 Wells in 2011', Iraq Business News, 18 January 2011.924 'Iraq Starts Drilling for Oil in Hamrin Mountains', Iraq Business News, 5 June 2011.925 'Foreign Companies Keen to Work for Missan Oil', Iraq Business News, 1 December 2011.926 'Contact Us', Maysan Oil Company, retrieved 5 January 2012.927 'South Iraq Missan’s Council sacks Missan Oil Company’s DG from his post', Aswat Al-Iraq, 9 June 2011.928 'Missan heralds oil boom with Halfaya opening', Iraq Oil Report, 19 July 2012.929 'New Iraq oil firm aims to triple production in Maysan', Reuters, 28 June 2008.930 'Iraq Aims to Join OPEC Quota System in 2014', Bloomberg, 26 October 2011.

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Other Iraqi EntitiesIraq has numerous entities organised under the Oil Ministry in addition to the major producing companies, which are listed and outlined below.

North Gas Company (NGC)The state-owned North Gas Company (NGC), based in Kirkuk,931 is responsible for the utilisation of all associated gases produced at Iraq's northern fields: dry gas used in electricity generation stations, fuel gas used in other industrial factories, and raw ma-terials used in the petrochemical industry in order to manufacture fertilisers; liquid petroleum gas (LPG); natural gasoline; and, sulphur.932

Official website: www.ngc.gov.iq

South Gas Company (SGC)The state-owned South Gas Company (SGC) is responsible for the processing of associ-ated gas from the Iraq's southern fields in order to produce dry gas, liquid gas and nat-ural gasoline, in addition to the industrial management of liquefied gas storage tanks and export terminals.933

In November 2011, Reuters reported the approval of a $17 billion deal between the SGC, Royal Dutch Shell and Mitsubishi to capture gas that is flared off in the oilfields around the southern oil hub of Basra. The deal established a new company called the Basra Gas Company (BGC), a joint venture of the SGC and the Shell/Mitsubishi consortium, which could eventually lead to the export of liquefied natural gas (LNG).934

Official website (ar): www.sgciraq.com

North Refineries Company (NRC)The state-owned North Refineries Company (NRC) is the largest of the Ministry's re-fining companies. The NRC's total refining capabilities as of October 2011 were estim-ated to be 402,000 barrels per day (bpd). The NRC produces various refined products, which include: unleaded gasoline, kerosene, aviation turbine, kerosene (ATK), diesel and gasoline, lubricant oil products, spindle oil, transformer oil, asphalt, sulfur, lique-fied refinery gases, and others. The NRC operates the North, Saladin, Sininya, Qayara, Kasak, Kirkuk and Hadeetha refineries.935

931 'North Gas Company', Zawya, retrieved 10 January 2013.932 'North Gas Company (NGC)', Iraq Energy Expo, retrieved 25 December 2011.933 'South Gas Company', Iraq Energy Expo, retrieved 25 December 2011.934 'Iraq Approves $17bn Gas-Capture Contract With Shell, Mitsubishi', Iraq Business News, 16 November 2011.935 'North Refineries Company', North Refineries Company, retrieved 25 December 2011.

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The NRC is headquartered at the Baiji Oil Refinery (BOR).936 and as of April 2012 the Director General was Abdul Ghafoor Mohamed Abdul-Jabar.937

Official website: www.nrcbaiji.com

Midland Refineries Company (MRC)The state-owned Midland Refineries Company (MRC) is responsible for the industrial management and operation of oil refineries in the midland region of Iraq, such as the Daura refinery. The MRC produces a wide range of refinery products, which include: li-quid petroleum gas (LPG), lubricant oils, greases, wax and asphalt.938

It was established in 1953 and became operative in 1955.939 The company is headquartered at the Daura Refinery936 and as of December 2011 the Director General was Dathar al-Khasbab.938

Official website: www.dauramrc.com (ar)

South Refineries Company (SRC)The South Refineries Company (SRC) provides a variety of refined oil products and op-erates the Basra, Dhi Qar and Maysan refineries.940

The company is headquartered at the Basra Refinery936 and as of mid-2011 the Director General was Abdul Hussein Nasir Qasim.941

Official website: www.src.gov.iq

Oil Projects Company (SCOP)The Oil Projects Company (SCOP) is responsible for the design and execution of oil projects: refineries, oil depots, pipelines, storage tanks, and exporting crude oil ter-minals.942

As of late 2011 the Director General of SCOP was Nihad Mousa, the first Iraqi woman to hold this position in any of the subsidiary companies of the Iraqi Oil Ministry.943

Official website: www.scop.gov.iq

936 'Iraqi Refineries Present And Future', Wikileaks, 8 January 2009.937 'Iraq Refinery 2012 conference programme', 17 April 2012.938 'Midland Refineries Company (MRC)' Iraq Energy Expo, retrieved 25 December 2011.939 'Daura', Midland Refineries Company, retrieved 10 January 2013.940 'Department', South Refineries Company, retrieved 25 December 2011.941 'US Approves Grant for Basra Refinery Feasibility Study', Iraq Business News 25 July 2011.942 'Oil Projects Company', Iraq Energy Expo, retrieved 25 December 2011.943 'Nihad Mousa', Iraq Oil Forum, 27 October 2011.

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Oil Pipelines Company (OPC)The Oil Pipelines Company (OPC) is responsible for management and operation of oil depots, pumping stations, and pipelines that lead to distribution depots and industrial consumers.944

It is with the OPC that private companies must sign contracts in order to work on pipeline projects in the country.945

Official website: www.opc.oil.gov.iq

Iraqi Oil Tankers Company (IOTC)The Iraqi Oil Tankers Company (IOTC), based in Basra, is responsible for seaborne transportation of oil in the Iraqi oil industry.946

The IOTC's fleet was almost destroyed in the second Gulf War. 946 However in 2012 the company put out a tender for the purchase or construction of a new crude oil tanker, which would be the government's third state-owned oil transport vessel, to add to the two currently in operation which were bought in 2007 and 2008.947

Official website: www.iotc-basra.com

Petroleum Research & Development Center (PRDC)The Petroleum Research & Development Center (PRDC) is a research institute estab-lished with the purpose of developing methods of scientific, pilot and experimental re-search for the oil industry. In this sense, the PRDC: solves technical problems related to petroleum, develops refining techniques in order to find new products or improve petroleum products that already exist, provides scientific support and information services to the Iraqi oil industry, follows the latest scientific and technological re-search on oil industry development and reduction of environmental pollution, and sustains bilateral cooperation efforts with Iraqi universities, their post-graduate stu-dents and professors.948

Official website: www.prdc.gov.iq

Gas Filling Company (GFC)The Gas Filling Company (GFC) was founded in 1998949 and is responsible for industrial

944 'Pipe Line Company', Iraq Energy Expo, retrieved on 25 December 2011.945 'KOGAS wins $127m Iraqi Pipeline Project', Iraq Business News, 9 October 2012.946 'Iraqi Oil Tankers Company', Iraq Expo Online, retrieved 25 December 2011.947 'Iraq Extends Deadline for Crude Tanker Tender', Iraq Business News, 19 April 2012.948 'About the center', Petroleum Research & Development Center, retrieved 25 December 2011.949 'About Us', Iraqi Gas Filling Company, retrieved 10 January 2013.

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management and operation of gas filling complexes. The company receives gas that is produced by the North Gas Company (NGC) and South Gas Company (SGC) in order to treat it and fill bottles to bring to market.950 The company plays an important role in supplying the Iraqi market with liquid petroleum gas (LPG).951

As of 2012 the Director General of the GFC was Hamid Yunis Saleh.951

Official website: gfc.oil.gov.iq

Oil training institutesThe Iraqi Ministry of Oil runs four state-owned oil training institutes throughout the country, specifically, in Baghdad (BOTI), Basra (BasOTI) , Kirkuk (KOTI) and Baiji (Bai-OTI).952953

Established in 1951, the Institute in Kirkuk is the oldest petroleum technical institute in the Middle East. After the second Gulf War, the institute as a whole was transferred to Baiji, but in 2005 the institutes were separated and became independent.953 The In-stitute in Baghdad is considered one of the largest Arab petroleum technical institutes. The Institute in Basra is the second largest of those that are run in Iraq. All four insti-tutes educate their students in a variety of technical education courses related to the oil industry and send their students, later on in their studies, to petroleum industry worksites for further training and acclimation to the industry's work environment.952

BOTI website: www.boti.oil.gov.iq

BasOTI website: www.bsroti.oil.gov.iq

KOTI website: www.kirkukoti.net

BaiOTI website: www.otibaiji.oil.gov.iq

Other Iraqi actorsIraqi Ministry of FinanceThe Iraqi Ministry of Finance is responsible for drafting the country's fiscal budget and overseeing its implementation, imposing and collecting taxes and coordinating the payment of pensions and salaries of government employees.954 It is also respons-ible for reporting the country's official expenditure data.955

950 'Gas Filling Company', Iraq Energy Expo, retrieved 25 December 2011.951 'Ministry of Oil increases pumping liquid gas for actual need', Iraqi News, 14 August 2012.952 'Baghdad Oil Training Institute', Baghdad Oil Training Institute, retrieved 25 December 2011.953 'About us', Kirkuk Oil Training Institute, retrieved 25 December 2011.954 'Ministry of Finance Iraq', Maps of the World, retrieved 25 November 2011.955 'Report to Congressional Committees: Securing, Stabilizing, And Rebuilding Iraq', United

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The federal budget, which is passed as a law by the Iraqi parliament, is drafted by the Ministry of Finance in consultation with other ministries, governorates and the re-gional government. The investment budget is drafted with the assistance of the Min-istry of Planning.956

From the 2003 occupation onwards, revenues from export sales of Iraqi petroleum products were deposited into the Development Fund for Iraq (DFI), an account held by the Central Bank of Iraq (CBI) at the New York Federal Reserve Bank. The DFI is man -aged by the Iraqi Ministry of Finance and administered by the CBI. Expenditures from the DFI are carried out via checks issued by the CBI upon instruction from the Iraqi Ministry of Finance on the basis of the budget.956

On the 21 December 2010, Rafi al-Isawi became Finance Minister and remained in that position as of late 2012.957

Central Bank of Iraq (CBI)The Central Bank of Iraq (CBI) was established on the 6 March 2004 on introduction of the Central Bank of Iraq Law. The bank's principal functions are to: maintain price sta-bility; implement monetary policy and exchange rate policies; manage foreign re-serves; issue and manage the Iraqi currency; and regulate the banking sector. The head office of the CBI is in Baghdad and has four branches, located in Basra, Mosul, Su-laymaniyah and Erbil.958

In 2011 Iraq's Supreme Court ruled that the CBI and other previously independent bodies should be put under supervision of the Cabinet instead of parliament, a ruling which the Huffington Post reported as attracting criticism for putting the non-partisan nature of these institutions at risk.959

Further to this, In October 2012 an arrest warrant was issued by the Ministry of Interi -or for Sinan al-Shabibi, who had led the bank since its creation. The stated reason for the arrest were allegations of financial wrongdoing, but government critics see the charges as politically motivated and an attempt by those in power to sideline the polit-ically independent economist959 and to gain greater control over the US $63 billion of reserves held by the bank. Toby Dodge, Iraq specialist at the London School of Eco-nomics in London, suggested that Prime Minister al-Maliki had "long wanted to access the dollar reserves that Sinan was holding back to stabilise the Iraqi dinar". 960 Abdul Baset Turki, head of the Supreme Audit Board, was named interim central bank gov-ernor after al-Shabibi's suspension.961

States Government Accountability Office, retrieved 25 November 2011.956 'Iraq: Extractive Industries', Revenue Watch Institute, retrieved 25 November 2011.957 'Iraqi parliament approves new government', BBC, 21 December 2010.958 'History of the CBI', Central Bank of Iraq, retrieved 25 November 2011.959 'Sinan al-Shabibi, Iraqi Central Bank Chief, Issued Arrest Warrant Over Corruption Allegations', Huffington Post, 18 October 2012.960 'Iraqi central bank chief suspended', Financial Times, 17 October 2012.961 'Iraq Dismisses Central Bank Chief Amid Investigation', Wall Street Journal, 16 October 2012.

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Role in management of oil revenuesFrom the 2003 occupation of Iraq to July 2011, the CBI had arrangements with the Fed-eral Reserve Bank of New York (FRBNY) whereby the FRBNY maintained an oil pro-ceeds account that received Iraqi oil sales revenues. Of these proceeds, 95 percent were assigned to the Development Fund for Iraq (DFI),962 created by a United Nations Security Council (UNSC) resolution in May 2003963 and housed within the CBI. The re-maining 5 percent was assigned to the United Nations Compensation Commission's fund account,962 established in 1991 for Iraq to pay compensation for losses resulting from its invasion and occupation of Kuwait in 1990.964

During this period, an organisation called the International Advisory and Monitoring Board (IAMB) had oversight of the operations of the DFI. This included audit oversight, both over the control and reporting of oil export revenues, and over the use of reven -ues by the Iraqi ministries. On the 1 July 2011 oversight of the DFI was handed over to the Iraqi Committee of Financial Experts (COFE).965 The UNSC welcomed the Iraqi fed-eral government's assumption of oversight and full authority over its development fund at the same time that it underscored the importance of the Iraqi government en-suring that oil revenues are used in the interest of the country’s people.966

Iraqi Prime Minister's OfficeThe Iraqi Prime Minister is the direct executive authority responsible for the general policy of the state and the commander-in-chief of the Iraqi armed forces. He directs the Council of Ministers, presides over its meetings, and has the right to dismiss any Minister with the consent of the Council of Representatives.967

Role in hydrocarbons industryWhile the Prime Minister’s Office is not directly involved in the day-to-day manage-ment of the oil and gas industry, it is tasked with monitoring developments and rais-ing issues for discussion at meetings of the Council of Ministers. Major oil contracts with international companies also require the approval of the Council of Ministers.968 The Prime Minister’s Office is also often directly involved in negotiations between political blocs with regards to proposed legislation related to the oil industry.969

962 'FSVC and Central Bank of Iraq Meet to Discuss New Central Bank HQ and Future Arrangements for Development Fund for Iraq', Financial Services Volunteer Corps, 14 June 2010.963 'Iraq: Transparency Snapshot', Revenue Watch Institute, retrieved 25 November 2011.964 'Introduction', United Nations Compensation Commission, retrieved 25 November 2011.965 'IAMB Fund for Iraq: Press Release', Iraq Business News, 5 July 2011.966 'Security Council welcomes Iraq’s assumption of oversight over development fund', United Nations News Service, 30 June 2011.967 'Iraqi Constitution', United Nations Assistance Mission for Iraq, retrieved 18 December 2011.968 'Oil and gas contracts in Iraq', Who's Who Legal, July 2010.969 'Analysis: Oil law dissent shows cracks in Maliki's government', Iraq Oil Report, 8 September

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The Prime Minister’s Advisory Board (PMAB), headed by former Oil Minister Thamir Ghadban, is tasked with formulating Iraq’s long-term strategic oil policy.970971 The PMAB’s energy advisor, Ali al-Mashat, is responsible for liaising with international or-ganisations including the World Bank.971

Starting in February 2011, a 'visa blackout' that affected a variety of employees of in-ternational oil companies, from labourers to prospective investors, managers to tech-nicians with specialised skills, was reported in March of the same year by Iraq Oil Re-port journalists. This was based on two anonymous sources, as the result of a decision by the Prime Minister's Office that applications for visas should go through them-selves and not the Iraqi Ministry of Interior.972

Official website: www.pmo.iq

Kurdistan Regional Government (KRG)The Erbil-based Kurdistan Regional Government (KRG) is the official and democratic-ally elected executive body of the Kurdistan Region, also known as Iraqi Kurdistan. An autonomous region of Iraq since 1992, Iraqi Kurdistan reconstituted itself as a federal region upon the ratification of the new 2005 Iraqi constitution.973

Rather than the technical service agreements offered by the central government, the KRG instead offers production sharing contracts (PSCs) to investors in the region, per-ceived by many as more generous to international companies, according to industry analyst Derek Brower.974

Government structure and leadershipThe President of the KRG, who delegates executive powers to the cabinet, is directly elected.975 The cabinet selects the head of the legislature, the Prime Minister.976

KRG President Massoud Barzani was elected in 2005977 and re-elected in 2009 with 71 percent of the vote. Prior to this he was leader of the Kurdistan Democratic Party (KDP), one of the main parties controlling the region since 1991. During the 1990s the KDP was at war with the other leading political faction in the region, the Patriotic Uni-

2011.970 'Q&A:Thamir Abbas Ghadhban', Society of Petroleum Engineers, retrieved 18 December 2011.971 'Iraq Outlines Oil Production Strategy To 2030', Energia, 20 October 2011.972 'Iraq Entry Visa Quagmire Blamed on al-Maliki', Iraq Business News, 23 March 2011.973 'About the Kurdistan Regional Government', Kurdistan Regional Government, etrieved 18 November 2011.974 'About the Kurdistan Regional Government', Petroleum Economist, 13 December 2012.975 'Kurdisan Region Presidency', Kurdistan Regional Government, retrieved 23 November 2011.976 'Prime Minister Salih pledges renewal as cabinet is sworn in' Kurdistan Regional Government, 29 October 2009.977 'Masoud Barzani', Kurdistan Regional Government, 27 June 2007.

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on of Kurdistan (PUK), under the leadership of Jalal Talabani.978 Talabani went on to be elected President of Iraq in 2005.979

As of December 2012 Nechirvan Barzani was Prime Minister of the Kurdistan region, a man who Time magazine credited with the growing Turkish-Kurdish rapproche-ment.980 The region's Natural Resources Minister as of December 2012 was Ashti Hawrami.974

The Iraqi Kurdistan Parliament examines proposals for new laws, scrutinises govern-ment policy and administration, and debates major issues that concern the region. Al-though the regional Parliament shares legislative power with the Iraqi federal govern-ment, priority is given to regional laws in matters that relate to customs, electric en-ergy and its distribution, general planning, and internal water resources. Elections are held at least every four years.981

Relations with central governmentOver recent years relations between the central government and the KRG have deteri-orated, provoked by contracts signed between oil majors and the KRG, viewed as illeg-al by the government in Baghdad.

According to media site Al-Monitor, this can be attributed to a number of reasons, one being the complete breakdown of trust between the two sides, particularly the dam-aged relationship between Nouri al-Maliki and Massoud Barzani, aggravated by strings of accusations.982

Aside from this, leaders in Baghdad have disputed the right for the Kurds to export the oil they produce, outside of the centrally controlled infrastructure. Furthermore the KRG claims control over large areas of disputed territories and has enlisted interna-tional oil companies (IOCs) to explore and produce in these areas, which overlap the boundaries of Nineveh, Kirkuk, Saladin and Diyala provinces. In late 2012 Iraq Oil Re-port reported that the central government and the Kurds came close to open conflict when both deployed troops near the contested border area between north and south, on territory where US companies ExxonMobil and Hunt Oil had agreed to drill.

However officials on both sides of the conflict have said that war is not in either side's interest and may be a consequence of the heated run-up to provincial and national elections in 2013-14.983 In December 2012 the two sides agreed to gradually withdraw their troops from the disputed territories. However according to Turkey's Hurriyet Daily News, the clash raised questions about Baghdad’s federal unity with the KRG.984

978 'Massoud Barzani - Fast Facts', CNN, 14 December 2012.979 'Jalal Talabani', New York Times, 18 December 2012.980 'An Interview with Nechirvan Barzani: Will There Be an Independent Kurdistan?', Time, 21 December 2012.981 'The Kurdistan Parliament', Kurdistan Regional Government, retrieved 30 November 2006.982 'Baghdad-KRG Relations Go from Bad to Worse', Al-Monitor, 16 December 2012.983 'Disputed oil drilling could provoke war', Iraq Oil Report, 12 December 2012.984'Baghdad, KRG agree to withdraw soldiers from disputed area', Hurriyet Daily News, 15 December 2012.

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Official website: www.krg.org

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Key InfrastructureOverview of Infrastructure in IraqRecurring conflict in Iraq has left much of the existing energy infrastructure either damaged or in a poor state of repair. The International Energy Agency (IEA) ear-marked the state of Iraq's energy transport, storage and export infrastructure as a ser-ious constraint to progress in the energy sector.985

In order to reach its stated production targets, Iraq will have to expand its export ca-pacity. By law the country's oil infrastructure is in the hands of the state. Deputy Prime Minister for energy Hussein Shahristani has said that US $500 billion of invest-ment will be needed to lift oil production in line with targets.986 According to the IEA, sufficient oil storage and transportation capacity will also be needed to avoid over-re-liance on the southern sea-borne export route.985

RefineriesA leaked US diplomatic cable from 2009 commented on the poor maintenance and an-tiquated design of Iraq's refinery infrastructure. Whereas modern refineries produce 80 to 90 percent of a barrel of oil into light or medium distillates, Iraq's refineries pro-duce between 50 and 55 percent, thus creating large amounts of heavy fuel oil.987

Iraq's principal refineries are at Basra, Daura, and Baiji. The country's refineries are di-vided between three operating companies: the North Refineries Company (NRC), the Midland Refineries Company (MRC), and the South Refineries Company (SRC).987 The facilities at Baiji, Daura and Basra account for around 70 percent of total output.985

The country's oil processing facilities have run below capacity following the 2003 inva-sion. As of October 2012 overall refining capacity in Iraq stood at around 620,000 bar-rels per day (bpd), however following a series of expansions, particularly at the Daura and Basra facilities, the Iraqi government hoped to expand this by 23 percent to reach 760,000 bpd by early 2013.988 But estimates differ and according to a US diplomatic cable from early 2009, design refining capacity in Iraq stood at approximately 740,000 bpd.987 According to a leaked US diplomatic cable from 2009, plans to modernise and expand Iraq's refineries have moved slowly due to difficult contracting procedures, a shortage of skilled staff and unreliable electricity supplies making operation of equip-ment unsafe.987 The country is also planning to build four new refineries at a cost of around $25 billion, including a 300,000 bpd plant in Nasiriyah and a 140,000 bpd plant

985 'Iraq Energy Outlook', International Energy Agency, 12 November 2012.986 'Will Iraq be the next oil superpower?', Petroleum Economist, 12 December 2012.987 'Iraqi Refineries Present And Futur',e Wikileaks, 8 January 2009.988 'Iraq Plans to Boost Oil-Refining Capacity by 23% Early Next Year', Bloomberg, 4 October 2012.

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in Karbala.989

In the northern Kurdistan region the majority of official refining capacity is provided by the Khabat refinery near Erbil990 (capacity of 40,000 bpd in 2010).991 Other refineries in the region are Bazian in Sulaymaniyah and Kat in Kirkuk. Iraq Oil Report estimated in 2012 that the region's major refineries are capable of processing 66,000 bpd in total, and the government had plans to expand capacity with two new refineries. In addi-tion, in 2012 there were an estimated 80-100 so-called 'topping plants' available to the KRG, that is smaller and less efficient facilities with an estimated cumulative capacity of 150,000 bpd.990

TerminalsIraq has two terminals at Basra and Khor al-Amaya. Up until the construction of two new export terminals at Khor al-Amaya in March 2012, Basra was the country's main export terminal, with the terminal at Khor al-Amaya handling only small volumes.992

The EIA's 2012 report notes that the lack of sufficient storage in the south of Iraq is a particular problem, meaning that any delays or weather-related interruptions to load-ing tankers at the offshore facilities can lead directly to a production shut-down. New storage capacity was being built in 2012 at the main export depot at Fao, but further expansion of capacity was required.993

PipelinesAccording to Iraq Oil Report, Iraq's crude pipelines are long overdue for inspection and would need to be upgraded or replaced if Iraq is to succeed in increasing its oil ex -ports. The country urgently needs to expand its capacity and find alternative export routes, as the primary export route through Basra is 'logistically constrained' to around 5 million barrels per day (bpd) of exports, while Iraq is looking to increase pro-duction capacity to 8 million bpd by 2018.994

Aside from the export terminals at Basra and Khor al-Amaya, Iraq's other principal ex-port route is the northern pipeline route to Ceyhan. According to the Ministry of Oil the maximum capacity along this route in July 2012 was 600,000 bpd, far below the 'nameplate capacity' of 1.6 million bpd. Actual flow rates averaged just over 300,000 bpd.993

The pipeline system from Iraq to Turkey suffered much damage during Iraq's wars, causing a fall in capacity. Iraq's reversible north-south pipeline, the Strategic Pipeline was also damaged by the conflict and can carry only a fraction of its 1.4 million bpd ca-

989 'Iraq Plans to Boost Oil-Refining Capacity by 23% Early Next Year', Bloomberg, 4 October 2012.990 'KRG oil deals buoyed by refinery plan', Iraq Oil Report, 29 March 2012.991' Kurdish Refinery to Start Selling Petrol', Iraq Business News, 8 December 2010.992 'Iraq ramps up its crude exports', Lloyd's List Intelligence, 20 September 2012.993 'Iraq Energy Outlook', International Energy Agency, 12 November 2012.994'Iraq sets Jordan pipeline into motion', Iraq Oil Report, 2 January 2013.

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pacity.995

Iraq has announced plans in the past to rebuild its national strategic pipeline network, calling for expanding capacity into Turkey and opening routes to both Jordan and Syr-ia. A strained relationship with Turkey and conflict in Syria complicated these plans. But in 2012 the Iraqi government set a target of creating 1 million bpd of export capa-city to Jordan, via a 1,680 kilometre pipeline from Basra, up to Haditha and into Jordan. This would be the first cross-border pipeline constructed since the Iraq Pipeline through Saudi Arabia (IPSA) was built in the 1980s and later expropriated by the Saudis.996

The Iraq Pipeline through Saudi Arabia (IPSA) remained out of operation in early 2013 despite talk of reactivation.997

Other projectsSince 2008 the Iraqi government has also been pursuing a project to capture and use surplus gas produced at the country's southern fields, in collaboration with oil major Shell, known as the South Gas Utilisation Project (see separate article).998

RefineriesBaiji RefineryBaiji, located roughly 180 kilometres north of Baghdad, is Iraq's largest refinery999 and supplies 11 Iraqi provinces with refined petroleum products.1000 It was built in 19821001 and is part of a complex that includes a thermal power plant, also the largest in the country, which is a major contributor to Baghdad's electricity supply.1002

Baiji is operated by the the North Refineries Company.1003 According to the IEA in 2012, Baiji, like other refining infrastructure in Iraq, was in urgent need of upgrading.1004

995 'Will Iraq be the next oil superpower?', Petroleum Economist, 12 December 2012.996 'Iraq sets Jordan pipeline into motion', Iraq Oil Report, 2 January 2013.997 'Circumventing the Strait of Hormuz' Bottleneck', Atlantic Sentinel, 20 December 2011.998 'Shell signs £11bn deal to fuel Iraq's power stations with gas', Guardian, 27 November 2011.999' All units at Iraq’s Baiji oil refinery re-started', Arab News, 25 June 2011.1000 'UPDATE 2-Iraq Baiji refinery says restarts partial operation', Reuters, 28 February 2011.1001 'Iraq's Baiji refinery 'back to normal'', France 24, 4 March 2011.1002 'Bayji [Beiji]', Global Security, retrieved 14 December 2011.1003 'The biggest 25 refineries in the Middle East', Arabian Oil and Gas, retrieved 14 December 2011.1004 'Iraq Energy Outlook', IEA, 12 November 2012.

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CapacityAccording to a leaked US diplomatic cable, the design capacity at Basra in 2009 was 310,000 barrels per day (bpd), accounting for 40 percent of the country's overall design capacity. However the distinction is highlighted between "design capacity" and "oper-ational capacity", noting that the BOR has an operational capacity of approximately 75 percent of its design capacity, largely due to difficulties in acquiring spare parts for maintenance, damage caused by unreliable electricity supplies, the long-term effects of the sanctions period, and a shortage of highly skilled workers. As of early 2009 total operations capacity was approximately 65,000 bpd (or 10 percent) lower than design capacity.1005

As of mid-2011, the Baiji refinery was functioning at about 70 percent of its 310,000 barrel per day (bpd) capacity, according to Arab News. However other press sources es-timate total capacity at the lower figure of 300,000 bpd.1006 However this could be a res-ult of a lack of clarity over production levels and design capacity.

On 22 November 2011 the Japanese Prime Minister Yoshihiko Noda announced a loan of $35 million for Iraq to upgrade engineering services to modernise the Baiji refinery, and on 28 November US-based firm Honeywell announced it had obtained a contract to upgrade the refinery's control and process system.1007

SecurityThe refinery was heavily damaged during bombing in 1991 Gulf War. In the years fol-lowing the 2003 invasion Baiji's supply chain, especially a pipeline carrying crude oil from the supergiant Kirkuk field, was the subject of repeated attacks by insurgents and organised crime syndicates. The refinery itself was also targeted, and production was interrupted on numerous occasions.1008 Baiji was shut down again in late February 2011 when insurgents detonated several bombs, killing two people and damaging sev-eral units. The attack halted the production of around 150,00 bpd of petroleum products,1009 but production levels returned to normal in early March 2011.

Basra RefineryAlso known as the Ash Shaabiya refinery,1010 the Basra Oil Refinery (BOR) is located in the far south of the country about 545 kilometres (km) from Baghdad and 55 km from the Persian Gulf. Basra is Iraq's primary terminal point for oil pipelines and is also the

1005 'Iraqi Refineries Present And Future', Wikileaks, 8 January 2009.1006 'Baiji refinery’s capacity reach 300,000 barrels per day – ministry', Iraqi News, 21 March 2011.1007 'Honeywell Has $360 Mln Of Contracts In Iraq - Executive', Wall Street Journal 28 February 2011.1008 'Iraq Pipeline Watch' Institute for the Analysis of Global Security, 27 March 2008.1009 'Bombing Damages Iraq’s Largest Oil Refinery', New York Times, 26 February 2011.1010 'Iraq’s Baiji Refinery Unit to Restart Next Week, Ministry Says', Bloomberg, 28 February 2011.

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site of Iraq's chief export terminal.1011

The refinery began production in 19741012 and was heavily damaged in the 1980-1988 Iran-Iraq war. The complex is owned and operated by Iraq's South Refineries Com-pany.1013

CapacityAccording to a leaked US diplomatic cable, "design capacity" at the Basra refinery in 2009 was at 160,000 barrels per day (bpd). However operational capacity was approx-imately 15 percent of this figure. 1014 In other press sources there are some discrepan-cies in the capacity figures cited, with many sources claiming 140,000 bpd of produc-tion, and Arabian Oil and Gas citing a figure of 210,000 bpd.101510161017

In July 2011, the US Trade and Development Agency signed an agreement with the South Refineries Company for a grant of $502,798 to conduct a feasibility study for the upgrade and rehabilitation of the refinery. The refinery's modernisation is intended to support the Iraqi Ministry of Oil’s goal to reach a capacity of 12 million barrels per day in production by 2020.1018

Daura RefineryThe Daura refinery was built in 1953 and began operations in 1955.1019 It is located 20 kilometres south-west of Baghdad. Operated by Iraq's Midland Refineries Company (MRC),1020 the Daura refinery is Iraq's second-largest.1021

The refinery itself and pipelines supplying it with crude oil were attacked numerous times by insurgents between 2003 and 2008.1022

CapacityDaura's refining capacity has undergone major fluctuations. It was expanded in 1996 to nearly 130,000 barrels per day (bpd), but its capacity had fallen to 110,000 bpd by

1011 'Basrah', Global Security, retrieved 5 January 2012.1012 'Homepage', South Refineries Company, retrieved 5 January 2012.1013 'Basrah Refinery', A Barrel Full Retrieved 5 January 2011.1014 'Iraqi Refineries Present And Future', Wikileaks, 8 January 2009.1015 'Iraq eyes upgrade for Basra refinery', World Tribune, 25 May 2012.1016 'Shaw to Conduct Feasibility Study to Basra Refinery', Gulf Oil and Gas, 13 December 2011.1017 'Top 22 Regional Downstream Projects', Arabian Oil and Gas, 29 October 2012.1018 'United States approves grant for Basrah refinery feasibility study', US Embassy Baghdad, 21 July 2011.1019 'Daura Refinery Expansion On Schedule', Business Monitor International, 26 October 2009.1020 'Iraq - The Daura Refinery', APS Review Downstream Trends, 11 May 2011.1021 'Bombs in Daura refinery intensify security scare', Iraq Oil Report, 17 June 2011.1022 'Iraq Pipeline Watch', Institute for the Analysis of Global Security, 27 March 2008.

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2005.1023 A leaked US diplomatic cable from January 2009 claimed a 'design capacity' of 90,000 bpd, but noted that the refinery regularly operated at 50 percent capacity due to inadequate supplies of crude oil, as the Strategic Pipeline was unable to fuel all of the users along its route.1024

Between 2009 and 2011, the refinery's capacity was raised to 210,000 bpd following the construction of new units, and remained at this level as of mid-2011.1025 In late 2012 Deputy Oil Minister Ahmad al-Shamaa announced that expansion of the Daura re-finery would be a component of plans to increase overall refining capacity by 23 per -cent by 2013.1026

Erbil RefineryOwned by the KAR Group, Erbil refinery is the first major refinery in the northern Kur-distan region and the first private sector refinery in Iraq. It received its first oil in 2009. The oil is transported via pipeline from the processing station at the Khurmala Dome.1027 Feedstock for the Erbil refinery comes from the disputed Kirkuk field.1028

The refinery project is a key part of expansion plans in the Kurdistan region in order to absorb increasing production levels under the Kurdistan Regional Government (KRG).1028 The UK's Financial Times described the project as a "symbol of private, local investment in Kurdistan - and of the region's ambitions."1029

Construction originally began on the refinery in 2005 under a contract between the Ir -aqi Ministry of Oil and the Iraqi Ministry of Industry and Minerals. However following delays and budget difficulties, the KRG intervened in late 2008 and awarded the con-struction contract to the KAR Group.1027

CapacityAccording to the KAR Group, the complex had an initial capacity of 20,000 barrels per day (bpd).

In late 2011 the refinery was processing 40,000 bpd of crude, but following an expan-sion plan was expecting to nearly triple the figure to 110,000 bpd by late 2012. KAR founder Baz Karim estimated that once the expansion is complete, the refinery will be able to cater for close to 80 percent of local needs.1029

1023 'IRAQ - The Daura Refinery', APS Review Downstream Trends, 9 May 2005.1024 'Iraqi Refineries Present And Future', Wikileaks, 8 January 2009.1025 'Iraq - The Daura Refinery', APS Review Downstream Trends, 11 May 2011.1026 'Iraq Plans to Boost Oil-Refining Capacity by 23% Early Next Year', Bloomberg, 4 October 2012.1027 'Erbil Refinery', KAR Group, retrieved 15 January 2013.1028 'KRG oil deals buoyed by refinery plan', Iraq Oil Report, 29 March 2012.1029 'Refining: Domestic processing capacity is rising quickly', Financial Times, 7 December 2011.

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TerminalsKhor al-Amaya Oil Terminal (KAAOT)The Khor al-Amaya oil terminal (KAAOT), along with Iraq's Basra Oil Terminal, is used to export 'Basra blend' crude.1030 The terminal was built in 19611031 and lies south-east of the Al-Faw peninsula in the Arabian Gulf.1032

Crude produced at Iraq's southern fields, or processed at domestic refineries, is sent onto onshore storage facilities and exported into the Gulf via KAAOT. According the International Energy Agency (IEA) analysis from a 2012 report, 113,000 barrels per day (bpd) is exported via this route, compared to 1.5 million bpd via the Basra terminal and 442,000 bpd into the Gulf via single point mooring (SPMs).1033

CapacityWhen the KAAOT re-opened for exports after the 2003 invasion of Iraq, it had an initial capacity of 300-400,000 barrels per day (bpd).1034 By 2011 it still had an effective capa-city of 300,000 bpd.1035

SecurityAccording to the UK Ministry of Defence, since 2003 UK, US and Australian naval forces were committed to almost round-the-clock patrols of the waters around Khor al-Amaya, until responsibility was handed over to Iraqi forces.1036

In a 2009 US leaked diplomatic cable, it was reported that an Iranian letter claiming that the KAAOT was located in Iranian territorial waters had alarmed Iraqi officials.1037

Basra Oil Terminal (ABOT)The al-Basra Oil Terminal (ABOT), formerly known as Mina al-Bakr, was built in 1975 by the Iraq National Oil Company. It lies some 50 kilometres off the Iraqi coast.1038

1030 'Iraqi Oil Industry', IAS Group, March 2011.1031 'Oil Minister Complacent About Upstream Production Plans', Wikileaks, 9 April 2009.1032 'Excavating a path through Iraq’s unexploded ordnance', Oil Online, 9 September 2011.1033 'Iraq Energy Outlook', International Energy Agency, 2012.1034 'Iraqi American Chamber of Commerce and Industry', IAS Group, March 2011.1035 'Iraqi Oil Industry', IAS Group, March 2011.1036 'Last Iraq oil terminal patrol for Royal Navy', UK Ministry of Defence, 25 January 2011.1037 'Oil Minister Complacent About Upstream Production Plans', Wikileaks, 9 April 2009.1038 'Al Basrah Oil Terminal, Special Inspector General for Iraq Reconstruction, 26 April 2007.

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CapacityAs of mid-2011 ABOT had an effective export capacity of about 1.5 million barrels per day (bpd) of oil, handling about 80 percent of Iraq's exports.1039

However in September 2010 Iraq’s cabinet approved a US $733 million deal to build a new oil export terminal, with a capacity of 1.8 million bpd, at the site.1040 Over 2012 two single-point mooring systems came on stream, each with a capacity of 900,000 bpd. Two further systems were due to come on stream in 2013, bringing total export capacity out of the south to 4.5 million bpd.1041

Impact of conflictThe terminal's infrastructure has been badly damaged by years of war and instabil -ity.1042 Major expansion work was stalled by the outbreak of the Iran-Iraq War in September 1980. The terminal was heavily damaged in the fighting and exports did not resume until the war ended in 1988-9.1043

The Basra terminal suffered further serious damage during the second Gulf War in January 1991 and exports were halted completely. Iraq managed to start repairs at ABOT in the 1990s, but it was only possible to export around 400,000 bpd through the terminal. By 2003 its capacity reached some 1.3 million bpd. During the US-led inva-sion the terminal was captured by US Navy Seals in a night-time amphibious attack in the war of 2003.1044

PipelinesKirkuk-Banias Pipeline (IPC)The 880-kilometre Kirkuk-Banias pipeline was first brought online in 1952 and trans-ported oil from Kirkuk in central-northern Iraq to the port of Banias in Syria. Accord-ing to Pipelines International, the building of the pipeline marked a significant moment in the development of Iraq's petroleum industry.1045

The pipeline stopped operating in 2003 during the US-led invasion of Iraq and as of late 2012 remained closed.1046

1039 'Iraqi Oil Industry, IAS Group, March 2011.1040 '$733m Contract Awarded for Basra Oil Terminal', Iraq Business News, 28 September 2010.1041 'Will Iraq be the next oil superpower?'. Petroleum Economist, 12 December 2012.1042 'Aging Oil Terminal Vital To Iraq's Economy', NPR, 20 June 20091043 'Iraq’s Oil Export Outlets, Middle East Economic Survey, 30 November 2009.1044 'Task Forces Bolster OIF, OEF Maritime Security, WhisperWave, 16 February 2006.1045 'The Kirkuk – Banias Pipeline', Pipelines International, March 2011.1046 'Syria Oil Gas Profile', A Barrel Full, retrieved 6 January 2011.

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CapacityThe Kirkuk-Banias pipeline had a capacity of 300,000 barrels per day (bpd) prior to 2003. However its original capacity when built in the 1950s was 1.4 million bpd.1047

HistoryIn 1950 the Iraq Petroleum Company (IPC) contracted Bechtel to construct the 30-32 inch pipeline, which was laid by British, American, Syrian and Iraqi workers. Construc-tion was completed in 1952. The pipeline was damaged by the Syrian army in response to the Anglo-French seizure of the Suez Canal zone in 1956, but was later repaired.

In 1972 Iraq nationalised the IPC, prompting Syria to nationalise the IPC's assets in Syria, including the Syrian section of the Kirkuk-Banias pipeline.1045

The pipeline was closed for much of the 1970s and 1980s, but in the 1990s it was re-opened so that Iraq could bypass the UN oil embargo. At the time, reports put Iraq's exports through the line at about 150,000-200,000 bpd.1047 But the pipeline was bombed by US forces during the invasion that removed Saddam Hussein in 2003, stopping the flow of oil.

In 2007 it was reported that Syria and Iraq were discussing plans to revive the pipeline, however ongoing security issues stalled the deal according to then Oil Minis-ter Shahristani.1048 Reports suggested that Russian firm Stroytransgaz had secured a contract for repairs, however Christopher Blanchard reported that in 2007 the Syrian government was seeking alternative foreign firms. In April 2009 Syria and Iraq again announced that the two sides had reached an agreement to repair the line, however the deal was not followed through.1049

In April 2011, Stroytransgaz reported that Iraq was finalising the terms of engagement for a contract to construct two crude export pipelines and a gas pipeline through Syria to the Banias port, to be offered to investors. Capacity for the two pipelines was expec-ted to reach 2.75 million bpd. The first pipeline would transport heavy crude from the northern Baiji area, potentially including oil from Majnoon, Halfaya, Badra, Ahdab and the East Baghdad fields, as well as Najmah and Qayara. The second would follow the route of the existing damaged pipeline, with a capacity of 1.25 million bpd. As of late 2011 the project had not been confirmed.1050

Iraq Pipeline through Saudi Arabia (IPSA)The Iraq Pipeline through Saudi Arabia (known as IPSA) travels through Saudi Arabia

1047 'NOC lets contract for Kirkuk-Banias oil line repair', Pipelines International, 4 July 2008.1048 'Iraq says oil flows through Syria depend on security', Reuters, 20 August 2007.1049 Blanchard, Christopher ' Iraq: Regional Perspectives and US Policy', Congressional Research Service, 6 October 2009.1050 'Iraq Finalises Tender Terms for Syria Export Pipelines', Stroytransgaz, 21 April 2011.

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to the Red Sea Port of Mu'ajiz, just north of Yanbu. IPSA has suffered several closures as a result of wars and other political events and has been out of operation since the Gulf crisis.1051

The terminal at Mu’ajiz has 10 million barrels of storage and loading facilities for handling tankers up to 400,000 tons.1052

CapacityIPSA has a design capacity of 1.65 million barrels per day (bpd).1052

HistoryIPSA was laid in the 1980s in order to diversify export routes after oil tankers were at-tacked in the Gulf by both sides during the Iran-Iraq war. However it has not carried Iraqi crude since Saddam Hussein invaded Kuwait in 1990, causing relations between the two countries to deteriorate.

Saudi Arabia confiscated the pipeline in 2001 as compensation for debts owed by Bagh-dad and from then until 2012 had only used the line to transport gas to power plants in the west of the country.1053

According to former Iraqi Oil Minister Issam al-Chalabi, no attempts were made to re-cover the pipeline system following the 2003 invasion, and political relations between Iraq and Saudi Arabia remained sour.1054

In September 2003, unnamed official sources stated that Saudi Arabia had decided to reopen the IPSA pipeline to allow Iraqi oil to be exported from the country's southern oilfields to Yanbu.1055 However by October of the same year, a Saudi Aramco official stated that Iraqis "don't know what they are talking about... the pipeline is not in a us-able form because of its long-term and sudden closure."1056

In December 2011, after Iranian authorities threatened to close the Persian Gulf to in-ternational oil trade, consideration of alternative export routes to the Strait of Hor-muz led to renewed discussion about the various oil pipelines that run across Saudi Arabia. The IPSA pipeline and the Trans-Arabian Pipeline (also known as Tapline) could carry the equivalent of up to 2 million bpd to ports on the Red Sea and Mediter-ranean coasts.1057 Nonetheless Iraq's security concerns, which include protection of threatened oil infrastructure and reserves, would also need to be considered before any decision to reopen the IPSA pipeline could be suggested as a viable option, accord-

1051 'Energy Profile of Iraq', Encyclopedia of Earth, 3 July 2007.1052 'Baker Institute paper suggests pipeline alternative to Hormuz oil route', Pipeline and Gas Journal, May 2012.1053 'Saudi Arabia reopens oil pipeline with Iraq to counter Iran Hormuz threat', Al Arabiya, 29 June 2012.1054 'Iraq’s Oil Export Outlets', Middle East Economic Survey, 30 November 2009.1055 'Saudi to reopen Iraq pipeline', AME Info, 11 September 2003.1056 'Iraq-Saudi oil pipelin is unusable', Gas And Oil, 20 October 2003.1057 'Circumventing the Strait of Hormuz' Bottleneck', Atlantic Sentinel, 20 December 2011.

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ing to reports by Reuters.1058

Taq Taq-Khurmala Oil PipelineThe 75-kilometre Taq-Taq-Khurmala pipeline, under construction as of late 2012, will link the Taq Taq oil field to the Khurmala dome, the northernmost part of the giant Kirkuk field and the entry point for the Kirkuk-Ceyhan pipeline. The pipeline was be-ing built by the Erbil-based KAR Group, has a capacity of 150,000 barrels per day (bpd) and was due for completion in late 2012.1059 In the meantime crude for export was be-ing transported by truck, either 135 kilometres (km) to Khurmala or 255km to Fishka-bur on the Turkish border.

The project constitutes the first part of a two-phase project envisaged to link produ-cing fields in Kurdistan to Fishkabur. The completed pipeline will have a capacity of 1 million bpd. The second phase was expected to be completed by the end of 2013, ac-cording to Genel Energy.1060

Kirkuk-Ceyhan Oil PipelineTransporting oil from fields near Kirkuk in Iraq's north to the Turkish Mediterranean port of Ceyhan, the Kirkuk-Ceyhan pipeline spans 941 kilometres. It comprises two parallel pipelines, the first of which was commissioned in 1977 and the second in 1987.1061 In 2012 the pipeline was carrying a quarter of Iraq's crude exports1062 and as of 2012 was the only export route for Iraq's northern oil production.1063

The pipeline is operated by the Iraqi Oil Ministry's North Oil Company (NOC). 1064 Since it rests directly within the sphere of influence of the Kurdistan Regional Government (KRG) some Kurdish observers, such as the newsletter Kurdish Aspect, have argued that the pipeline should be automatically incorporated into KRG geography pursuant to Article 140 of Iraq's 2005 constitution.1065

As of December 2011, the Turkish-backed company Genel Energy had plans to build a US $400 million oil pipeline to link the southern Taq Taq field with the Kirkuk-Ceyhan pipeline. Genel hoped to start construction on the new 400,000 bpd pipeline in the spring of 2012.1066

1058 'FEATURE-Iraq oil security tested as U.S. forces withdraw', Reuters, 16 December 2011.1059 'Kurdistan Taq Taq oil exports rise ahead of Sept deadline', Reuters, 6 September 2012.1060 'Taq Taq PSC', Genel Energy, retrieved 7 December 2012.1061 'Pipeline projects in the Middle East', Pipelines International March 2010.1062 'Fire halts Kirkuk-Ceyhan pipeline', Upstream Online, 27 August 2012.1063 'Syria’s transit future: all pipelines lead to Damascus?', OpenOil, 28 March 2012.1064 'False Reports of Suspension of Oil Exports from Kurdistan', Iraq Business News 12 September 2011.1065 'Kirkuk-Ceyhan pipeline belongs to Kurdistan', Kurdish Aspect, 22 September 2010.1066 'Former BP chief explores the final oil frontier', Financial Times, 7 December 2011.

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CapacityThe pipeline has a capacity of 1.6 million barrels per day (bpd) but in 2011 was typic -ally pumping around 500,000 bpd.1067 The two component pipelines have diameters of 46 inches and 40 inches respectively, and the project includes four pump stations and three storage tank farms on the Iraqi side, with a metering station at the Turkish bor-der.1068

HistoryThe pipeline was made operational in the 1980s in part to make possible the export of crude oil while avoiding the risk of passing through the Persian Gulf during the Ir-an-Iraq war from 1980 to 1988. It has been under attack and subject to prolonged clos-ures for much of its existence, contributing to its below-capacity operation.1069

The pipeline was a primary target of insurgent attacks and sabotage in the years fol -lowing the US-led invasion of Iraq,1070 and was offline more than online between 2003 and 2007.1071 Since then it has been shut down on several occasions, sometimes due to attacks (for instance, a bomb shut down operations for several days in March 2011) 1067

and at other times due to old, deteriorating infrastructure (as in September 2011, when exports were halted because of a leak).1071

In September 2010 Iraq and Turkey signed an agreement to extend their joint opera-tion of the pipeline for 15 years and to upgrade its capacity by about 1 million bpd, though the Iraqi Oil Ministry provided no timetable for the upgrade's completion. The extension also included amendments that raised the transit fees payable to Turkey as well as an official guarantee by the Turkish government giving it the authority to dis-miss orders by Turkish courts to seize Iraqi oil.1072

Strategic PipelineIraq's Strategic Pipeline was built in 1975, comprising two parallel 700,000 barrels per day (bpd) pipelines capable of transporting crude from Kirkuk south to the Arabian Peninsula.1073 The objective of this reversible pipeline was to give the option of pump -ing Kirkuk crude southwards for export via the Gulf or of pumping crude from the southern fields northwards, for export via Turkey or to refineries around Baghdad.1074

1067 'UPDATE 1-Blast shut down Iraq Kirkuk-Ceyhan pipeline-sources', Reuters 9 March 2011.1068 'The Main Installations', North Oil Company, retrieved 14 December 2011.1069 'Terror threatening European energy', Hurriyet Daily News, 17 November 2011.1070 'Iraq Pipeline Watch', Institute for the Analysis of Global Security, 27 March 2008.1071 'Iraq Shuts Kirkuk-Ceyhan Crude Export Pipeline Following Leak', Downstream Today, 29 September 2011.1072 'Iraq, Turkey sign renewed oil pipeline accord', Reuters, 12 September 2010.1073' The Kirkuk – Banias Pipeline ' Pipelines International, March 2011.1074' Iraq Energy Outlook' IEA, 12 November 2012.

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Work was halted on the second line during the Gulf War of 1990-91.1075 Due to damage to parts of the pipeline, as of 2012 the line was only used to transport oil for domestic purposes, mainly from the South Oil Company to the refinery at Daura.1074

CapacityThe Strategic Pipeline is designed to carry 850,000 bpd of crude, but the IEA estimates operating capacity to be much lower. Actual flows in June 2012 were below 50,000 bpd.1074

Islamic Gas PipelineIn summer 2011 Iran, Iraq and Syria signed a memorandum on laying a 5,000-kilo-metre pipeline,1076 to be named the Islamic Gas Pipeline. The proposed pipeline would transport gas resources from Iran's South Pars field and would extend through Iraq, Syria, Lebanon and to Europe under the Mediterranean sea.1077

Iran suggested in 2011 that the Islamic Pipeline could serve as an alternative to the EU-backed Nabucco pipeline set to supply Europe with gas resources via Turkey and Austria. The estimated cost of the project is US $10 billion and is expected to be in op-eration by 2016.1077

However Konstantin Simonov of the National Energy Safety Foundation commented that "everyone is aware of political risks associated with Iran" and that "moreover, the construction will never begin because Iran and Syria have no money and foreign fin-ancial resources are unavailable to them.”1077

CapacityAccording to the Deputy Oil Minister Javad Owji, the proposed pipeline would be able to pump 3.9 billion cubic feet (bcf), of natural gas per day.

Baghdad stated it wants up to 530 million cubic feet (mcf) per day for its own needs, Syria would need up to 706 mcf and Lebanon up to 247 mcf. According to UPI, this would leave 2.4 bcf for possible export.1078

Erbil-Dohuk gas pipelineThe Erbil-Dohuk pipeline is a project under construction, as of mid-2012, by the KAR Group, built to transport gas to a power plant in Dohuk, near the Turkish border. How-

1075 'Iraq 'Reopens Strategic Pipeline'' Iraq Business News, 6 December 2012.1076 'Seven Investors Ready to Fund Islamic Gas Pipeline' Gulf Oil and Gas, 8 June 2011.1077 'Islamic Pipeline to challenge Nabucco' Voice of Russia, 26 July 2011.1078 ''Islamic pipeline' seeks Euro gas markets' UPI, 25 July 2011.

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ever according to Iraq Oil Report, the pipeline also has serious strategic implica-tions, in that the Dohuk plant needs only around 100 million cubic feet (mcf) of gas per day, while the pipeline has a capacity of 400 mcf, leaving space for potential exports. According to the report, this would suggest that the KRG might be looking to build a pipeline extending beyond Dohuk and north into Turkey.1079

Other infrastructure projectsSouth Gas Utilisation ProjectIn September 2008 international oil company Shell signed a Heads of Agreement (HOA) with the Iraqi Ministry of Oil to capture some of the surplus gas produced during oil extraction at Basra in the south, for a project which later came to be known as the South Gas Utilisation Project. The surplus gas was previously burnt off in a process known as 'flaring', which is estimated to cost US $5 million a day in lost fuel. Shell Chief Executive Peter Voser described the deal as heralding “a new chapter in the gas industry in Iraq”.1080

The joint venture company established to manage the project was the Basra Gas Com-pany (BGC), a collaboration between the state-run South Gas Company (SGC), Shell and Mitsubishi Corporation. The documents finalising the creation of the BGC were ap-proved by the energy committee at the Council of Ministers in September 2011, and ratified by the Cabinet on the 15 November 2011. Under the agreement, gas was to be supplied from the southern oil fields of Rumaila, Zubair and West Qurna-1 and the life-time investment was estimated at more than $17 billion.1081 The SGC holds a 51 percent stake, Shell 44 percent and Mistubishi 5 percent.1082 However when reacting to leaked diplomatic cables in 2011, Iraq Oil Report suggests that in contrast to the transparent and competitive bidding rounds of 2009 and 2010 for oil and gas contracts, the Shell gas deal was brokered behind closed doors and may have put Shell's prerogatives ahead of Iraq's interests.1083

Operations are to be overseen by a management committee consisting of five repres-entatives from the ministry, four from Shell and one from Mitsubishi. As majority shareholder, the SGC must approve any committee decision.1084

1079 'Strategic KRG pipelines near completion' Iraq Oil Report, 29 August 2012.1080 'Shell signs £11bn deal to fuel Iraq's power stations with gas', Guardian, 27 November 20111081 'Iraq’s Challenges On Its Path Toward A World Class Gas Industry', Middle East Economic Survey, 21 November 2011.1082 'Shell gets its gas deal', Iraq Oil Report, 27 November 2011.1083 'The secret history of the Shell gas deal' Iraq Oil Report, 21 January 2010.1084 'Shell gets its gas deal', Iraq Oil Report, 27 November 2011.

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Project goals Oil Minister Abdul Karim al-Luaibi has highlighted the important role the BGC was in-tended to play in Iraq's strategy to boost the country's "chronically underperforming electricity sector". A further goal of the project is to diminish the environmental and public health impact of gas flaring.1083

In the short term, the objective is to rehabilitate 30 existing facilities and two major processing plants at North Rumaila and Khor al Zubair previously operated by the South Gas Company. But as oil production increases, there will be total investment of US $13 billion, with the possibility of an additional $4 billion for an LNG export plant if there were to be sufficient surplus gas after domestic needs had been met. The object -ive for throughput is 20 billion cubic metres (bcm) of gas per year.1085

Obstacles Despite the deal finally being brought to a conclusion in 2011, the project continued to face opposition from key local stakeholders. The Basra provincial council has threatened to file a lawsuit against the deal, claiming that local officials were not in-volved in the negotiations and did not have the opportunity to secure guarantees of social investment. This is a claim denied by Shell management, however Iraq Oil Report suggests that the validity of the Council's objections was acknowledged by one of PM Nouri al-Maliki's top oil advisors.1083

The question of how to align the interests of the various parties involved present a further challenge. As of December 2011, the issue of the relationship between the BCG and the operators of the fields in question (including BP, ExxonMobil and Eni) still needed to be resolved. There was some disagreement on who has first rights to the as-sociated gas produced at the fields.1083 Analysis by the International Energy Agency (IEA) expands on this challenge, arguing that as the technical service contracts signed for fields supplying gas to the BGC do not include a remuneration fee for gas produc-tion, the contractors have little commercial incentive to make gas readily available. However they do have an incentive to use the project to promote a strong public im-age on the question of flaring.1085

In addition the project presents complex economic problems. Low domestic gas prices (fixed at just over $1 per million British thermal units, MBtu) do not offer sufficient value to underpin the investment required, according to the IEA, meaning that the BGC must rely on returns earned from the higher value of natural gas liquids extracted from the raw gas (condensate and LPG), which command a higher price than the do-mestic gas price.1085

1085 'Iraq Energy Outlook', International Energy Agency, 2012.

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Environmental Impacts of Iraq's Oil and Gas Industry

Gas flaringAs of 2011, the only countries to 'flare' more natural gas than Iraq were Russia, Iran and Nigeria.1086

See also: Natural Gas Flaring in Iraq

Water and marshlandsThe process of oil extraction requires vast quantities of water, often more than the volume of oil produced. In the past, oil companies in the south of Iraq have primarily relied on the Tigris river for water supply, however Iraqi government officials have predicted that southern Iraq will face a major water crisis in 15 to 20 years if things continue as they are.1087

In particular tensions between Turkey and Iraq have arisen over the impact of Tur-key's US $32 billion1088 Southeast Anatolia Project (GAP) on Iraq's water resources. GAP is an infrastructure project launched in 1975 and involving the construction of 22 dams across the Euphrates and Tigris basins. Turkey in the past has resisted reaching an agreement with both Iraq and Syria, fellow 'owners' of the water from these rivers, with former president Turgut Ozal saying that "we don’t tell Arabs what to do with their oil, so we don’t accept any suggestion from them about what to do with our wa-ter."1089 According to Venkata Vemuri of pressure group One Water, for the neighbours of Turkey and Iraq the immediate concern is that differences over water could disrupt the flow of oil.1088

The NGO Coordination Committee for Iraq also reports concerns around the ultimate destination of the large quantities of water used after oil extraction. This water is of-ten contaminated during extraction with toxic byproducts and released into the ground, from where acids, carcinogens and other toxins can enter the ecosystem and pose major health risks such as cancer. Those working in the oil industry and exposed to these toxins are at particular risk.1090 A 2007 Report by the United Nations Environ-ment Programme (UNEP) states that 'oil industry sites.... are undoubtedly a major source of contamination and hazardous waste.'1091

1086 'Shell signs £11bn deal to fuel Iraq's power stations with gas', Guardian, 27 November 2011.1087 'Iraq may suffer clean water crisis in 15-20 years', Reuters, 21 September 2011.1088 'Middle East- Turkey and Iraq, Partners in So Many Ways', One Water, retrieved 3 December 2012.1089 Jongerden, Joost, 'Dams and Politics in Turkey: Utilizing Water, Developing Conflict', 2010.1090 'Iraqis and NGOs Consider Future Engagement with International Oil Companies', NGO Coordination Committee for Iraq, retrieved 7 December 2011.1091 'UNEP in Iraq: Post-conflict Assessment, Clean-up and Reconstruction', UNEP, December

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The same UNEP report addresses the alluvial plains in the south-east corner of the country, which constitute approximately 30 percent of Iraqi territory and are formed by the combined deltas of the Tigris and Euphrates rivers. The region begins north of Baghdad and extends to the Persian Gulf.1092 This region, known as the Mesopotamian marshlands, is home to local tribes who live above some of the richest oil reserves in Iraq. During Saddam Hussein's rule over the country, the marshes were dammed and drained when Hussein accused the Marsh Arabs of treason during the 1980-88 war with Iran.1093 The ecosystem forms part of the Tigris and Euphrates river basin, which feeds Iraq, Turkey, Syria and Iran. However the heart of the wetlands lies in southern Iraq, along the border with Iran and near big cities like Basra.1094 According to a 2011 UN White Paper, the future of the marshlands 'depends on how successfully Iraq is able to strike a balance between national development, including the development of the oil industry infrastructure in the Marshlands area, and environmental conserva-tion.' The central government initiated planning for the long term development of the marshlands between 2005 and 2006, however the influence of the oil industry is cited by the United Nations Integrated Water Task Force for Iraq as being one of the chal-lenges in developing a single strategic plan for the area.1095

Oil transportation and spillsThe transportation of oil may also entail environmental risks, with leaks or major oil spills endangering parts of the Gulf, part of a fragile ecosystem. In the south where the water table is just a few feet below the ground, oil from damaged pipelines also seeps into water supplies used for agriculture and drinking water.1096

Iraq's oil infrastructure has also come under attack frequently since 2003. The Insti-tute for the Analysis of Global Security think-tank counts at least 469 significant at-tacks on Iraqi oil infrastructure between when exports resumed in June 2003 and March 2008.1097 According to the BBC, the vast majority of attacks on the oil industry were blamed on insurgents bent on destabilising Iraq.1096

Aside from sabotage, some ruptures have been linked to maintenance issues along pipelines. In particular, in late October 2011 a pipeline which runs south from West Qurna past the Rumaila oil field to the Fao port suffered an oil spill, following a rup-ture in a pipe scheduled to be replaced by Chinese CNPC. The spill was termed a 'dis-aster' by Deputy Environment Minister Kamal Latif, as it endangered Basra's only source of fresh water and contaminated a 22-kilometre stretch of the Bada's channel, which feeds the only water purification facility serving the city of Basra. According to Iraq Oil Report, the incident was seen as an accident rather than an act of sabotage and an official from the Oil Police admitted that poor maintenance was to blame for the

2007.1092 'UNEP in Iraq: Post-conflict Assessment, Clean-up and Reconstruction', UNEP, December 2007.1093 'Iraqi Tribal Disputes Pose New Challenge to Oil Firms', Iraq Energy News, 31 May 2011.1094 'Eden in the Line of Fire', Tierra America, retrieved 7 December 2011.1095 'Managing Change in the Marshlands:Iraq’s Critical Challenge', United Nations, 2011.1096 'Oil attacks target Iraq recovery', BBC News, 16 June 2004.1097 'Iraq Pipeline Watch ', IAGS, retrieved 8 December 2011.

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pipeline rupture in North Rumalia.1098

Iraqi environmental regulationFollowing the 2003 invasion of Iraq and subsequent upheaval, the operations of envir-onmental authorities in Iraq were severely curtailed, with many laboratories in Bagh-dad looted following the conflict. According to a UNEP Report, the need to rebuild Iraq's environmental monitoring capacity was urgent.1099

2005 ConstitutionThe 2005 Constitution of the Republic of Iraq demands shared responsibility for envir-onmental regulation between the federal authorities and the producing administrat-ive regions in management of oil and gas. However, the federal government remains the decision maker on certain matters, including generating policies relating to water sources from outside Iraq.1100

Environmental laws of 1997 and 2008Law No. 3 of 1997 covered soil, air quality and water resources and formed the frame -work for the protection of the environment in Iraq until being subsumed into the 2008 and 2009 Environmental laws. The goal of the 1997 Law is to "protect the environment and to make it better including the territorial waters, from pollution and to extenuate its effects on health, environment and natural resources.”

The subsequent Law No. 37 of 2008 strengthens the 1997 Environmental Law, and cre -ated a formal Ministry of Environment. This Ministry executes formal ministerial in-structions and orders, creates environmental policy and initiates compliance and de-terrence mechanisms.1100

Environmental law under bid roundsThe technical service contracts (TSCs) signed in the first bid rounds in 2009 required contractors and operators to conduct petroleum operations with due regard to the protection of the environment and to the conservation of natural resources, adopting 'best international petroleum industry practices'.

However, the definition of 'best practices' is somewhat ambiguous. According to Iraq Oil Report, an international oil company (IOC) may well already apply the highest standards, as a result of its own corporate policies or those of its financiers, however the TSCs would seemingly allow lower standards generally accepted as 'good practice'.1100

1098 'Oil pipeline leak threatening Basra water supply', Iraq Oil Report, 3 November 2011.1099 'UNEP in Iraq: Post-conflict Assessment, Clean-up and Reconstruction', UNEP, December 2007.1100 'Analysis: Iraqi legal regime protects environment', Iraq Oil Report, 31 January 2011.

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2009 Environmental LawThe 2009 Environmental Law expanded the jurisdiction and enforcement powers of the Ministry of Environment and introduced the concept of environmental impact as-sessments (EIAs), which should be submitted to the Ministry and approved before work may begin. The assessment should include the following elements:

• positive and negative impacts of the project on the environment.

• means to prevent and address the causes of pollution in order to comply with reg-ulations.

• contingencies for pollution emergencies and precautions.

• possible alternative to the use of technology less harmful to the environment.

• provisions to reduce waste.

The 2009 law also establishes penalties for non-compliance and environmental pollu-tion, such as closure of operations for defined periods and fines of up to US $850 a month until the non-compliant factor is removed. If not remedied, the authorities can resort to imprisonment and further fines.1101

International treaty obligationsAside from internal regulation, Iraq has also signed up to a number of environmental conventions and agreements, including; the Basel Convention (2009); the Convention on Desertification (2007); the Climate Change Convention and Kyoto Protocol (2008); the UNESCO Convention (2008); and Convention for Biological Diversity (2008).1101

However according to corporate attorney Thomas Donovan, Iraq has traditionally lagged behind international standards and has only recently signed up to many con-ventions, the provisions of which had not yet been implemented into Iraqi law as of 2011.1101

1101 'Analysis: Iraqi legal regime protects environment', Iraq Oil Report, 31 January 2011.

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Oil and Gas FieldsFields awarded by central governmentAhdab Oil Field

Oil Reserves 1 billion barrels (estimate)1102

Oil Production 140,000 bpd (2012)1102

Estimated Gas in Place 750 bscf1103

Discovered 19791102

First Produced 20111102

Location Wasit Province, East.

Principal Partners CNPC (75%)1104

Secondary Partners North Oil Company (25%)1102

The Ahdab field lies in a 303 square kilometre block in Iraq's Wasit province, 180 km south-east of Baghdad. The field was originally explored using 1970s vintage 2D seis-mic data.1103

Iraqi officials have estimated that the field holds approximately 1 billion barrels of oil. The field also holds 750 billion standard cubic feet (scf) of associated gas reserves, however as of 2011 no plans had been announced for their commercial development, in which case the gas would likely be flared or reinjected.1102

Contracts negotiatedA deal for exploitation of the al-Ahdab field was first signed in 1996 between the CNPC and Saddam Hussein's government. However, the deal was postponed after the UN im-posed sanctions and delayed further by the US-led invasion in 2003.1102

However in November 2008 Chinese CNPC secured rights to the Ahdab field under a technical services contract signed with the Iraqi government. Under the terms of the contract the company has development rights for 23 years and is to invest $3 billion. Analysts told the New York Times in 2011 that the Ahdab operation is CNPC's

1102 'China Opens Oil Field in Iraq, New York Times, 28 June 20111103 'Iraq's Ahdab oil field development limits contractor profitability, Oil and Gas Journal, 8 January 20111104 'CNPC starts production Al-Ahdab oil field in Iraq, Penn Energy, 29 June 2011

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largest in the Middle East. A Chinese oil executive also claimed in 2009 that the com-pany would make a profit of less than 1 percent but that the contract was a way to 'get a foot in the door' of the Iraqi industry.1105

According to a 2008 US diplomatic cable, CNPC estimates that output could reach as high as 110,000 barrels per day (bpd) and that CNPC will be paid 'something like' $6 per barrel under the terms of the deal. But Chinese Trade Counselor Zhue Yuesheng commented that the Chinese side was concerned about Iraqi security guarantees, which had to be resolved before work could begin at the site.1106

The deal over the oilfield has drawn criticism from residents and officials in Wasit Province. Some people demanded that Wasit be granted a royalty of $1 per barrel to improve access to clean water, health services, schools, roads and other public needs in the province, which is among Iraq’s poorest. However, the Iraqi government rejec-ted the demands. The residents complained in 2009 that Chinese development of the field would hold no benefits for them, other than providing local employment for less than $600/month. Fears were also raised over security for workers and fears of kid-napping.1105

Production and ExportIn November 2012 it was reported that the field had a total of 170 operating wells and was producing at a level of 140,000 bpd.1105

Akkas Gas FieldEstimated Gas in Place 5.6 tcf1107

Discovered 19921108

Location Al-Anbar governorate, West.

Principal Partners Kogas (75%)1108

Secondary Partners North Oil Company (25%)1108

The Akkas gas field (also known as Salah Al Dine) is situated in the western deserts of Iraq, in the al-Anbar province. It lies 30 km south of Al Qaim city on the Syrian border. The Akkas structure is approximately 30km long and 12km wide.1109

al-Anbar province was once a hotbed for insurgents, with one Iraq official referring to the area as "the same source, for al-Qaida and gas." However, security was reported to have improved in 2010 as Al-Qaida was chased to neighbouring territories. An Iraqi oil

1105 'China Opens Oil Field in Iraq, New York Times, 28 June 20111106 'Chinese Embassy On Wasit Oil Deal And Business In Iraq, WikiLeaks, 9 September 20081107 'Iraq Signs Final Akkas Gas Deal with KOGAS Iraq Business News, 17 October 20111108 'Iraq to Sign Contract With Korea Gas for Akkas Field Today'. Bloomberg, 13 October 2011.1109 'Akkas'. Iraq Energy, retrieved 13 December 2011.

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official acknowledged to Iraq Oil Report the difficulty of operating in the area, though Iraqi and American security officials dismissed concerns.1110

The field hold the country's largest reserves of gas, with 5.6 trillion cubic feet (tcf). Ir-aqi officials have said that the priority for the gas will be domestic consumption, mainly for power generation, but has left open the possibility of allowing exports once domestic needs are satisfied.1111

Contract negotiations In May 2010, the government announced Akkas would be part of the m, which would focus on Iraq's gas reserves.1112 The original deal awarded to consortium partners Ko-gas and KazMunayGas was long delayed amid negotiations between different stake-holders, however the deal to develop the deposit was finally signed in October 2011 under an amended ownership structure.1113 Under the terms of the original bid, the plateau production target was 100 MMscf (million standard cubic feet) per day and the proposed remuneration fee was $7.50 per barrel of oil equivalent (boe) produced.1114

In May 2011, KazMunayGas pulled out of the venture, leaving Kogas as the sole in-vestor and operator and forcing the company to double its share in the project.1110 A new deal was then negotiated and signed in October 2011 between Kogas and the Iraqi Oil Ministry. The company committed to increasing production to 400 MMscf per day within seven years and holding that output for 13 years, earning a $5.50 remuneration fee for each boe produced.1111

According to Iraq Oil Report the Akkas deal faces several political obstacles on a local and national level. In particular, Anbari leaders demanded that all gas from the field stay within the province to serve existing and future local demand, rather than being exported.1115 The governor of Anbar threatened to withhold security and logist-ical support for foreign contractors if the deal went through and warned that, as a measure of last resort, the province could assert autonomy from Baghdad.1110

Production and exportAccording to Iraq Oil Report, there is a planned power plant linked to the Akkas project, as well as a provision establishing a maximum number of years during which the gas produced can be sent to a processing facility in Syria before a comparable do-mestic facility at Akkas must be ready.1116

The issue of future exports from the Akkas field has caused some discussion in Iraq. Being located close to the Syrian border, Akkas is an attractive source of gas for the

1110 'Anbar, central governments poised for fight over Akkas'. Iraq Oil Report, 1 June 2010.1111 'Akkas deal finally signed'. Iraq Business News, 13 October 2011.1112 'Iraqi Gas From 'Akkas Field Allbusiness.com 22 March 20101113 'Iraq Signs Final Akkas Gas Deal with Kogas'. Iraq Business News, 17 October 2011.1114 'Bidding Results Overview for Licensing Round 3'. Iraq Energy, retrieved 13 December 2011.1115 'Gas deals advance, political hurdles remain'. Iraq Oil Report, 15 November 2010.1116 'Akkas deal finally signed'. Iraq Business News, 13 October 2011.

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'Southern Corridor' pipeline project, which needs a guaranteed supply of gas to com-pete with Russian pipelines feeding European customers. According to Iraq Oil Re-port, Baghdad officials promised Iraqi gas for Nabucco, but only after local demand for refined products and electricity has been met.1117

Badra Oil FieldOil Reserves 3 billion barrels1118

Oil Production n/a

Discovered 1979

First Produced 2013 (forecast)1119

Location Wasit Province, East.

Principal Partners Gazprom (30%)

Secondary Partners Kogas (22.5%), Petronas (15%), TPAO (7.5%), Oil Exploration

Company (25%)1118

The Badra oil field is situated in Wasit governorate, 160 km south-east of Baghdad, and extends across the border with Iran. The field is approximately 16km long and 6km wide. The Badra discovery well was drilled in 1979. A second appraisal well, drilled in the late 1980s, was abandoned due to the impact of war.1120

Gazprom describes the Basra deposit as having a 'challenging profile', with a signific-ant part of the surface requiring clearance of mines. In preparation for a 2011 3D seis-mic survey of the deposit, work was carried out to remove weapons over an area of ap-proximately 12,000 square metres.1119

Contracts negotiatedThe Gazprom-led consortium was the only group to bid for the contract area in Iraq's second licensing round of 2009. The Oil Ministry announced in December 2009 that it had accepted a revised bid form the consortium, which comprised of Gazprom (30 per-cent), Kogas (22.5 percent), Petronas (15 percent) and TPAO (7.5 percent). The 25 per-cent Iraqi state partner was the Oil Exploration Company.1121

The contract specified the consortium would pay a $100 million signature bonus and the remuneration fee would be $5.50 per barrel. The official press release announcing

1117 'Anbar, central governments poised for fight over Akkas'. Iraq Oil Report, 1 June 2010.1118 'Gazprom begins drilling at Iraq's Badra field', Arabian Oil and Gas, 27 November 20111119 'Gazprom Neft Starts Drilling In The Badra Field In Iraq', OilVoice, 28 November 20111120 'Badra'. Iraq Energy, retrieved 12 December 2011.1121 'Iraq’s Second Petroleum Licensing Round Badra Contract Area – Bidding Results', Petroleum Contracts and Licensing Directorate, 2009.

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the contract said the consortium had originally offered $6 a barrel but ultimately ac-cepted the lower figure. As well as crude oil, the contract stipulates that the fee is also payable on liquid petroleum gas (LPG) and natural gas handed over to the state part-ner from a gas processing plant. The fee was to kick in when production reaches 15,000 barrels per day (bpd). The release specified that the state partner also born the costs of development of the field.1121

Production and exportIn November 2011, the governor of Wasit announced that the first oil well had been drilled at Badra field, one of 17 wells to be drilled at the site. The governor expected that the field would reach peak production of 170,000 bpd by 2016, making the Wasit province one of the main oil producing provinces in the country.1122

The depth of the appraisal well reached 4,900 metres and drilling was expected to be completed in April 2012.1123

Bai Hassan Oil FieldOil Reserves 2.078 billion barrels1124

Oil Production 200,000 bpd (2012)1124

Location Dibis Province, North.

Principal Partners state-managed

The Bai Hassan field lies in the northern province of Dibis, just south-west of the Kirkuk field.1125 The field lies within a tract of disputed territory that is claimed by both the central government and Kurdish regional authorities. The field is operated by Iraq's state-owned North Oil Company (NOC).1124

Security concerns were raised in June 2012 when seven bombs were discovered at the field, including two that exploded beneath pipelines at the site, although production output was not disrupted.1124

Contract negotiations On the 2 July 2009 the Petroleum Contracts and Licensing Directorate of the Ministry of Oil announced that, despite several bids from international oil companies (IOCs) for the Bai Hassan contract area, the country decided not to award an international con-tract for the field.1126 A bid was proposed by a consortium of ConocoPhillips, CNOOC

1122 'First well in Badra oil field drilled, Governor', Iraq Daily Journal, 28 November 20111123 'Gazprom Neft Starts Drilling In The Badra Field In Iraq', OilVoice, 28 November 20111124 'Bombs target Kirkuk province oil field', Iraq Oil Forum, 9 June 2012.1125 'Bai Hassan', Iraq Energy, retrieved 12 December 2011.1126 'Iraq’s First Petroleum Licensing Round: Bai Hassan Contract Area – Bidding Results',

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and Sinochem, however the remuneration fee bid of $26.70 was well in excess of the minimum established by the Ministry of Oil. According to a leaked US diplomatic cable, Conoco's bid was by far the highest fee requested in the bid round and though they were the sole bidders, they refused to reduce their offer to the maximum $4 fee and walked away with no award.1127

Production and exportAccording to comments made by Manaa al-Obeidi, Director General of North Oil Com-pany (NOC) in 2009, production at Bai Hassan increased from 150,000 barrels per day (bpd) in mid-2008 to 175,000 bpd in 2009 following a water injection project and the drilling of three new wells.1128 It was reported in 2011 that the NOC expected to in-crease production to 240,000 bpd.1129

'Eastern Fields'Oil Production n/a

Discovered 1927, 1938, 1976, 1979

Location Diyala governorate, North-East

Principal Partners state-managed

The 'Eastern Fields' is the collective name for a group of four undeveloped fields; Gil -abat, Khashem AlAhmar, Nau Doman and Qumar. The fields are located in Diyala gov-ernorate in north-eastern Iraq, some 100-150km south of Kirkuk city.

The fields were discovered in 1927 (Khashem Al-Ahmar), 1958 (Gilabat), 1976 (Nau Do-man) and 1979 (Qumar). As of December 2009, eight wells had been drilled at the con -tract area, two in Khashem Al-Ahmar, three wells in Gilabat, two wells in Nau Doman and one well in Qumar.1130 Oil and gas discoveries have been made in multiple reser-voirs in the four field, confirmed by successful well tests.1131

Al-Qaida and other insurgent groups have been active in the area around the fields, and pose an added risk to investors and workers. They are also grouped in disputed territories fought over between Iraq's Arabs and Kurds.1131

Republic of Iraq Ministry of Oil, 2 July 2009.1127 'Iraq Ministry Of Oil Prepares To Invite In Foreign Oil Companies', WikiLeaks, 7 October 20081128 'Mana’a Al-Obeidi', Iraq Oil Forum, 4 September 20091129 'Export infrastructure deal latest of oil re-investment', Iraq Oil Report, 17 September 2011.1130 'Iraq’s Second Petroleum Licensing Round: Eastern Fields Contract Area – Bidding Results', Ministry of Oil Petroleum and Contracts Licensing Directorate, 11 December 2009.1131 'No bidders for Eastern Fields', Iraq Oil Report, 11 December 2009.

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Contract negotiations Following Iraq's second postwar licensing round, the Petroleum Contracts and Licens-ing Directorate (PCLD) of the Ministry of Oil announced in December 2009 that no bids had been received for the Eastern Fields contract area.1132 According to Iraq Oil Re-port, the Iraqi Oil Ministry wanted the fields to be producing at 80,000 barrels per day (bpd) within seven years and then maintained for another seven years. The winning bidder would have to pay a $100 million and would be required to spend at least $150 million in project costs, which would be refundable.1133

East Baghdad Oil FieldOil Reserves 8 billion barrels (2010)1134

Discovered 1976

First Produced 19801135

Location East Baghdad.

Principal Partners state-managed

The super-giant East Baghdad oil field is situated in the Baghdad and Saladin gov -ernorates, 10 kilometres east of Baghdad city. The contract area for the field is around 65 kilometreslong and 11 kilometres wide and covers only the section north-west of the Diyala river.1135

Despite proved reserves of 8 billion barrels, during the 2009 licensing rounds in Iraq there were no bids by the international consortia to exploit the deposit. Forbes magazine suggests that this may because much of the deposit lies under residential areas,1134 as part of the field lies under the city of Baghdad.1136 Following this, Oil Minis-ter Shahristani announced that the Oil Ministry would develop the East Baghdad field on its own.1137

In May 2010 then-Oil Minister Shahristani said another bidding round could be held if there was enough preliminary interest from international companies. "We will talk to companies and if we find the desire to develop these fields, then we could announce another bidding round for the qualified companies to develop those fields," he said in an interview.1138

1132' Iraq’s Second Petroleum Licensing Round: Eastern Fields Contract Area – Bidding Results', Ministry of Oil Petroleum and Contracts Licensing Directorate, 11 December 2009.1133' No bidders for Eastern Fields', Iraq Oil Report, 11 December 2009.1134 'The World's Biggest Oil Reserves', Forbes, 21 January 20101135 'East Baghdad', Iraq Energy, retrieved 12 December 20111136 'Iraq Progresses toward a Future Built on Oil Wealth', Der Spiegel, 4 October 2012.1137 'Iraq Oil Field Goes to Royal Dutch Shell and Petronas', New York Times, 11 December 2009.1138 'Iraq may hold third oilfield auction', Calgary Herald, 28 May 2010.

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ProductionAs of 2012 Iraqi and Jordanian companies were drilling at the site and production reached 10,000 barrels per day (bpd). However production at the field is slower than in desert regions as the area is so densely populated.1139

Garraf Oil FieldOil Reserves 860 million - 1 billion barrels11401141

Oil Production 35,000 bpd (2012)1142

Discovered 1980s1142

Location Dhi Qar Governorate, South.

Principal Partners Petronas (45%)1141

Secondary Partners Japex (30%), South Oil Company (25%)

API Specificity 15-36°

The Garraf oil field is situated in Dhi Qar Governorate in southern Iraq, some 5 kilo-metres (km) north west of Al-Refaei city, 9 km south-east of Qal’at Suker city and 85 km north of Nasiriyah. Discovered in 1984, the oil found ranges in gravity from 15 to 36 °API, in multiple reservoirs. The field is 17.5 km long and 5.5 km wide. 1143 According to Iraq Oil Report the Dhi Qar province is slated to be one of the biggest producing areas in the country.1144

Contract negotiations A consortium led by Malaysian Petronas submitted a bid for development of the Garraf field on the first day of Iraq's second licensing round in December 2009. According to leaked US diplomatic cables, the undeveloped Garraf field was one of the first two fields offered, which received bids at 'stunningly low prices'. The international part-ners in the winning consortium were made up of Petronas, (60 percent), and Japex (40 percent). According to the deal, the remuneration fee offered was $1.49 and the 'plat -eau production target' was 150,000 barrels per day (bpd).1145

The consortium suffered a setback at the site when local tribesmen refused to cede their ancestral lands peacefully without a cash payment from Petronas. The alleged

1139 'Iraq Develops East Baghdad Oilfield', Iraq Business News, 19 April 2012.1140 'Q&A: Garraf Oilfield Director Settar Mahdi Jabara', Iraq Oil Report, 14 November 2012.1141 'Weatherford Wins $200m Project at Garraf Oil Field', Iraq Business News, 20 October 2011.1142 'Petronas taking bids for Garraf oil line in Iraq', Arabian Oil and Gas, 11 June 2012.1143 'Garraf Iraq Energy, retrieved 12 December 2011.1144 'Protestors storm Garraf oil field after religious dispute', Iraq Oil Report, 30 November 2012.1145 'Oil Stampede: Iraq,s 2nd Bid Round Results', Wikileaks, 14 December 2009.

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extortion drew condemnation from the Iraqi Oil Ministry however, and the tribal sheiks denied any threat of violence.1146

Production and export According to Adnan Galay, former chairman of the field's management committee, output from the field was expected to hit 50,000 barrels per day (bpd) by the end of 2012, 60,000 bpd in 2013 and 100,000 bpd in 2014. Garraf has an eventual output target of 230,000 bpd, although the Petronas-Japex partnership may look to increase produc-tion beyond that level, according to officials. However in July 2012 Hussein Shahristani, Iraqi Deputy Prime Minister for Energy Affairs, reportedly urged the con-sortium developing the Garraf field to speed up progress on the project.1147

In June 2012, as the consortium was ramping up production, Petronas opened up a tender for the construction of a new pipeline to take crude from the field to central transport infrastructure.1148

Halfaya Oil FieldOil Reserves 4.1 billion barrels1149

Oil Production 70,000 bpd (July 2012)1150

Discovered 1976

Location Maysan governorate, South-East.

Principal Partners CNPC (37.5%)1151

Secondary Partners Total (18.75%), Petronas (18.75%), South Oil Company (25%)1151

The Halfaya oil field was discovered in 1976 and is located in the Maysan governorate in the south-east of Iraq, 35 kilometres (km) south-east of Amarah city. 1152 As of 2010 the field was proven to hold 4.1 billion barrels of recoverable reserves, with a produc -tion potential of 200-535,000 barrels per day (bpd).1151 The Halfaya deposit is approxim-ately 35 km long and 10 km wide.1152

According to Iraq Oil Report in 2012, Maysan province is emerging as a major new source of oil and is on track to becoming Iraq's second largest producing province.1150

1146 'Petronas preparing for drilling in Garraf', Iraq Oil Report, 8 July 2010.1147 'Shahristani tells Japex, Petronas to Speed up Development at Gharraf', Iraq Business News, 17 July 2010.1148 'Petronas taking bids for Garraf oil line in Iraq', Arabian Oil and Gas, 11 June 2012.1149 'CNOOC, TPAO finalize Missan fields contract', Iraq Oil Report, 17 May 2010.1150 'Missan heralds oil boom with Halfaya opening', Iraq Oil Report, 18 July 2012.1151 'Iraq-CNPC/SOC - Halfaya Oil Field', Energy World, 17 September 2010.1152 'Halfaya' Iraq Energy, retrieved 14 December 2011.

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Contract negotiationsFollowing Iraq's second petroleum licensing round held in December 2009, the Halfaya contract area was awarded to an international consortium led by Chinese CNPC. The consortium split was 37.5 percent to CNPC, 18.75 percent each to Petronas and Total, and 25 percent to the Iraqi state partner. The CNPC-led group beat three consortia which submitted offers to win the field, including offers led by Norway's Statoil and Russia's Lukoil.1153

Under the terms of the deal, the group is paid a remuneration fee of $1.40 per barrel, lower than the $1.76 sought by a rival consortium led by Indian state-owned ONGC Videsh Ltd.1154 They must also pay Iraq a non-recoverable signature bonus of US $150 million.1155 The contract stipulates that production should reach 535,000 bpd, in addi-tion to provision of gas products to neighboring power stations.1156

In April 2010 Total CEO Christophe de Margarie said his company would like to acquire a larger stake in the field. "Iraq is a strong part of our strategy in the world and we certainly don't intend to remain a minority partner in the Halfaya field," de Margarie was quoted as telling Reuters.1157

Production and exportOil Minister Abdul Kareem Luaiby said that the second phase of Halfaya will involve production capacity reaching 200,000 bpd by the end of 2013, while after the third phase production will rise to 400,000 bpd by the end of 2014. The consortium plans to hit production of 600,000 bpd by the end of 2016.1158 In June 2012, the company said the first phase of operations at Halfaya was operational and producing around 120,000 bpd.1159

Maysan Oil Company (MOC) has stated that any liquid petroleum gas (LPG) from Hal-faya would be transferred to Iraqi state-run South Gas Company for domestic needs and power generation.1153

Majnoon Oil FieldOil Reserves 13 billion barrels1160

1153 'Iraq-CNPC/SOC - Halfaya Oil Field', Energy World, 17 September 2010.1154 'ONGC Videsh qualifies for Iraq's oil exploration bidding', The Economic Times, 9 August 20111155 'Iraq inks CNPC, Total, Petronas Halfaya deal', AME Info, 26 January 2010.1156 'Four Oil Wells Drilled at Halfaya', Iraq Business News, 16 May 2011.1157 'Total eyes bigger Halfaya slice', Upstream Online, 22 April 2010.1158 'PetroChina, Total, Petronas Calgari Start Oil Production at Iraq's Halfaya', Rigzone, 18 July 2012.1159 'CNPC pumping 120,000 bpd from Halfaya field', ArabianOilandGas.com, 18 June 2012.1160 'Iraq oil development rights contracts awarded', BBC News, 11 December 2009

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Oil Production 18,600 bpd (first quarter 2012)1161

Discovered 1975

Location Al-Basrah, South-East.

Principal Partners Shell (45%)

Secondary Partners Petronas (30%), Maysan Oil Company (25%)1162

The super-giant Majnoon oil field is situated in the Basra governorate in south-east Iraq, extending northerly toward the Maysan governorate.1163 The name Majnoon (meaning 'crazy') was chosen due to the excessive presence of oil in a limited area on the east of the Tigris River.

The field is around 60 kilometres (km) long and 15 km wide, is located 60 km northw-est of Basra city and lies mostly under man-made islands in the Hawizah marshes, close to the Iranian border.1164

Majnoon was discovered by Brazilian Braspetro in 1975, however development came to a halt in 1980 during the engineering phase of the project, due to the Iran-Iraq War. At the time, Braspetro had finished drilling of 20 wells and 14 drilling rigs were in ser -vice. Over the course of the war, Iran occupied and sabotaged the area. Following the war, Iraq's South Oil Company (SOC) restarted the production. In the 1990s French Total negotiated a development contract with Saddam Hussein but was ultimately un-able to sign the deal due to UN sanctions imposed on Iraq. The deal was eventually an-nulled by Hussein in 2002. In 2007 Total and Chevron signed an agreement with the new Iraqi government to explore the Majnoon field.1165

Contracts negotiated Following Iraq's second post-war licensing round in 2009, the Iraqi government signed a 20-year service contract with international oil companies Shell and Petronas to de-velop the Majnoon oil field. Iraqi state-owned South Oil Company (SOC) and Maysan Oil Company (MOC) also formed part of the group, which intended to boost production to 1.8 million barrels per day (bpd) from 45,000 bpd in 2010. Shell is the lead operator in the consortium with a 45 percent stake, Petronas holds 30 percent and the Iraqi state holds 25 percent.1166

The bid from Shell and Petronas beat a rival bid from France's Total and China's CNPC. The consortium pledged to increase output to 1.8 million bpd. Under the terms of the

1161 'UPDATE 1-Shell says may miss 2012 Majnoon output target', Reuters, 18 September 2012.1162 'Halliburton Signs $150m Contract for Iraq’s Majnoon Oilfield', Iraq Business News, 24 November 20101163 'Majnoon', Iraq Energy, retrieved 12 December 2011.1164 'Majnoon Field, Iraq', Offshore Technology, retrieved 12 December 2011.1165 'Under Tight Security, Iraq Sells Rights to Develop 2 Oil Fields', New York Times, 11 December 2009.1166 'Iraq Signs Majnoon Oilfield Agreement With Shell, Petronas', Bloomberg, 17 January 2010.

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deal the companies receive a remuneration fee of $1.39 per barrel.1167

Production and export In September 2011, Shell Vice President Hans Nijkamp announced that production was at a level of approximately 75,000 bpd.1168 But in the first quarter of 2012 production fell - output levels varied, with highs of 54,000 bpd but an average of only 18,600 bpd. The upper limit was as much as pipeline capacity could handle. As a result of these constraints in June 2012 a shutdown began at Majnoon for maintenance and in order to bring new production facilities online.1169

Regional Shell boss Mark Carne commented in 2012 that "it would be fair to say that progress has been slower than we originally hoped."1170 But according to Shell's 2013 development programme for Majnoon, output was expected to rise above 200,000 bpd over the year, above the level needed to start recovering costs.1171

Infrastructure limitations have been a key obstacle for the consortium, as the existing 28-inch Majnoon pipeline cannot cope with the projected increase in crude produc-tion. A letter from Shell's managing director at Majnoon stated that "a key concern... remains the uncertain delivery of the First Commercial Production (FCP) pipeline".1172 The development has also suffered setbacks such as unexpected mine clearance work, delays in customs and inclement weather conditions, that hampered development.1173 In December 2012 the discovery of an ancient Persian archaeological site at Majnoon added further complications in Shell's development of the field.1174

Mansuriyah Gas FieldGas in Production n/a

Location Diyala governorate, East.

Principal Partners TPAO (37.5%)1175

Secondary Partners Oil Exploration Company (25%), Kuwait Energy Company (22.5%),

Kogas (15%)1175

1167 'Iraq oil development rights contracts awarded', BBC News, 11 December 2009.1168 'Iraq's Majnoon producing 75,000 bpd', Reuters, 27 September 20111169 'UPDATE 1-Shell says may miss 2012 Majnoon output target', Reuters, 18 September 2012.1170 'Gently does it', Petroleum Economist, 26 September 2012.1171 'UPDATE 1-Shell sees Iraq Majnoon 2013 output at over 200,000 bpd', Reuters, 12 November 2012.1172 'Exclusive: Iraq pipeline delays threaten Shell's Majnoon', Reuters, 26 August 2012.1173 'Shell Expects To Meet Iraq Oil Field Target Despite Setbacks', Wall Street Journal, 19 September 2012.1174 'Beyond the Headlines: Dec. 11, 2012', Iraq Oil Report, 11 December 2012.1175 'KBR Awarded FEED, QCSS Contracts at Mansuriya', Iraq Business News, 6 December 2012.

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The Mansuriyah gas field is located 50 kilometres (km) north-east of Baquba city in Diyala province, which is about 100 km north-east of Baghdad.1176 According to Iraq Oil Report, in 2011 the province was still suffering from persistent insurgent violence.1177

Contract negotiations The Mansuriyah field was initially put up for bidding during the first postwar licensing round in Iraq in June 2009, however the contract area attracted no bids.1178

The winning bid for the field during Iraq's third round of licensing in 2010 came from an international consortium led by Turkish energy company TPAO, who held a 50 per-cent stake. Other companies to participate in the consortium were Kuwait Energy, with a 30 percent stake and Kogas with 20 percent.1179

In October 2010 the Petroleum Contracts and Licensing Directorate (PCLD) of the Min-istry of Oil announced that only one bid had been received for the field. The initial re-muneration fee proposed the consortium of $10 per barrel of oil equivalent (boe) was above the 'maximum remuneration fee' set by the Ministry, however the lower figure of $7 was subsequently accepted by the consortium. Under the terms of the deal, the target production plateau was 320 million standard cubic feet (Mmscf) per day.1180

Production and exportAs of December 2012, the Mansuriyah field was still in the development stage and no gas had yet been produced at the site.1181

Maysan Oil FieldsOil Reserves 2.5 billion barrels1182

Oil Production 90,000 bpd (2010)1183

Location Maysan governorate, South-East.

Principal Partners CNOOC (63.75%)1184

Secondary Partners TPAO (11.25%), Iraq Drilling Com-pany (25%)1184

1176 'Mansuriya', Iraq Energy retrieved 13 December 2011.1177 'Turkey continues energy strategy in Iraq', Iraq Oil Report 6 June 2011.1178 'First Iraqi Petroleum Licensing Round', Deloitte, retrieved 13 December 2011.1179 'Gas deals advance, political hurdles remain', Iraq Oil Report, 15 November 2011.1180 'Bidding Results Overview for Licensing Round 3', Iraq Energy retrieved 13 December 2011.1181 'Iraq-Mansuriya', Kuwait Energy, retrieved 13 December 2012.1182 'UPDATE 2-Iraq in deal with CNOOC, TPAO for Maysan oilfields', Reuters, 17 May 2010.1183 'Iraq to Double Oil Output from Maysan Fields', BEDigest, retrieved 13 December 2011.1184 'International Activities', TPAO, retrieved 13 December 2011.

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The Maysan oil fields (also known as the Missan Oil Fields) are a complex of fields loc-ated around 175 kilometres (km) north of Basra city and include the Abu Ghirab, Jabal Fauqi (Fakka) and Buzurgan oil fields.1185

The Maysan province shares a border with Iran and in December 2009 a group of Irani -an border guards crossed the border and occupied one of the wells at the Fakka field, raising an Iranian flag. The occupation lasted for less than 48 hours, however the guards remained in the area for another month. According to Iraq Oil Report, this raised an anti-Iranian sentiment borne from war in the 1980s, further complicating the ef-forts to demarcate the border and thus the fields that cross it.1186

Contract negotiationsThe Maysan contract area was put up for bidding in Iraq's first petroleum licensing round, but the field only attracted one bid and no contract was awarded.1187

However in May 2010 Iraq signed a final deal with China's CNOOC and Turkish state-run TPAO to develop the Maysan oilfield complex. CNOOC's original partner for devel-oping the field, Sinochem, pulled out of the deal when CNOOC decided to reconsider and accept the Iraqi government's proposed remuneration fee of $2.30 per barrel of oil produced. TPAO then joined the venture to fill the gap. CNOOC and TPAO set the pro-duction plateau target for the field at 450,000 barrels per day (bpd). CNOOC holds a 63.75 percent stake in the venture, while TPAO holds 11.25 percent 1188 and the Iraq Drilling Company (IDC) holds a 25 percent stake.1185

Production and exportAs of 2010, the Maysan fields were producing at a level of 90,000 bpd.1189

Middle Furat Oil FieldsOil Reserves 600 million barrels of oil1190

Discovered 1960, 1983, 1981

Location Karbala governorate, Centre.

Principal Partners state-managed

The Middle Furat area is a cluster of three undeveloped oil fields located in Karbala

1185 'International Activities', TPAO, retrieved 13 December 2011.1186 'CNOOC, TPAO finalize Missan fields contract', Iraq Oil Report, 17 May 2010.1187 'Iraq: Oil and Gas Legislation, Revenue Sharing, and U.S. Policy', Congressional Research Service, 3 November 2009.1188 'UPDATE 2-Iraq in deal with CNOOC, TPAO for Maysan oilfields', Reuters, 17 May 2010.1189 'Iraq to Double Oil Output from Maysan Fields', BEDigest, retrieved 13 December 2011.1190 'No bids for Middle Furat fields', Iraq Oil Report, 12 December 2009.

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governorate in central Iraq, south of Al-Razaza Lake. The fields were discovered in 1960 (Kifl), 1983 (Merjan) and 1987 (West Kifl).1191 Karbala province is home to one of the holiest cities in Shi'ite Islam.1192

The approximate sizes of the fields are 2.5 kilometres (km) by 2 km (Merjan), 10 k m by 8 km (West Kifl) and 5 km by 1.5 km (Kifl).1191

Contract negotiationsThe contract area was put up for bidding in Iraq's second post-war licensing round. However on the 12 December 2009 Iraq's Petroleum Contracts and Licensing Director-ate (PCLD) announced that no bids had been received for the Middle Furat contract area.1193 In May 2010, oil minister Hussein Shahristani announced that the government was considering inviting foreign companies to develop the fields.1194

Nahr Bin Umar Oil FieldOil Reserves 6.5 billion barrels1195

Oil Production 50,000 barrels of oil per day (2009)1195

Estimated Gas in Place 12 bcf1196

Discovered 1940s

Location Basra Province, South.

Principal Partners state-managed

The Nahr Bin Umar field (also known as the Nahr Umr field) is located in southern Iraq, 15 kilometres (km) to the north of Basra. The deposit covers an area roughly 40 km long by 25 km wide and was first drilled in 1948.1197

France's Total agreed to survey the field in 2008. They estimated that it held 6.6 billion barrels of crude and 12 billion cubic feet (bcf) of natural gas.1196

1191 'Middle Furat', Iraq Energy, retrieved 13 December 20011.1192 'No bids for Middle Furat fields', Iraq Oil Report, 12 December 2009.1193 'Iraq’s Second Petroleum Licensing Round: Middle Furat Contract Area – Bidding Results', Ministry of Oil Petroleum and Licensing Directorate, 12 December 2009.1194 'Iraq mulls inviting cos to develop Furat oilfields', Reuters, 17 May 20101195 'Three IOCs in bilateral negotiations as Iraq attempts to improve licensing round terms', AMEinfo 24 March 2009.1196 'Total Seeks Iraqi Oil Fields in Return to Roots', Gulf Oil & Gas, 12 February 2009.1197 'The Development Plans of Nahr Umr Field for the New Millenium', Mohammad Al-Gailani, retrieved 14 December 2011.

206

Contract negotiationsIn March 2009 Total, Statoil, Chevron and a possible fourth Iraqi state-owned oil com-pany were reported to be holding negotiations with the Iraqi Ministry of Oil over the Nahr Umr field.1198

However as of December 2012 no deals had been made and Iraq's state-owned South Oil Company (SOC) was developing the field.

Production and exportIn September 2010, the SOC decided to increase the field's production to 70,000 barrels per day (bpd) by the last quarter of 2011.1199

Najmah Oil FieldOil Reserves 807 million barrels1200

Oil Production n/a

Discovered 19341200

Location Nineveh governorate, North.

Principal Partners Sonangol (75%)1201

Secondary Partners North Oil Company (25%)1201

The Najmah oil field was discovered in 1934 and is situated in Nineveh governorate, 50 kilometres (km) south of Mosul city.1202 The field is 11 km long and 4.5 km wide1203

Contract negotiations Angolan oil company Sonangol was the only company to bid for the Najmah contract area in the second licensing round of 2009. The Oil Ministry announced on the 12 December 2009 that the company had been awarded the contract area.1202

The contract specified the consortium would pay a US $100 million signature bonus.1202

Sonangol originally offered to accept a remuneration fee of $8.50 per barrel, but later

1198 'Three IOCs in bilateral negotiations as Iraq attempts to improve licensing round terms', AMEinfo 24 March 2009.1199 'New Quarterly Production Targets for Basra's Oilfields', Iraq Business News, 7 September 2010.1200 'Sonangol takes Najmah', Iraq Oil Report, 12 December 2009.1201 'Duo eye Sonangol's Iraqi assets', Upstream Online, 19 July 2010.1202 'Iraq’s Second Petroleum Licensing Round Najmah Contract Area – Bidding Results', Ministry of Oil Petroleum and Licensing Directorate, 12 December 2009.1203 'Najmah', Iraq Energy, retrieved 12 December 2011.

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accepted the maximum figure of $6 per barrel allowed by the Ministry of Oil. The deal specified that the state partner, the Iraq Drilling Company (IDC), also bore the costs of development of the field.

The Najmah field holds significant accumulations of heavy oil (15 to 20°API).1204 Re-ports by the BBC suggested that the high fees paid for the contract area to Sonangol reflect the operational risks at the site and the relatively low quality of oil.1205

Production and export Under the contract, the company committed under the agreement to reaching a pro-duction plateau of 110,000 barrels per day (bpd), and holding it for nine years.1206 In March 2011 Sonangol started work at the Najmah field and was due to start to dig wells in April 2011, according to a report from Aswat al-Iraq.1207

Nasiriyah Oil FieldOil Reserves 4.4 billion barrels1208

Oil Production 12,000 bpd (2012)1209

First Produced 2009

Location South of Baghdad.

Principal Partners state-managed

The Nasiriyah field, located south of the capital Baghdad and with an estimated 4.4 bil-lion barrels of crude reserves, was not included in either of Iraq's 2009 bidding rounds.

Contract negotiations A Japanese-led consortium, including Nippon Oil Corporation, reached an accord in principle with the Iraqi government in August 2009 for oil development rights at the field, but negotiations were effectively suspended in January 2010. The Japanese con-sortium had submitted bids for the contract to Iraq's Oil Ministry in February 2009 along with Spain's Repsol and Italy's Eni. In January 2011 Japanese trade minister Aki-hiro Ohata made an unannounced visit to Baghdad and called on the Iraqi government to resume negotiations with a group of Japanese firms over the development of the Nasiriyah, but without success. The Iraqi government subsequently made the decision

1204 'Najmah', Iraq Energy, retrieved 12 December 2011.1205 'Iraq oil contract goes to Angola's Sonangol', BBC News, 30 December 2009.1206 'Iraq’s Second Petroleum Licensing RoundNajmah Contract Area – Bidding Results', Ministry of Oil Petroleum and Licensing Directorate, 12 December 2009.1207 'Sonangol to Start Work on Ninewa Oilfields', Iraq Business News, 14 March 2011.1208 'Iraq to develop Nasiriyah oilfield alone', MEED, 1 March 2010 1209 'Nasiriyah oil field production will rise to 35 thousand barrels per day', The Iraqi Dinar, 10 September 2012.

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to develop the Nasiriyah oil field on its own.1208

However in August 2012 Iraq's Petroleum Contracts and Licensing Directorate (PCLD) announced that it was preparing for a licensing round to develop the field and to build a refinery in the area. The field and refinery would be considered as a single project.1210

Production and export In June 2009, the chief engineer at the field told press that production was due to start imminently and that oil from the field would be transferred to Basra via pipeline.1211

Dhiya Jaafar, head of the South Oil Company (SOC), stated in February 2010 that they planned to drill ten oil wells in Nasiriyah over the year. He commented that “we are capable of boosting production from Nasiriyah from 10,000 barrels per day (bpd) to 50,000 bpd by the end of 2010."1212

Qayara Oil FieldOil Reserves 800 million barrels (2010)1213

Discovered 1927

First Produced 1930s

Location Nineveh governorate, South-East.

Principal Partners Sonangol (75%)1214

Secondary Partners South Oil Company (25%)1214

API Specificity 15

The 800-million barrel Qayara field is located in Nineveh, known as one of the most dangerous regions of the country.1215 The field was discovered in 1927 by British Oil-field Development. Qaraya lies within the same structures as the Najmah field.1216

The deposit is notable for its very heavy and sour crude compared to the crudes of other Iraqi fields.1217 In 1990 the oil could not yet be refined and only a limited volume was used for asphalt and other purposes. All of the surrounding fields contain large ac-cumulations of very sour soil (11-18° API with 6.5-8 percent sulphur). Oil at Qayara it-self has an API gravity of 15°, by far the lowest among the ten fields offered at Iraq's

1210 'Nassiriyah Oilfield and Refinery to be Offered as Single Contract', Iraq Business News, 31 August 2012.1211 'Nasiriyah field to begin production in Iraq', Arabian Oil and Gas, 20 June 2009.1212 'Iraq to develop Nasiriyah oilfield alone', MEED, 1 March 2010 1213 'IRAQ: Angola's Sonangol sign Iraqi oilfield deals', ITN, 28 January 2010.1214 'Duo Eye Sonangol's Iraqi Assets', Iraq Energy, 20 July 2010.1215 'Iraq oil contract goes to Angola's Sonangol', BBC, 30 December 2009.1216 'IRAQ - The Main Fields In The North', Free Library, retrieved 12 December 2011.1217 'Sonangol wins oil deals in Iraq's riskiest region', Reuters, 12 December 2009.

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second bidding round. 1218

Contract negotiations In December 2009, the field was awarded by the Iraqi government to Angolan Sonan-gol in the second bidding round, when the company was the sole bidder for the con-tract.1219

Sonangol signed a deal with the Iraqi government on the 26 January 2010 to take a 75 percent stake in a venture to exploit the Qayara field. Under the terms of the deal, Sonangol receive a remuneration fee of $5 per barrel and has said that it would invest US $2 billion at the field. According to Reuters, the oil company could start recovering costs once production levels hit 30,000 barrels per day (bpd).1220

The remuneration fee accepted was among the highest paid to any of the oil firms that won contracts at tender, reflecting the security risks in the region and the relatively low quality of the oil at the site.1221

Originally, the firm had rejected cutting its bid fee of $12.50 per barrel but won the deal after revising estimates that excluded the cost of facilities to lighten the heavy oil, according to a senior Sonangol official. The consortium is committed under the agreement to reaching a production plateau of 120,000 bpd, and holding it at that level for nine years.1222

Rumaila Oil FieldOil Reserves 17.7 billion barrels1223

Oil Production 1.35 million bpd (2012)1224

Discovered 19531223

Location Basra, South.

Principal Partners BP (38%), CNPC (37%)1225

Secondary Partners South Oil Company (25%)

Rumaila, together with the northern 'supergiant' Kirkuk field, have historically made up most of Iraq's oil production.1226, and as of 2012 production at Rumaila made up for

1218 'IRAQ - The Main Fields In The North', Free Library, retrieved 12 December 2011.1219 'Iraq fails to award contract for Qayara oilfield', Allrroya, 12 December 2009.1220 'FACTBOX-Oil deals between Iraq and global majors', Reuters, 26 February 2010.1221 'Duo Eye Sonangol's Iraqi Assets', Iraq Energy, 20 July 2010.1222 'Sonangol wins oil deals in Iraq's riskiest region', Reuters, 12 December 2009.1223 'Highs And Lows For Iraq’s Rumaila Oil Field', Commodities Universe, 27 October 2011.1224 'UPDATE 2-BP proposes cuts to Iraq's Rumaila target-sources', Reuters, 13 December 2012.1225 'BP and CNPC to Develop Iraq's Super-Giant Rumaila Field', BP, 3 November 2009.1226 'Iraq’s First Petroleum Licensing Round Rumaila Contract Area Bidding Results', Petroleum

210

more than a third of Iraq's total crude output.1227 Prior to 2009 Rumaila was seen as two contract areas, Rumaila North and Rumaila South, but in the 2009 bidding rounds they were bundled together into one asset.1228

The field is located in the Basra region of southern Iraq, about 20 miles from the Kuwaiti border. Discovered in 1953 during an expedition by British Petroleum, it was nationalised by Saddam Hussein and subsequently became Iraq's chief source of rev-enue. Rumaila is estimated to contain approximately 15 percent of all Iraqi oil re-serves, and as of 2011 the field accounted for 40 percent of the country's oil produc-tion.1229

Rumaila's 17.7 billion barrels of proven reserves are said to be sitting less than 8,000 feet below the surface of the earth, making them an easy target for drilling. 1229 The oil at the site is sweet (low in sulphur) and around 34°API Gravity.1230

Contract negotiations Two consortia bid for the Rumaila development in the first licensing round in 2009, one led by ExxonMobil and the other by BP. The Ministry of Oil announced that the ExxonMobil group had originally scored more points in the evaluation than the BP group, but that both groups were above the maximum remuneration fee of $2 a barrel set by the Ministry. Exxon declined the offer to meet the maximum fee but BP accep-ted and thus won the contract. The deal included a signature bonus of US $500 million, which was intended to be a 'soft loan' repayable over five years.1231

The CNPC percentage of ownership in the consortium appears to have significantly in-creased between the mid-2009 bid and when the deal was signed in November. A June 2009 press release announced that BP held a 66.67 percent stake and CNPC 33.33 per-cent of the international component of the bid.1231 Once the 25 percent involvement of the South Oil Company (SOC) was taken into account the stakes work out as 50 percent to BP and 25 percent each to CNPC and the SOC. However official announcements that followed indicated that the split was 38 percent to BP, 37 percent to CNPC and 25 per -cent to the Iraqi state.

The BP-led consortium offered to take production to 2.85 million barrels per day (bpd), lower than the 3.1 million bpd offered by the ExxonMobil-led consortium. 1231 However in December 2012 BP was in talks with the government to cut this production target to between 1.8 million and 2.2 million bpd, on the back of problems provoked by ageing infrastructure, red tape and a lack of clear oil legislation.1232

Licensing and Contracts Directorate, 30 June 2009.1227 'BP seeks contract revamp on Iraq oilfield', Financial Times, 16 December 2012.1228 'BP, CNPC to drill wells to boost Rumaila output', Bloomberg, 25 April 2010.1229 'Highs And Lows For Iraq’s Rumaila Oil Field', Commodities Universe, 27 October 2011.1230 'BP in Rumaila', BP, 16 February 2010.1231 'Petroleum Contracts and Licensing Directorate, Ministry of Oil ', press release June 30, 2009. 1232 'UPDATE 2-BP proposes cuts to Iraq's Rumaila target-sources', Reuters, 13 December 2012.

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Production and exports According to a BP press release, the Rumaila Field Operating Organisation (ROO) will manage the rehabilitation and expansion project at the field. ROO was to be staffed mainly by employees from the SOC and contain a small number of technical experts and managers from BP and CNPC.1233

Over the course of 2010 BP and CNPC drilled only 41 out of the 70 wells originally planned.1234 However the general manager of the ROO stated at a conference in 2011 that the consortium was planning to increase production by around 10 percent, or 130,000 barrels per day (bpd), at Rumalia in 2012. This was hoped to boost output to around 1.43 million bpd.1235 However by the end of 2012 the field was producing only around 1.35 million bpd.1232

Through 2011 production at the field suffered a number of setbacks. In September 2011 an explosion occurred, injuring at least 15 people and resulted in a temporary drop in production which was promptly resumed after repairs. A further explosion hit Rumaila in October, said to be a bombing targeting pipeline networks. Three days later another explosion occurred when a pile of mines exploded prematurely while being disposed of, killing two army officers and four deminers.1236

Siba Gas FieldEstimated Gas in Place 1.1 tcf1237

Gas in Production n/a

Discovered 19681238

Location Basra governorate, South.

Principal Partners Kuwait Energy Company (45%)1239

Secondary Partners TPAO (30%), Maysan Oil Company (25%)1239

The Siba gas field is situated the southern Basra governorate, some 30 kilometres (km) south-east of Basra city. The field is approximately 21 km long and 6-13 km wide. 1240

1233 'BP and CNPC to Develop Iraq's Super-Giant Rumaila Field', BP, 3 November 2009.1234 'Petrofac JV snags Rumaila job', Oil Online, 29 June 2011 1235 'Iraq Aims to Up Rumaila Oilfield Output by 10 Pct', Iraq Energy, 18 November 2011.1236 'Highs And Lows For Iraq’s Rumaila Oil Field', Commodities Universe, 27 October 2011.1237 'Kuwait Energy, TPAO, KazMunaiGaz Get Iraq Gas Awards', Bloomberg, 20 October 2010.1238 'Iran-IOM - Siba Gas Field', Energy World, retrieved 12 December 2011.1239 'Iraq-Siba', Kuwait Energy Company, retrieved 12 December 2011.1240 'Siba', Iraq Energy, retrieved 12 December 2011.

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Contract negotiations At Iraq's third post-war licensing round in 2010, the Siba contract area attracted a total of two bids from three companies. The winning bid came from a consortium of Kuwait Energy Company and Turkish TPAO, who proposed a remuneration fee of $7.50 per barrel of oil equivalent (boe) and a production plateau of 100 million standard cu-bic feet (MMscf) per day. They outbid an offer from Kazakhstan's KazMunayGas, who proposed a remuneration fee of $16 per boe.1241 TPAO told press in June 2011 that the two partners expected to invest US $1 billion in the field.1242

Under the terms of the contract, which will last for 20 years, Kuwait Energy will be the operator at Siba with a 45 percent share in the venture. TPAO holds a 30 percent in-terest and the remaining 25 percent is held by the state-owned Maysan Oil Company (MOC).1243 Kuwait Energy Chairman Manssour Aboukhamseen referred to the deal as “a significant milestone for Kuwait Energy” and the Arab Times described the deal as "as politically symbolic as it was a business coup."1244

Production and exportIn August 2012 Iraq's Oil Ministry signed a contract with Kuwait Energy to carry out a seismic survey at the Siba field.1245 As of December 2012 the Siba field was still awaiting development.1243

West Qurna Field (Phase 1)Oil Reserves 8.7 billion barrels1246

Oil Production 400,000 bpd (Oct 2012)1247

Discovered 1973

Location Basra governorate, South-east.

Principal Partners ExxonMobil (60%)1248

Secondary Partners Shell (15%), Oil Exploration Com-pany (25%)1249

1241 'Iraq’s Third Petroleum Licensing RoundSiba Contract Area – Bidding Results', Ministry of Oil Petroleum Contracts and Licensing Directorate, 20 October 2010.1242 'UPDATE 1-Iraq to sign Mansuriyah, Siba gas deals June 5', Reuters, 1 June 2011.1243 'Iraq-Siba', Kuwait Energy Company, retrieved 12 December 2011.1244 'Future Gas Exports From Iraq Fields Possible: Adviser', Arab Times, retrieved 12 December 2011.1245 'm', Iraq Business News, retrieved 12 December 2011.1246 'Exxon ups oil target for Iraq's West Qurna Phase 1', Reuters, 28 November 2010.1247 'Exxon seeks to quit flagship Iraq oil project', Reuters, 18 October 2012.1248 'Iraqi Oil Potential and Implications for Global Oil Markets and OPEC Politics', James Baker III Institute for Public Policy, Rice University, July 2011.

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The 'super giant' West Qurna oil field in southern Iraq is located in Basra governorate. The field comprises of two separate license areas, Phase 1 and Phase 2, defined by the Euphrates river which runs west-east across the centre of the field.1250

The West Qurna field is located around 50 kilometres (km) north-west of the city of Basra. Overlapping the northern edge of the Rumaila field, West Qurna can be re-garded geologically as a structural extension of North Rumaila, but was designated a separate field for non-technical reasons. It is considered a separate asset for develop-ment.1251

Contract negotiations West Qurna Phase 1 was awarded to a consortium led by ExxonMobil in November 2009, several months after the government had declined to award the contract area to any of the bids received during the first round of competitive bidding.1252 At the origin-al offering in July 2009 the bids specified a remuneration fee in excess of the maximum fee of $1.90 set by the Ministry of Oil. The Exxon-led consortium proposed a remuner-ation fee of $4, which was then revised to $3.70 as part of an 'additional bid', which was also turned down.1251

However later in the year an ExxonMobil-led consortium finally entered into a twenty-year venture to develop the field. Under the deal, the stakes were split as fol -lows: ExxonMobil (60 percent), Shell (15 percent) and the Iraqi state (25 percent).1253 Under the contract, the companies were to be paid a fee of $1.90 a barrel for the oil they produce at the site. Analyst Samuel Ciszuk commented that the deal was "a big loss for Lukoil” which did work on West Qurna when Saddam Hussein ruled Iraq and which had "really been eyeing this field.”1252 The consortium signed the final contract with the Ministry of Oil on the 25 January 2010.1249

Change in ownership structure As of December 2012 ExxonMobil was in the process of selling its stake in the field, ap-parently in response to pressure coming from Baghdad in the wake of the contracts the company signed with the Kurdistan Regional Government (KRG) in the north. Ac-cording to Derek Brower of the Petroleum Economist, Russian Lukoil and Chinese CNPC, both of which have stakes in other fields in the south, were the front-runners in the competition to take over the asset. Deputy Prime Minister Hussein Shahristani said that he wanted the deal to be completed by the end of 2012.1254

1249 'Iraqi Oil Potential and Implications for Global Oil Markets and OPEC Politics', James Baker III Institute for Public Policy, Rice University, July 2011.1250 'West Qurna (Phase 2)', Iraq Energy, retrieved 13 December 2010.1251 'Iraq’s First Petroleum Licensing Round, West Qurna Contract Area – Bidding Results, Petroleum Contracts and Licensing Directorate, 2 July 2009.1252 'Exxon, Shell Win Iraq’s West Qurna Oilfield Contract (Update3)', Bloomberg, 5 November 2009.1253 'New stability and prospects for Kurdish oil and gas', European Centre for Energy and Resource Security, 9 December 2011.1254 'Will Iraq be the next oil superpower?', Petroleum Economist, 12 December 2012.

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Production and exportIn November 2010 an Iraqi oil official told Reuters that ExxonMobil and its partners had raised their production plateau at West Qurna 1 to 2.825 million bpd (from the original plateau target of 2.325 bpd on signing) after adding new reserves to the area covered by their original development contract. He noted that under a rehabilitation plan for the field, the consortium was planning to boost output from the field to around 750,000 bpd by 2013, from 2010 levels of 230,000-240,000 bpd. This would be achieved by drilling new wells, overhauling existing wells and implementing a series of water injection projects.1255

As of October 2012 output was at around 400,000 bpd.1256 However industry analysts quoted by the Petroleum Economist argued that due to disappointing production levels and the low remuneration fee of $1.90 per barrel, West Qurna 1 turned into a loss-maker for ExxonMobil. The company's priority was to ramp up production quickly and cheaply, which did not happen. Furthermore, payments from the Iraqi government for oil produced were were delayed.1254

West Qurna Field (Phase 2)Oil Reserves 13 billion barrels1257

Oil Production n/a

Discovered 1973

Location Basra governorate, South-east.

Principal Partners Lukoil (56.25%)1258

Secondary Partners Statoil (18.75%), South Oil Com-pany (25%)1258

West Qurna-2 is the second portion of the 'super giant' West Qurna field made avail-able for licensing.1259 The field was discovered by Soviet geologists in 1973 and as of 2012 was the second biggest undeveloped field in the world with around 13 billion bar-rels of recoverable oil reserves.1257

Contract negotiations Phase 2 of the West Qurna field was put up for bidding at Iraq's second licensing round of 2009. The field was among the first two fields offered on the second bidding day,

1255 'Exxon ups oil target for Iraq's West Qurna Phase 1', Reuters, 28 November 2010.1256 'Exxon seeks to quit flagship Iraq oil project', Reuters, 18 October 2012.1257 'Lukoil to invest $4 bln in West Qurna-2 in 2013', Interfax, 9 October 2012.1258 'Iraqi Oil Potential and Implications for Global Oil Markets and OPEC Politics', James Baker Institute for Public Policy, Rice University, July 2011.1259 'West Qurna (Phase 2)', Iraq Energy, retrieved 13 December 2010.

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which according to a leaked US diplomatic cable attracted 'stunningly low prices'. The remuneration fee accepted for the winning bid by a Lukoil-led consortium was $1.15 per barrel and the agreed target production plateau was 1.8 million barrels per day (bpd). The other consortia which bid for the field were led by Malaysian Petronas and French Total, proposing remuneration fees of $1.25 and £1.72 respectively.1260

The remuneration fee would be payable once the contract area achieved a production level of 120,000 bpd. The plateau production target was to be maintained for 13 years and a signature bonus of US $150 million was also be payable.1261 Under the terms of the contract, Russian Lukoil would lead the consortium with a 56.25 percent stake, Statoil would hold a an 18.75 percent stake and the Iraqi state-owned South Oil Com -pany (SOC) would hold the remaining 25 percent.Error: Reference source not found

Production and export As of October 2012 production had not yet begun at West Qurna-2. However Andrei Kuzyaev, president of Lukoil Overseas, said the company planned to start production in late 2013 or early 2014 at a level of 150,000 bpd. They hoped to see production reach 400-500,000 bpd by the end of 2014. Lukoil CEO Vagit Alekperov also separately told local press that the company expects output of 1.7 million bpd by 2017.1262

Zubair Oil FieldOil Reserves 4 billion barrels1263

Oil Production 270,000 bpd (2012)1264

Discovered 1949

Location South of Basra.

Principal Partners Eni (32.81%)

Secondary Partners Occidental (23.44%), Kogas (18.75%), Maysan Oil Company (25%)

Zubair lies in the south-east of Iraq, around 20 kilometres (km) south-west of the city of Basra, and is one of Iraq's largest fields.1265 The field is though to hold around 4 bil-lion barrels of proven reserves.1266

1260 'Oil Stampede: Iraq,s 2nd Bid Round Results', WikiLeaks, 14 December 2009.1261 'Iraq's Second Petroleum Licensing Round: West Qurna (Phase 2) Contract Area – Bidding Results', Petroleum and Licensing Directorate, 12 December 2009.1262 'Russia's Lukoil to invest $4 bil in Iraqi West Qurna 2 project in 2013', Platts, 10 October 2012.1263 'Mubadala plans to gain part of Oxy share in Zubair', Upstream Online, 30 October 2009.1264 'Iraq: the Zubair oilfield', Middle East Confidential, 1 November 2012.1265 'Zubair', Iraq Energy, retrieved 12 December 2011.1266 'Iraq's Zubair-Eni deal effective Thursday-official', Reuters, 18 February 2010.

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Contract negotiations Follow Iraq's licensing rounds of 2009, an Eni-led consortium struck a deal with the Ir -aqi government for the development of the Zubair field. Under the contract, Eni holds a 32.81 percent stake, Occidental Petroleum 23.44 percent, Kogas 18.75 percent and state-owned Maysan Oil Company (MOC) a further 25 percent.1267 According to the con-tract, the consortium should boost the field's production by 10 percent from its start-ing level of around 200,000 barrels per day (bpd), and will then earn $2 for each extra barrel produced.1268 The consortium initially asked for $4.80 a barrel produced but later revised its bid to $2 after BP accepted the same amount for the Rumaila field.1269 The consortium also agreed to pay the Iraqi Oil Ministry US $300 million as a refund-able five-year loan, instead of paying a signature bonus.1270

Production and export When Eni took over the Zubair field it was producing 195,000 bpd. However according to Eni's field's expansion programme, production is expected to reach a plateau level of 1.125 million barrels per day (bpd) by 2017.1271 According to Eni CEO Paolo Scaroni in 2012, the consortium to date had invested 4-5 billion euros into the project (roughly US $5.2 - 6.5 billion), but the group expects to invest a total of $18 billion in the pro-ject.1264

Fields awarded by KRGTaq Taq Oil Field

Oil Reserves 647 million barrels1272

Oil Production 105,000 bpd (2012)1273

Location Kurdistan region

Partners Genel Energy (55%), Addax Petro-leum (45%)

1267 'Eni, Occidental Petroleum and KOGAS sign the technical service contract with Iraq's South Oil Company and Missan Oil Company to redevelop Zubair field', Eni, 22 January 20101268 'Eni Consortium to Redevelop Zubair Field in Iraq', Rigzone, 22 January 2010.1269 'Eni Consortium Finalizes Deal to Develop Iraq Oil Field', The Wall Street Journal, 25 January 2010.1270 'Eni S.p.A., Occidental Petroleum Corporation and Korea Gas Corporation Sign Final Deal For Zubair Oil Field-DJ', Reuters, 22 January 2010.1271 'Eni awarded the license for the Zubair giant field in Iraq', Eni, 13 October 2009.1272 'Taq Taq PSC', Genel Energy, retrieved 14 December 2012.1273 'Kurdistan Taq Taq oil exports rise ahead of Sept deadline', Reuters, 6 September 2012.

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API Specificity 48

The Taq Taq field, lying in the Zagros basin within the semi-autonomous Kurdistan re -gion of Iraq, has gross 2P reserves of 647 million barrels. However Genel Energy be-lieves that the field could potentially hold one billion barrels of oil.

The license area is located 60 kilometres (km) north-east of the Kirkuk oil field and ad-jacent to the city of Kirkuk, 85 km south-east of the city of Erbil and 120 km north-west of the city of Sulaymaniyah. Its gross area is approximately 951 square km.1272

Through 2012 wells at the site had to be sporadically shut-down as exports stopped as a result of export disputes between the Kurdistan Regional Government (KRG) and Baghdad.1273

Contract negotiations In 2005 a production sharing contract (PSC) was signed for the development of the Taq Taq field between the KRG, Genel Energy and Addax Petroleum (a subsidiary of Sino-pec). Genel holds a 55 percent stake in the contract and Addax 45 percent.1274

Production and export The companies operating at Taq Taq began producing oil in 2009 at an initial level of 40,000 barrels per day (bpd).1275

According to Reuters, as of September 2012 the field was pumping 105,000 barrels per day (bpd), with 55,000 bpd delivered by tanker truck to Khurmala for export via the government-controlled Kirkuk-Ceyhan pipeline. Of the remainder, around 35,000 bpd was trucked to the nearby Bazian refinery and the rest stored. Head of operations at the site, Joe Stein, said exports could be boosted to 70,000 bpd if needed.1273 However Genel's official website states the production capacity of the field is 120,000 bpd and that the company hoped to increase this to 200,000 bpd by 2014.

According to Genel, the main obstacle to increasing the level of production in 2012 was the infrastructure bottleneck and current truck transportation options, however not-ing that the KRG was planning a new pipeline to transport produced oil to the Turkish border.1276

Taq Taq produces what has been dubbed 'champagne quality' crude, due to its very light API gravity of 48°.1277

1274 'Will Iraq be the next oil superpower?', Petroleum Economist, 12 December 2012.1275 'Iraq's Taq Taq oil field to grow as it comes online', Reuters, 31 May 2009.1276 'Taq Taq PSC', Genel Energy, retrieved 14 December 2012.1277 'Kurdistan Taq Taq oil exports rise ahead of Sept deadline', Reuters, 6 September 2012.

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Tawke Oil FieldOil Reserves 734 million barrels 2P1278

Oil Production 100,000 bpd (2012)1279

Discovered 2006

Location Kurdistan region

Partners DNO (55%), Genel Energy (25%)

The Tawke field is located in the semi-autonomous Kurdistan region, close to Iraq's border with Turkey. The field was discovered in 2006 by Norwegian DNO and has gross 2P reserves of 734 million barrels. The contract area extends over 637 square km.1278

Contract negotiations DNO originally entered into a production sharing contract (PSC) for the Dohuk area in 2004, of which the Tawke field was a part. This original PSC was amended in 2008 and caused the original license area to be split into two parts, which is how the Tawke li -censing area came into being.1278

However in 2010 a PSC was signed between the Kurdistan Regional Government (KRG), Genel Energy and DNO. Genel holds a 25 percent stake in the contract and DNO the re-maining 55 percent. 1280

Production and export At the end of 2011 Tawke could count 13 producing wells, and 17 producing wells by the end of 2012. Genel has a target production capacity of 200,000 barrels per day (bpd) for Tawke by 2014.1278

In November 2012 DNO officials announced that its production at Tawke had exceeded 100,000 bpd for the first time.1279

Disputed fieldsKirkuk Oil Field

Oil Reserves 8.7 billion barrels1281

1278 'Tawke PSC', Genel Energy, retrieved 14 December 2012.1279 'DNO production exceeds 100 thousand barrels in Tawke field in Kurdistan', Shafaq News, 15 November 2012.1280 'Will Iraq be the next oil superpower?', Petroleum Economist, 12 December 2012.

219

Oil Production 280,000 bpd (2012)1282

Discovered 1927

First Produced 1934

Location Kirkuk, North.

Kirkuk is an oil field at Baba Gurgur ('St. Blaze' in Kurdish), one of Iraq's oldest produ-cing fields, is located in the governorate of Kirkuk in northern Iraq. It was discovered in 1927 and brought into use by the Iraq Petroleum Company (IPC) in 1934. It was con -sidered the largest oil field in the world for around 20 years until Saudi Arabia's Ghawar field came online in the 1950s1283, and forms the basis of northern Iraqi oil pro-duction with nearly 9 billion barrels of proven remaining oil reserves as of 2006.1281

In the absence of deals concluded with international companies, as of December 2012 production at the field was being carried out by the North Oil Company (NOC) on be-half of the Iraqi Ministry of Oil.1284

Contract negotiations Following the invasion and occupation of Iraq in 2003, Kirkuk was among the eight fields on offer in Iraq's first post-war licensing round in 2009.1285 The government set a production plateau of 600,000 barrels per day (bpd). A consortium led by Shell offered a production plateau of 825,000 bpd, however their offer was declined because the Oil Ministry considered the suggested remuneration fee of $7.89 per barrel to be too high, compared to their own maximum fee set at $2 per barrel. A senior Iraqi official repor-ted in October 2009 that the Ministry would meet Shell to discuss terms further.1286 No deal is known to have resulted from these further contacts.

In 2012 Reuters reported that British major BP was considering a project aimed at re-viving declining production at Kirkuk. This would make BP the first foreign company to develop the Kirkuk deposit. However BP made no comment on the reports. Oil field service companies Schlumberger and Baker Hughes were also reported to be inter-ested in the re-development project.1282

1281 'Iraq Oil Production Kirkuk Oil Field', Oil and Gas Articles, 21 March 2006.1282 'Iraq wants BP to revive northern Kirkuk oilfield', Reuters, 17 April 2012.1283 'The Kurdish battle for Kirkuk', International Resource Journal 20091284 'Iraq - Extractive Industries', Revenue Watch, retrieved 14 December 2012.1285 'Shell Renegotiates with Iraq for Kirkuk Field Right's, Rigzone 16 October 2009.1286 'Iraq readies to meet Shell over Kirkuk', Zawya, 18 October 2009

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Production and export By 2012 production at the field had slumped to 280,000 bpd, from a level of 900,000 bpd in 2001 prior to the 2003 invasion. Iraqi officials in 2012 were looking to invite an in-ternational oil company (IOC) to boost production at the field, in order to raise capa-city to 600,000 bpd by 2017.1282

Once oil is extracted from the ground at Kirkuk, it is sent via the Kirkuk-Ceyhan Oil Pipeline to the Turkish port city of Ceyhan, from where it is shipped around the world.1287

Dispute over ownership The Kirkuk field lies near the city of Kirkuk, a city long disputed between the central government in Baghdad and the Kurdish Regional Government (KRG) based in Erbil.

Historically this area of Iraq was populated by Shi'ite Kurds, who originally occupied a large part of the Ottoman Empire. Since the fall of Saddam Hussein, many Kurds feel that Kirkuk should be returned to them.1287 In June 2008 there was a brief armed stand-off between the forces of the KRG and Iraq's central government over one of the areas of Kirkuk field, the Khurmala Dome. Oil Minister Hussein Shahristani said the Baghdad government secured the area after Kurdish peshmerga briefly stopped the Oil Ministry from producing out of the field, at the time yielding about 30,000 bpd.1288

KRG officials claim their right to manage the Khurmala Dome on the grounds that it falls within Erbil governorate, which is an undisputed part of the KRG. Iraq's central government bases its own claim on the fact that the 2005 Constitution grants the right to manage fields which are already in production to the federal level of govern-ment.1288

Quality of crude at Kirkuk Kirkuk normally produces crude with an API gravity of 35°, with 1.97 percent sulphur content. However both the API Gravity and sulphur content reportedly deteriorated sharply in the months just preceding the war in 2003. Kirkuk's gravity, for instance, declined to around 32°-33° API, while sulphur content rose above 2 percent.

Some analysts believe that poor reservoir management practices during the Saddam Hussein years (including reinjection of excess fuel oil, refinery residue and gas-stripped oil) may have seriously, even permanently, damaged Kirkuk. Among other problems, fuel oil reinjection has increased oil viscosity at Kirkuk, making it more dif-ficult and expensive to get oil out of the ground.1289

1287 'Kirkuk Oil Field- A History of Conflict', Commodities Universe, 28 October 2011.1288 'Future of Kirkuk Field Unknown', Energy Daily, 17 June 20081289 'Iraq Oil Production Kirkuk Oil Field', Oil and Gas Articles, 21 March 2006.

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Resource Transparency OpportunitiesTransparency of ContractsThe drawing up of contracts is necessary in the extractive industries in order to give precise detail and legal specificity to the obligations of a state and company or consor-tium of companies involved in a project. Many contracts establish important tax, en-vironment and investment provisions with major implications for a producing coun-try.1290

The 2009 'Contracts Confidential' report from Revenue Watch Institute (RWI) notes that in recent years there has been a growing movement calling for greater contract transparency, within and beyond the extractives sector. International jurisprudence on the right to information, which increasingly supports the disclosure of agreements, as well as domestic freedom of information (FOI) laws across the world, are trends which offer important tools of argument and procedure in breaking the barrier to dis-closure while balancing other legitimate interests.1290

BenefitsAccording to Ingilab Ahmadov of the Public Finance Monitoring Center in Azerbaijan, it is widely known that a transparent 'company-state' relationship is a key factor for resource-rich countries seeking efficient management of their natural resources to be-nefit current and future generations. He argues that contract transparency is neces-sary because an outside observer who wishes to compare similar contracts across or within countries needs a way to determine the extent to which it takes society's in-terests into account. To judge the fairness of these contracts, one must first have ac -cess to them.1291

Proponents of contract transparency argue that the publishing and scrutiny of con-tracts allows governments to be held accountable for all contracts they enter into. In their report on the issue, Revenue Watch argue that "contract transparency is critical to addressing better resource management and bringing contract stability to an in-dustry that sees its contracts renegotiated more than any other."1290

1290 'Contracts Confidential: Ending Secret Deals in the Extractives Industries', Revenue Watch, 2009.1291 'Why is oil contract transparency necessary?' ,Public Finance Monitoring Centre, retrieved 15 March 2012.

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Opposition and counter-argumentsOne of the most commonly aired arguments against transparency of contracts is that this openness impairs a company's commercial interests and weakens its competitive position. Confidentiality clauses are a common and legitimate feature in contracts between private parties and are used to prevent information from coming into the hands of public groups.1292

This assertion is contradicted by proponents of transparency such as Ingilab Ah-madov, who argues that industry specialists in any case are aware of all or almost all contracts. Given the high level of information technology and close cooperation on joint projects in today's oil industry, it is unrealistic to maintain 'trade secrets' as they existed in the 1980s and 1990s. According to Ahmadov, practice has shown that the commercial interests of parties involved in oil and gas contracts do not suffer negat -ively from the exposure, but on the contrary are able to benefit from a badly needed enhancement of their public image.1293

Susan Maples, in her report for RWI, suggests that one reason why companies are not eager to embrace contract transparency is that the information asymmetry between different parties resulting from secrecy arrangements allows certain companies an ad-vantage, enabling them to negotiate more favourable commercial deals. Maples admits that the arguments in support of contract secrecy are not negligible arguments, but they overlook the special obligations of governments and the democratic right to in-formation.1292

The EITI and contract transparencyAs of 2011, the Extractive Industries Transparency Initiative (EITI) did not make de-mands on participating countries regarding contract transparency. There have been calls from transparency activists for the initiative to widen its remit to include con-tract transparency. However EITI representatives argue that it is important that the EITI retains precisely this tight focus in order to foster wider change and provoke de -bate on broader governance issues.1294

Natural Resource Charter (NRC)The Natural Resource Charter, as part of the resource transparency movement, is a set of principles to guide governments' and societies' use of natural resources so these economic opportunities result in maximum and sustained returns for a country's cit-izens. It outlines tools and policy options designed to avoid the mismanagement of di-

1292 'Contracts Confidential: Ending Secret Deals in the Extractives Industries' Revenue Watch Institute, 2009.1293 'Why is oil contract transparency necessary?' Public Finance Monitoring Centre, retrieved 15 March 2012.1294 'What needs to change for the EITI remains relevant?' EITI, 2 October 2009.

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minishing natural riches, and ensure their ongoing benefits.1295

FoundationThe charter was conceived by economist Paul Collier, as he worked on his book 'Plundered Planet'. Recognising the precedent set by the Extractive Industries Trans-parency Initiative (EITI), the charter is an attempt to extend the principles of good governance across every area of natural resource management. A draft of the charter was announced in February 2009.1296 As well as Collier, the charter was sponsored by a number of academics and the Revenue Watch Institute (RWI).1295

Collier's idea is that natural resources are key to the development of many countries, particularly in Africa. But the reason so many countries have suffered from the 're-source curse' is a series of breaks in a crucial chain of decisions required to ensure ef-fective exploitation of resources: the lack of sufficient investment in the discovery process, failure to impose adequate taxation, shortage of domestic investment of rev-enue, and the need to ‘invest in investments’ by building civil service capacity to man-age investment portfolios.1297

PreceptsThe charter is made up of a number of precepts, or basic principles. These are thought to be universally applicable to all natural resource producing countries, in the same way as the Universal Declaration of Human Rights. Each of the principles has a de-tailed explanation and an accompanying document on ways to achieve it on the charter's website.1298

Overarching issues• Precept 1: The development of natural resources should be designed to secure

maximum benefit for the citizens of the host country.

• Precept 2: Extractive resources are public assets and decisions around their ex-ploitation should be transparent and subject to informed public oversight.

Upstream issues• Precept 3: Competition is a critical mechanism to secure value and integrity.

• Precept 4: Fiscal terms must be robust to changing circumstances and ensure the country gets the full value from its resources.

1295 'Natural Resource Charter', Revenue Watch Institute, retrieved 15 January 2013.1296 'New Charter to help oil-rich poor countries - launched today', Natural Resource Charter, retrieved 24 October 2011.1297 Collier, Paul ' The Plundered Planet: Why We Must--and How We Can--Manage Nature for Global Prosperity', Oxford University Press, 2010.1298 'Natural Resource Charter – Precepts', Natural Resource Charter, retrieved 24 October 2011.

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• Precept 5: National resource companies should be competitive and commercial op-erations. They should avoid conducting regulatory functions or other activities.

• Precept 6: Resource projects may have serious environmental and social effects which must be accounted for and mitigated at all stages of the project cycle.

• Precept 7: Resource revenues should be used primarily to promote sustained eco-nomic growth through enabling and maintaining high levels of domestic invest-ment.

Downstream issues• Precept 8: Effective utilisation of resource revenues requires that domestic ex-

penditure be built up and gradually smoothed to take account of revenue volatil-ity.

• Precept 9: Government should use resource wealth as an opportunity to secure ef-fective public expenditure and to increase the efficiency of public spending.

• Precept 10: Government policy should facilitate private sector investments in re-sponse to new opportunities and structural changes associated with resource wealth.

Global responsibility• Precept 11: The home governments of extractive companies and international cap-

ital centers should require and enforce best practice.

• Precept 12: All extraction companies should follow best practice in contracting, operations and payments.

InstitutionThe charter is at present a draft put together by a group of leading international scholars. In March 2010, the charter announced that it had an advisory board which includes former president of Mexico Ernest Zedillo and African businessman Mo Ibrahim.1299

Extractive Industries Transparency Initiative (EITI)

EITI complianceCountries seeking to achieve EITI Candidate status must meet five sign-up require-1299 'The Twelve Precepts', Natural Resource Charter, retrieved 15 January 2013.

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ments, and for a country to achieve EITI compliance, it has two and a half years to be validated as a Compliant country. Once a country is Compliant, the country must un-dergo Validation at least every five years, or upon the request from the EITI Interna-tional Board.1300

As of January 2013, 18 countries were 'EITI compliant', namely: Azerbaijan, Ghana, Iraq, Kyrgyz Republic, Mauritania, Mozambique, Nigeria, Peru, Timor-Leste, Zambia, Central African Republic, Liberia, Mali, Mongolia, Niger, Norway, Tanzania and Yemen. There were a further 18 'Candidate Countries': Afghanistan, Cameroon, Chad, the Democratice Republic of Congo, Guineau, Sao Tome and Principe, the Solomon Islands, Trinidad and Tobago, Albania, Burkhina Faso, Cote d'Ivoire, Gabon, Guatemala, In-donesia, Kazakhstan, Congo, Sierra Leone and Togo. Madagascar was temporarily sus-pended at the time.1301

Validation requirements

Sign-Up

The EITI rules state that a country applying for Candidate status must meet the follow-ing sign-up requirements:

1. The government is required to issue an unequivocal public statement of its intention to implement the EITI.

2. The government is required to commit to work with civil society and companies on the implementation of the EITI.

3. The government is required to appoint a senior individual to lead on the implementation of the EITI.

4. The government is required to establish a multi-stakeholder group to oversee the implementation of the EITI.

5. The multi-stakeholder group, in consultation with key EITI stakeholders, should agree and publish a fully costed work plan, containing measurable targets, and a timetable for implementation and incorporating an assessment of capacity constraints.1302

PreparationThe government is required to: ensure the engagement of civil society in the process; engage companies; and remove legal and regulatory obstacles to the implementation of the EITI. The multi-stakeholder group is required to agree a definition of materiality and the reporting templates, which define what revenue streams are included in company and government disclosures. The organisation appointed to produce the EITI reconciliation report must be perceived as credible, trustworthy and technically competent. The government is then required to ensure that all relevant companies and government

1300 'EITI Implementation', EITI, retrieved 27 October 2011.1301 'EITI Countries', EITI, retrieved 15 January 2013.1302 'Sign Up', EITI, retrieved 27 October 2011.

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entities report and that both company and government reports are based on accounts audited to international standards.1303

DisclosureCompanies must comprehensively disclose all material payments in accordance with the agreed reporting templates, and government agencies must comprehensively disclose all material revenues. The multi-stakeholder group must also be content that the organisation contracted to reconcile the company and government figures did so satisfactorily, and the reconciler must ensure that that the EITI Report is comprehensive, identifies all discrepancies, where possible explains those discrepancies, and where necessary makes recommendations for remedial actions to be taken.1303

DisseminationThe government and multi-stakeholder group must ensure that the EITI Report is comprehensible and publicly accessible to encourage that its findings contribute to public debate.1282

Review and ValidationOil, gas and mining companies must support EITI implementation, and the government and multi-stakeholder group are encouraged to take steps to act on lessons learned, address discrepancies and ensure that EITI implementation is sustainable. Implementing countries are required to submit Validation reports in accordance with the deadlines established by the Board.1282

Retaining Compliant StatusCompliant countries must maintain adherence to all the requirements listed above in order to retain Compliant status.1282

EITI criteria1. Publication: Regular publication of all material oil, gas and mining payments by companies to governments ('payments') and all material revenues received by governments from oil, gas and mining companies ('revenues') to a wide audience in a publicly accessible, comprehensive and comprehensible manner.

2. Audit: Where such audits do not already exist, payments and revenues are the subject of a credible, independent audit, applying international auditing standards.

3. Reconciliation: Payments and revenues are reconciled by a credible, independent administrator, applying international auditing standards and with publication of the administrator’s opinion regarding that reconciliation including discrepancies, should any be identified.

1303 'EITI Rules', EITI, retrieved 27 October 2011.

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4. Scope: This approach is extended to all companies including state-owned enterprises.

5. Civil Society: Civil society is actively engaged as a participant in the design, monitoring and evaluation of this process and contributes towards public debate.

6. Work Plan: A public, financially sustainable work plan for all the above is developed by the host government, with assistance from the international financial institutions where required, including measurable targets, a timetable for implementation, and an assessment of potential capacity constraints.1304

EITI in IraqIraq signed up to EITI in February 2010 and issued a draft of its first reconciliation re-port at the start of 20121305

Iraq first announced its intent to implement the EITI in 2008 and Deputy Minister Mr Barham Salih met with EITI Chairman Peter Eigen in Baghdad in October 20081306. The Iraq EITI (IEITI) Launch Conference took place on 9-10 January 2010, when Prime Min-ister Nouri al-Maliki announced Iraq's formal candidacy1307. The first IEITI Stakeholder Council meeting was held on 22-23 September 2010. Civil society was represented by several organisations, and in 2011 formed a coalition grouping more than 40 organisa-tions around the EITI initiative.

On the 12 December 2012 Iraq was declared a 'compliant country' by the EITI Board on the basis of a final validation report released in August 2012. According to the official EITI website, protracted and difficult negotiations took place between the IEITI and the Kurdistan Regional Government (KRG), but the 2010 reportwill cover Kurdistan's oil and gas production and revenues, which will be reflected in a separate chapter.1308

Despite Iraq's history of collaboration with the EITI, Revenue Watch Institute (RWI) highlights a lack of awareness among civil society, particularly in the northern Kurd-ish region, as an obstacle.1309

First Reconciliation Report: December 2011The first reconciliation report was issued by Iraq's EITI Secretariat on the 23 December 2011. It tallied some US $41.3 billion of receipts by the State Oil Marketing Organisa-tion (SOMO) in sales of Iraqi oil to international buyers. It initially showed a discrep-ancy of $1.09 billion between figures reported by SOMO and those of the buying com-panies but these were all subsequently explained in follow-up consultations, said the report, prepared by Price Waterhouse Cooper.

1304 'EITI Rules', EITI, retrieved 27 October 2011.1305 'English IEITI Report', EITI, retrieved 11 January 2012.1306 'EITI Secretariat's Iraq page', EITI, retrieved 11 January 2012.1307 'Iraq Joins Global Transparency Effort', PWYP, retrieved 11 January 2012.1308 'Iraq EITI', EITI', retrieved 15 January 2013.1309 'Raising EITI Awareness Among CSOs in Iraq’s Northern Kurdish Area', Revenue Watch, retrieved 15 January 2013.

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The report also reconciled the physical quantities of oil sent from Iraq's two main pro-ducing companies, rthe North Oil Company (NOC) and the South Oil Company (SOC), to SOMO.

The report used a disaggregated system, listing 34 companies which had bought oil from SOMO during 2009 and further breaking up the figures into regional markets. The top three buying companies were the Indian Oil and Gas company, with over four billion dollars worth, ExxonMobil with over three billion dollars, Total with just under three billion dollars, and BP with over two billion dollars.

Company Name SOMO Buyer Variance

INDIAN OIL CORPORA-TION LIMITED - INDIA

4,695,576,254 4,500,744,731 -194,831,522

CHEVRON PRODUCTS COMPANY

3,425,398,382 3,047,447,462 -377,950,919

EXXONMOBIL SALES AND SUPPLY LLC.

U.S.A

3,177,291,327 3,157,920,626 -19,370,701

TOTAL INTERNATION-AL LIMITED – FRANCE

2,965,904,327 2,817,337,283 -148,567,044

CONOCOPHILLIPS IN-TERNATIONAL TRAD-

ING PTE. LTD.

2,737,804,011 2,740,504,520 2,700,509

SINOCHEM INTERNA-TIONAL OIL (LONDON)

CO. LTD

2,392,402,310 2,175,822,577 -216,579,733

BP OIL INTERNATION-AL LIMITED – LONDON

2,300,671,969 2,300,671,969 0

VALERO SUPPLY AND MARKETING COM-

PANY

1,860,376,364 1,915,077,038 54,700,674

ENI COMPANY 1,780,734,981 1,780,734,981 0

SHELL INTERNATION-AL EASTERN TRADING

COMPANY LIMITED

1,775,848,179 1,920,093,763 144,245,584

SK ENERGY EUROPE LIMITED

1,448,268,927 1,300,298,708 -147,970,220

REPSOL YPF TRADING Y TRANSPORT S.A.

1,402,819,238 1,402,819,238 0

KOCH SUPPLY AND 952,568,079 1,027,146,001 74,577,923

230

TRADING L.P

CHINA ZHENHUA OIL CO. LTD.

926,379,176 926,379,176 0

PETROLIO BRASILERIO S.A. – PETROBRAS

812,143,771 812,143,771 0

TURKISH PETROLIUM REFINERIES CORP.

(TUPRAS) – TURKEY

809,676,034 809,676,034 0

MITSUBISHI CORPOR-ATION

714,224,287 574,119,369 -140,104,919

COMPANIA ESPANOLA DE PETROLEOS, S.A.

(CEPSA)

662,332,305 662,332,305 0

MOTOROIL (HELLAS) 633,929,317 633,929,317 0

UNIPEC ASIA CO. LTD. 606,305,113 606,305,113 0

SOCIETE ANONYME MAROCAINE DE L'IN-

DUSTRIE DU RAFFINAGE (SAMIR)

582,498,450 582,498,450

0

HINDUSTAN PETRO-LEUM CORPORATION

LTD. – INDIA

525,835,196 538,947,117 13,111,921

JX NIPPON OIL & EN-ERGY CORPORATION

523,078,003 375,129,376 -147,948,627

CHINA NATIONAL UNITED OIL CORPORA-

TION

469,046,369 504,679,862 35,633,493

APIOIL LIMITED 464,853,991 464,853,991 0

PETROVIETNAM OIL CORPORATION (PV

OIL)

432,557,987 432,557,987 0

ERG REFFINERIES MEDITERRANEE S.P.A.

- GENOA / OTALY

431,827,678 407,768,337 -22,059,341

LUKOIL INTERNATION-AL TRADING AND SUP-

PLY COMPANY

335,587,059 335,587,059 0

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PETRONAS TRADING CORPORATION SDN

BHD (PETCO)

300,835,328 300,835,328 0

IPLOM SPA ,REFFINERY IN BUS-

ALLA - GENOA – ITALY

289,776,698 289,776,698 0

TOYOTA TSUSHO COR-PORATION

277,730,650 277,730,650 0

SARAS S.P.A. – ITALY 239,062,332 239,062,332 0

PETROGAL S.A. LISBON – PORTUGAL

176,425,620 176,425,620 0

BHARAT PETROLEUM CORPORATION LTD.

119,912,746 119,912,746 0

The report also noted that Price Waterhouse Cooper was supposed to receive confirm-ation that the sums reported by SOMO were actually deposited in the Federal Reserve Bank of New York, under the arrangement put in place by the UN Security Council (UNSC), but that the bank had not supplied this confirmation. The report listed some 14 separate discrepancies in reports between SOMO and the buying companies.1310

CriticismEnergy consultancy OpenOil has criticised the nature of Iraq's path towards EITI com-pliance, noting that submissions from buying companies were not always signed off by the CEO or CFO as stipulated by EITI rules, and that the Central Bank of Iraq (CBI) was unable to obtain statements for the Development Fund for Iraqi oil revenues from the Federal Reserve Bank of New York, despite multiple requests over a three-month peri-od. Therefore there was no confirmation that the money received by the Iraqi govern-ment ultimately corresponded to the invoices sent out by SOMO. The author also called for a wider scope of implementation before Iraq was granted compliant status.1311

EITI official website: www.eiti.org

Iraq EITI official website: www.ieiti.org.iq

Publish What You Pay (PWYP)Publish What You Pay (PWYP) is a global network of civil society organisations calling for oil, gas and mining revenues to form the basis for development and improve the lives of ordinary citizens in resource-rich countries.

1310 'Reconciliation of cash inflows from the petroleum industry in Iraq in 2009', IEITI, retrieved 11 January 2012.1311 'Iraq's First Reconciliation Report: Executive Summary', OpenOil, January 2012.

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From a few, mostly UK-based groups at the time of its launch, as of early 2013, PWYP had created a global network made up of more than 650 member organisations across the world, including human rights, development, environmental and faith-based or-ganisations. In more than 35 countries, network members joined to create national co-alitions. Many also collaborate on a regional level.1312

According to Jonas Moberg of the Extractive Industries Transparency Initiative (EITI), PWYP has created a 'light touch global network".1313 PWYP has often been seen to be the flagbearer of a strategy which says transparency efforts should be led by legal and regulatory requirement, and made obligatory for companies, in contrast to the ap-proach adopted by the EITI, which is consensual.1314

HistoryThe call to 'publish what you pay' first appeared in a 1999 report by Global Witness on the oil and banking industries in Angola.

On the back of this, in June 2002 Global Witness, along with fellow founding members CAFOD, Open Society Institute (OSI), Oxfam GB, Save the Children UK and Transpar-ency International UK, launched the worldwide PWYP campaign. The small founding coalition of NGOs was soon joined by others such as Catholic Relief Services, Human Rights Watch, Partnership Africa Canada, Pax Christi Netherlands and Secours Cath-olique/CARITAS France, along with an increasing number of groups from developing countries.1312

ActivitiesPWYP undertakes public campaigns and policy advocacy to achieve disclosure of in-formation about extractive industry revenues and contracts.1312

The organisation's call for companies to 'publish what you pay' and for governments to 'publish what you earn' form the basis of their activities. However the coalition also calls for transparency and accountable management and expenditure of public funds, as well as the public disclosure of extractive industry contracts and for licensing pro-cedures to be carried out transparently and in line with best international practice.1312

PWYP's activities consist primarily of advocacy efforts and capacity building of civil society groups. The growing desire to monitor the payments, revenues and expendit-ures within the extractives sector has also generated an increasing need for technical training around issues such; contracting and taxation regimes; auditing and account-ing processes; EITI processes, rules and policies. PWYP collaborates with local and in-ternational actors to organise training workshops, conferences and seminars to help meet these needs.1312

1312 'About Us', Publish What You Pay retrieved 15 January 2013.1313 'Without PWYP, no EITI', EITI Blog, 16 September 2012.1314 'Extractive Industries Transparency Initiative (EITI)', PWYP, retrieved 15 January 2013.

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GovernanceIn 2006 a Strategic Advisory Group (SAG) was established to oversee strategic plan-ning. The SAG is comprised of 12 representatives from a broad spectrum of PWYP members from around the world.

PWYP has an International Coordinator (IC) based in London as well as one full-time regional coordinator for Africa, and coordinators for all national affiliated coalitions. These coordinators are supported and overseen by management committees.

Representatives from the entire coalition meet every two years for an international strategy meeting.1315

Official Website: www.publishwhatyoupay.org

Revenue Watch Institute (RWI)RWI was first launched in 2002 as the Revenue Watch Programme of the Open Society Institute (OSI) and spun off into an independent organisation in June 2006. According to their official site, the Revenue Watch Institute is the only organisation dedicated exclusively to addressing the special problems of oil, gas and mining-dependent coun-tries— “countries where poverty, conflict and corruption too often converge”.1316

Activities RWI characterises its work as mainly with civil society, helping them oversee extract-ive industries across the entire value chain, from wellhead to international markets. The organisation also makes many small grants to partner institutions in developing countries.1316

RWI was a key founding member of the EITI in 2002 and has sat on its International Advisory Board. The institute defines its projects as supporting the EITI process in many countries around the world.1317

RWI also carries out analysis of data found in EITI reports for participating countries. As part of this process they review the quality of recent reports and extract key pieces of revenue data, then rank the various reports according to a set of pre-determined in-dicators.1318

Official Website: www.revenuewatch.org

EITI Data Analysis: www.data.revenuewatch.org/eiti

1315 'How We Are Governed', Publish What You Pay, retrieved 14 December 2011.1316 'About Us', Revenue Watch Institute, retrieved 26 March 2012.1317 'RWI and the EITI', Revenue Watch Institute, retrieved 26 March 2012.1318 'EITI Reports: Results and Analysis', Revenue Watch Institute, retrieved 26 March 2012.

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Revenue Watch Institute in IraqThe Revenue Watch Institute (RWI) has been active in Iraq since shortly after the 2003 war. In April 2006, RWI held a seminar in Beirut gathering over 50 specialists and ex-perts in the oil industry1319

ProjectsIn 2011, RWI supported three projects in Iraq; two to strengthen parliamentary over-sight of Iraq's oil and gas sector and one to raise awareness of the Extractive Industries Transparency Initiative (EITI) among civil society organisations (CSOs) in Iraq's Kurd-ish north.13201321

RWI sponsored a US $115,958 grant in 2011 for the Arab Region Parliamentarians Against Corruption (ARPAC) to build the capacity of Iraqi parliamentarians, key min-istry staff and civil society representatives to improve oil and gas revenue manage-ment. The grant involved ARPAC holding a series of three-day workshops to train par-ticipants to obtain, analyze and act on oil and gas sector-related information, includ-ing public policy issues, standard industry oversight practices, revenue management and transparency, contracting basics, analyzing oil and gas contracts and the EITI.1320

Global WitnessGlobal Witness is a non-profit organisation headquartered in London which describes itself as exposing "the corrupt exploitation of natural resources and international trade systems, to drive campaigns that end impunity, resource-linked conflict, and hu-man rights and environmental abuses". 1322

Founded in 1993, Global Witness has been a key player in many of the major interna-tional mechanisms and initiatives that have been established to address these issues; including the Kimberley Process governing production of diamonds and precious stones, and the Extractive Industries Transparency Initiative (EITI).

1319 'Seminar report: Managing Iraq's Petroleum', Revenue Watch Institute, April 20061320 'Strengthening the Oversight Role of Iraqi Parliamentarians in the Oil and Gas Sectors', Revenue Watch Institute, retrieved 6 January 2012.1321 'Raising EITI Awareness Among CSOs in Iraq’s Northern Kurdish Area', Revenue Watch Institute, retrieved 6 January 2012.1322' Global Witness, About Us' Global Witness, retrieved 24 October 2010.

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Investigations and resultsGlobal Witness claims their investigations have had direct and major impacts, such as the International Monetary Fund (IMF) withdrawal from Cambodia in 1996 over cor-ruption in the logging industry,1323 the imposition of timber sanctions on Charles Taylor's Liberia in 2003,1324 and the precedent-setting arrest of timber baron Gus Kouwenhoven in the Netherlands in 2005.1325

Oil and GasGlobal Witness started producing reports on the oil and gas industry in 2004 when its report Time for Transparency detailed abuse of natural resources in Kazakhstan, Congo Brazzaville, Angola, Equatorial Guinea and Nauru.1326 Reports on Russia's gas trade with the countries of Eastern Europe and the EU followed.1327

In September 2009 Global Witness produced a report which provided details of the lack of transparency in the way Sudan distributes oil revenues between the govern-ment in Khartoum and the autonomous government of South Sudan.1328

Conflict mineralsGlobal Witness' work on conflict minerals focuses on the Democratic Republic of Congo (DRC) where fighting is fuelled by the trade in valuable minerals such as cassit-erite, coltan, wolframite and gold.1329

It was also one of the first organisations to bring the world's attention to the problems of conflict diamonds in countries such as Liberia, Sierra Leone, Angola, the DRC, and Cote d'Ivoire. The organisation is an official observer of the Kimberley Process and continues to campaign for the strengthening and effective implementation of its rules. However in December 2011 Global Witness made the decision to leave the process, due to concerns that the mechanism was no longer proving effective in achieving its ob-jective.1330

Official website: www.globalwitness.org

1323' Our History' Global Witness, retrieved 24 October 2010.1324' Liberia breaches UN Sanctions - whilst its logging industry funds arms imports and RUF rebels' Global Witness, 6 September 2001.1325' Arms dealer and timber trader Guus Kouwenhoven found guilty of breaking a UN arms embargo' Global Witness, 7 June 2006.1326' Time for Transparency' Global Witness, retrieved 26 October 2011.1327' It's a gas - funny business in the Turkmen-Ukraine oil trade' Global Witness, retrieved 26 October 2011.1328' Fuelling mistrust - The need for transparency in Sudan's oil industry' Global Witness, retrieved 26 October 2011.1329' Conflict Minerals' Global Witness, retrieved 30 November 2011.1330' Why we are leaving the Kimberley Process - A message from Global Witness Founding Director Charmian Gooch' Global Witness, 5 December 2011.

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Transparency InternationalTransparency International (TI) is the world's largest civil society organisation work-ing on issues of corruption and transparency. It was founded in 1993 by Peter Eigen, a former regional director in Africa from the World Bank.

Eigen explained that in his 25 years at the World Bank, bad projects often got funded because they had the support of leading officials, backed by corruption. The purpose of TI was to put the issue of corruption on the agenda of the World Bank, large donor countries, and the development process.1331

Major ProgramsThe project for which TI is most known is its Corruption Perceptions Index, an annual report issued since 1995. In it, business people are asked for their perceptions of the influence of corruption in their country.1332

As well as the index, TI also publishes a range of reports and position papers on vari -ous issues related to transparency.1333

Oil and GasIn March 2011, TI issued a report about the status of transparency among global oil companies. It follows a 2008 report that was built on a 2005 study by the charity Save the Children into the same issue, but the methodology was adapted.1334

Official Website: www.transparency.org

Transparency of Global Oil CompaniesIn March 2011, Transparency International (TI) issued a report on the transparency of information provided by 42 major oil and gas companies around the world.1331

FindingsThe report summarised its analysis into several main findings:

• Oil and gas companies are increasingly adopting and making publicly available an-ti-corruption programmes, but there are many companies that still do not publish their anti-corruption codes, policies or measures.

1331 'Peter Eigen', Africa Progress Panel, retrieved 15 January 2013.1332 '2011 Corruption Perception Index, Transparency International, retrieved 5 January 2012.1333 'Policy Research, Transparency International, retrieved 5 January 2012.1334 'Promoting Revenue Transparency: 2011 Report on Oil and Gas Companies', Transparency International, retrieved 25 October 2011.

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• Public disclosure of partnerships and subsidiaries, including their countries of in-corporation, are key elements of organisational disclosure and the average results in this section were relatively high. Many national oil companies have a good level of disclosure. However, disclosure of equity or field partners in upstream opera-tions remains infrequent, despite the fact that equity minority partnerships often present corruption risks.

• Country-level disclosure on international operations has improved since the 2008 PRT report, and reporting on production levels has become a broadly accepted standard and there are examples of good disclosure for financial data and re-serves. But country-level disclosure on international operations remains weak; many companies do not disclose any financial data on a disaggregated coun-try-level. The host country environment itself cannot be exclusively blamed for poor disclosure. In the same host countries, often described as ‘difficult environ-ments’, some companies disclose extensive information, while the others disclose little or none at all.

Key Policy Recommendations

For Companies

• Detailed anti-corruption programmes should be publicly available

• Companies should undertake voluntary independent assurance of anti-corruption programmes

• Companies should publish details of their subsidiaries and fields of operations

• Oil and gas companies should increase their reporting on a country-by-country basis

• Companies should join the Extractive Industries Transparency Initiative

• Companies should create and maintain up-to-date corporate websites

For National Oil Companies (NOCs)

• All NOCs should introduce internationally or generally accepted accounting stand-ards, as well as publish independently audited accounts

• The relationships between home governments and NOCs should be clear and pub-licly disclosed

For Public Bodies

• The European Union should amend relevant legislation to require EU-registered companies to report on their operations on a country-by-country basis

• All governments that are home to oil and gas producers should require companies to report on their operations on a country-by-country basis

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• Stock exchanges should enforce regulations providing for country-level reporting

For the Investor Community

• International rating agencies and risk analysts should include anti-corruption measures in their risk evaluation models where relevant

• The International Accounting Standards Board should require companies to report key information on a country-by-country basis

• Corporate responsibility indices should include reporting on anti-corruption pro-grammes, organisational disclosure and country-level disclosure

Report on Global Oil Companies in IraqCompanies in the Transparency International's March 2011 report1335 were graded on three criteria: their implementation and promotion of sound anti-corruption pro-grammes to prevent individuals from misappropriating revenues; their disclosure of the financial relationships they have with their partners and their operating subsidi-aries; and their publishing of precise information about how much revenue goes to state budgets and how much is retained by companies.

Aggregating the results of these criteria compiled by Transparency International, with 100 percent representing the highest level of transparency and 41 percent represent-ing the aggregate mean, international oil companies (IOCs) operating in Iraq placed as follows.

Above average performance transparency:

• Statoil: 75%

• BP: 64%

• Marathon: 63%

• Eni: 62%

• Shell: 58%

• ExxonMobil: 54%

• Talisman Energy: 52%

• Total: 47%

Below average performance transparency:

• Gazprom: 27%

• Petronas: 23%

• CNOOC: 19%

• CNPC: 12%

Seven companies operating in Iraq (Kogas, Kuwait Energy Company, TPAO, Hunt, Genel Energy, DNO and Heritage), were not fully covered in the report.

1335' Promoting Revenue Transparency: 2011 Report on Oil and Gas Companies' Transparency International website Retrieved 25 October 2011.

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DirectoriesIraq Directory of ContactsBelow please find a list of contact details for individuals, organisations and institutions who may be contacted for further detail on the issues covered in the OpenOil Iraq Oil Guide, along with website listings for access to further resources.

Civil Society and Media OrganisationsEITIWebsite: www.eiti.org

IEITI Website: www.ieiti.org.iq

Eddie Rich

Deputy Head and Regional Director (Southern and Eastern Africa and the Middle East)

EITI International Secretariat

E-mail: erich@eiti.org

Telephone: +44 207 613 4698

Alaa Mohie El-Deen

Head of Iraq EITI Secretariat

E-mail: aldeen57@msn.com

Telephone: +964 780 196 4606

Global WitnessWebsite: www.globalwitness.org

Brendan O'Donnell

Senior Campaigner

E-mail: bodonnell@globalwitness.org

Telephone: +44 207 492 5898 / +447970 379 387

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Iraq Oil ReportWebsite: www.iraqoilreport.com

Ben Lando

Director and Iraq Bureau Chief

E-mail: benlando@iraqoilreport.com

Telephone: 07903244469

Journalistic Freedoms ObservatoryWebsite: www.jfoiraq.org

Ziad Khalaf al-Ajili

Director

E-mail: zyad@jfoiraq.org

Bashar Al-Mandalawy

Project Manager

E-mail: bashar@jfoiraq.org

Telephone: +964 514862 7901 / +964 966750 7901

Publish What You PayWebsite: www.publishwhatyoupay.org

Sophia Harding

Programme Officer

E-mail: sharding@publishwhatyoupay.org

Telephone: +44 20 7031 1716

Reporters Without BordersWebsite: www.rsf.org

Soazig Dollet

North Africa & Middle-East Desk

47 rue Vivienne F - 75002 Paris

Telephone: + 33 1 44 83 84 78

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Fax : +33 1 45 23 11 51

E-mail : moyen-orient@rsf.org / middle-east@rsf.org

Revenue Watch InstituteWebsite: www.revenuewatch.org

Patricia Karam

Middle East and North Africa Regional Coordinator

E-mail: pkaram@revenuewatch.org

Transparency InternationalWebsite: www.transparency.org

Stephanie Twigg

Middle East and North Africa Department Alt Moabit 96 D-10559 Berlin

Telephone: +49 30 343820418

Fax: +49 30 34703912

E-mail: stwigg@transparency.org

Iraqi State Entities Baghdad Oil Training Institutewww.boti.gov.iq

PO Box: 46038, Al-Mustansiria, Baghdad

Tel: +964-1-4250363

E-mail: boti@boti.gov.iq

Iraq Exploration Companywww.iraqioec.com

Ministry of oil Box: 5694

Tel.: +964 1 8177000 / +964 1 8177014

E-mail: oec@iraqioec.com

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Kirkuk Oil Training Institutewww.kirkukoti.net

Kurdistan Regional Governmentwww.krg.org/krg

Maysan Oil Companywww.moc.oil.gov.iq

Republic of Iraq Missan Province Amarah City

Tel: +96443313470 / +96443313472

E-mail: moc_oil@mociraq.com

North Gas CompanyP.Box (16) Kirkuk

E-mail: gas@ngc.gov.iq

North Oil Companywww.noc.gov.iq

Kirkuk

Tel: +964 50 250000

E-mail: info@noc.gov.iq

North Refineries Companywww.nrc.oil.gov.iq

Iraq, Baghdad, Karada, P.O box: 3267

Tel: +964 1-543-0298

Petroleum and Contracts Licensing Directoratewww.pcld-iraq.com

Ministry of Oil Port Said Street Baghdad, Iraq

E-mail: contact@pcld-iraq.com

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Petroleum Research and Development Centrewww.prdc.gov.iq

South Gas Companywww.sgciraq.com

Basra province - Khor Al-Zubair Al-Ashar mailbox: 1201

Tel: 040/642346 / 040/642346

E-mail: sgco_office2009@sgciraq.com

South Oil Companywww.soc-basrah.com

Basrah

E-mail: info@soc-basrah.com

South Refineries Companywww.src.gov.iq

Basrah

Tel: +964-40-617712 / +964-40-614713

E-mail: info@src.gov.iq

State Oil Marketing Companywww.somooil.gov.iq

AL- Hay AL-Mou'tasim - District 724 - Street 17 AL-Muthana street , Adjacent to AL-Resafa fun fai P.O.Box 5118

E-mail: info@somooil.gov.iq

Iraq Oil Industry Listings

Oilfield Service CompaniesThe following is a list of oilfield services companies with operations in Iraq. Please note that the list is not exhaustive.

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Alkhair Oil Services

Iraq Office 52 Technology University St, Baghdad 10066 IRAQ.

Tel.: +9647704615368 Fax.: +96265711388

E-mail: admin@alkhairoil.com

Website: www.alkhairoil.com

Services: land and marine transportation; drilling & scouting; training.

Al Qabas Group

Baghdad Office Al-Mansour, 14 Rammadhan St. Building No. 4, M. 609, Z. 22,

Tel: +964 1 5420954 Mobile: +964 7901906291 Fax: +964 1 5412779

Email: qabasos@yahoo.com

Website: www.alqabasgroup.com

Services: infrastructure; waste water; irrigation; machinery and materials.

Baker Hughes

Regional Office P.O. Box 47513 Dhafir Tower, 4th Floor Corner of Najda / Electra Street Abu Dhabi

Tel: +971.2.4109100 Fax: +971.2.4109111

Website: www.bakerhughes.com

Services: reservoir development; drilling; integrated operations; evaluation; comple-tions; production; pressure pumping; tubular services; process and pipeline services; chemicals; education services.

Basrah East Company

Iraq Office P.O. Box: 2141, Basrah, Iraq

Tel: +964 40 640691 Fax: +964 40 623919

Mobile: +964 780 1390180 (Atheer) +964 790 2751871 (Iraqna) +971 50 5869337 (Interna-tional)

E-mail: info@basraheast.com

Website: www.basraheast.com

Services: refineries; pumping and receiving stations; gas production, liquefaction and distribution plants; pipelines; power generation plants; transmission networks.

Burj Al Rumila Company

Iraq Office Baghdad - Karrada - Kahramana Sq.

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Tel: +964-770-3739543

Services: reservoirs; pipelines.

Crescent Petroleum

Country Office Tel: + 964 (1) 719 4321 Fax: + 964 (1) 718 7243 E-mail: cpci-iraq@cres-cent.ae

Website: www.crescent.ae

Services: oil and gas exploration; production; transport.

HiTech Fluid Systems

Country Office 245/5/543 Shmony Street Ankawa, Erbil, Kurdistan, Iraq

Phone: 403.547.2906 Fax:: 403.547.3129 Email: moc.diulfhcetih@ofni

Website: www.hitechfluid.com

Services: drilling fluid systems; workover and completions; fluid additives.

Huawei

Country Office House No.24, Lane NO.27, Shorish Quater 101, Sulaimaniyah, Iraq

Tel: 00964-1-7744593 Fax: 00964-1-7744593

Website: www.huawei.com

Services: ICT Solutions.

IAG International Armoured Group

Regional Office P.O. Box 50060 Khor Khwair Industrial Park RAK Free Trade Zone Ras Al Khaimah, United Arab Emirates

Tel: + 971 7 266 0028 Fax: + 971 7 266 8969 E-mail: info@interarmored.com

Website: www.interarmored.com

Services: security services; risk management consultancy; security training; mine ac-tion.

Jawar Al Khaleej Shipping

Country Office PO Box 13372 Basrah, Iraq

Tel +964 780 1023988 / +964 781 2359556 E-mail: basra@jawaralkhaleej.com

Website: www.jawaralkhaleej.com

Services: shipping services.

Mott MacDonald

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Regional Office P.O. Box 47094, Al Hashmi Tower, Airport Road Abu Dhabi - Al Hashmi

Tel: +971 (0)2 445 7470 Fax: +971 (0)2 445 7490

Website: www.mottmac.com

Services: management, engineering and development consultancy.

OilServ

Regional Office 15th floor, One Business Bay Building, P.O.Box 117648, Dubai

Website: www.oilserv.com

Services: drilling, completion and production services.

Olive Group

Country Office

Tel: +971 (0)4 360 0831 E-mail: iraq@olivegroup.com

Website: www.olivegroup.com

Services: security, risk mitigation and specialist support services.

Petronasr

Iraq Office Near New City, 60 M, Erbil

Tel: +964 750 483 8593 / +964 770 197 4444 Satellite phone: + 88216 6660 9966

Email : info@petronasr.com

Website: www.petronasr.com

Services: power stations; refineries; pipelines; infrastructure.

Schlumberger

Regional Office Schlumberger Technical Services, Inc. Dubai World Trade Center, 9th Floor PO Box 9261 Dubai, UAE

Telephone: +971 4 306 7777 Fax: +971 4 306 7199

Website: www.slb.com

Services: seismic services; drilling; characterization; completions; production; well in-tervention.

Shammery

Iraq Office Sabah Al-Shammery & Partners Co. 50300 Al-Ma’amoon, Al-Mansoor Al-Ameerat St., District No. 609, St. No. 1, House No. 21 Baghdad, IRAQ

Tel: +964 1 5412787 / +964 1 5413516 Fax: +964 1 1 5418155

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E-Mail: sapco_iraq@shammery.com

Website: www.shammery.com

Services: exploration and drilling supplies; technology and communications; medical supplies; chemicals; automobile equipment.

SKA

Baghdad Office BIAP Post Office Box 23009 Baghdad International Airport Baghdad, Iraq

Tel: +964 7901 103 556 Tel: +964 7901 909 819 Email: baghdad@ska-arabia.com

Basrah Office SKA Complex Basrah International Airport Basrah, Iraq

Tel: +964 7901 909 871 VoIP: +1 703 673 3977 Email: basrah@ska-arabia.com

Erbil Office SKA Complex Erbil International Airport Erbil / Kurdistan, Iraq

Tel: +964 7703 668 919 Tel: +964 750 445 6415 Tel: +971 50 9195431 Email: info@ska-kur-distan.com

Website: www.ska-arabia.com

Services: aviation Services; ground logistics; life support; fuel supply chain manage-ment; camp construction; security services.

Technology Partners

Country Office Al Mansoor

Tel: +964 7901 946381 Tel: +964 7901 943660 Fax: +9714 390 8070

Website: www.tpfz.com

Services: ICT infrastructure and services integration.

TUOSSCO

Iraq Office Al-Mansur, Baghdad, Iraq

Tel: +964-1-5411424 Fax: +964-1-5415498

Website: www.tuossco.com

Services: instrumentation and control systems; power and generation; water treat-ment; mechanical; engineering; safety and environment; lab equipment.

Weatherford International

Country Office Tigris St. Behind Amara Kindergarten Amara (Missan) Iraq

Tel.: +917 284 9271 Fax.: +971-4-449 520

Website: www.weatherford.com

Services: drilling; evaluation; completion; production; intervention; training.

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Trading and Marketing CompaniesThe companies listed below all bought oil from state-owned SOMO in 2009.1336

BP Oil International Limited

20 Canada Square Canary Wharf London, E14 5NJ United Kingdom

Telephone: +44 20 7496 4000

ConocoPhillips International Trading PTE

1 Temasek Avenue, Millenia Tower, Singapore 039192

ExxonMobil Sales and Supply LLC

ExxonMobil Sales & Supply LLC One Alhambra Plaza Suite 900 Coral Gables, Florida FL33134, USA

Telephone (outside USA): +1 305 459 6358

Indian Oil Corporation Limited

36, Indian Oil Centre, Bhulabhai Desai Road, Cumballa Hill, Mumbai, Maharashtra 400026, India

Telephone: +91 22 2554 1679

Koch Supply and Trading L.P

Fountain House, 6th Floor, 130 Fenchurch Street, London EC3M 5DJ, United Kingdom

Telephone: +44 (0) 207 648 6300

Shell International Eastern Trading Company Limited (SIETCO)

Shell House, UE Square, 83 Clemenceau Ave, 239920, Singapore

Sinochem International Oil (London) Co. Ltd

Westminster Tower 3 Albert Embankment London SE1 7SP ‎

SK Energy Europe Limited

3rd Floor 11-12 Hanover Street, London W1S 1YQ United Kingdom

Telephone: +44-(0)20-7495-0956

Total International Limited

Tour Coupole - La Défense 6 2 place Jean Millier 92078 - PARIS LA DEFENSE CEDEX France

1336' Reconciliation of cash inflows from the petroleum industry in Iraq in 2009' IEITI Retrieved 11 January 2012.

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Valero Supply and Marketing Company

One Valero Way

Regional offices of IOCs operating in IraqBP

BP Iraq NV C/o BP Group Chertsey Road Sunbury-on-Thames Middlesex TW16 7LN United Kingdom

Telephone: +44 (0)1932 762 000 E-mail: iraq.enquiries@bp.com

DNO

DNO Middle East Office 3902, 39th Floor Shatha Tower, P.O. Box 502503 Dubai Media City Dubai - UAE

Telephone: +971-4-3642620 Fax: +971-4-3688447

Eni

SAIPEM S.P.A. IRAQ (Eni subsidiary) c/o Orient Trnsport Co. W11 Shmeisani Al-Hamra Building 4th Floor AMMAN

Telephone: +962 6 5664128 - 5682546

Fax: +962 6 5682541

Gazprom

Gazprom zarubezhneftegaz

4A Novodanilovskaya Emb. 117105, Moscow

Telephone: (+7 495) 544-48-93

Kogas

Kogas Iraq B.V.

200 Prins Bernhardplein, AMSTERDAM, 1097JB Netherlands

Kuwait Energy Company

Baghdad Office Al Wahda district 902, St 10, Building 5, Apartment 12, Baghdad, Iraq

Telephone: (+9641)7191861

Basrah Office Istiklal Street, near Noor Hospital Basra - Iraq

Telephone: (+964) 40 622002 Mobile: (+964) 7801321010

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Petronas

PETRONAS Carigali Iraq Holding B.V. Office No.1, Level 4, Gate Precinct Building 2, Dubai International Financial Centre, P.O Box 506594, Dubai, UAE

Telephone: +971 603 2331 5000

Shell

Shell Upstream International Ltd P.O. Box 11677 Dubai UAE

Telephone: +9714 4054400

E-mail: infoEPUAE@shell.com

Total

Total E&P Iraq

Hay Al-Wahda Mahalat 906, Zukak 8 House N°21 P.O. Box 2301 Alwiyah Baghdad

Telephone: +964 1 719 2908

TPAO

TPOC Iraq Office

Al-Wazereyah 301 Section 5th St. No: 6 Baghdad – IRAK

Telephone: + 90 312 207 20 00 – 18 58 – 18 59

E-mail: otekeli@tpao.gov.tr

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