Home
Iraq: Oil and Gas Legislation, Revenue
Sharing, and U.S. Policy
Christopher M. Blanchard
Analyst in Middle Eastern Affairs
November 3, 2009
Congressional Research Service
7-5700
[You must be registered and logged in to see this link.]
RL3406
Iraq: Oil and Gas Legislation, Revenue Sharing, and U.S. Policy
Congressional Research Service
Summary
Development in Iraq’s oil and natural gas sector is proceeding, in spite of continuing delays in
agreeing to hydrocarbon sector and revenue sharing legislation to define new terms for the
management of the country’s significant oil and natural gas resources. Both the Bush
Administration and the 110
th
Congress considered the passage of oil and gas sector framework
and revenue sharing legislation as important benchmarks that would indicate the Iraqi
government’s commitment to promoting political reconciliation and providing a solid foundation
for long-term economic development in Iraq. Obama Administration officials and some Members
of the 111
th
Congress have expressed similar views. In the absence of new Iraqi legislation,
interim revenue sharing mechanisms have been implemented, while both the national government
and the Kurdistan Regional Government have signed oil and natural gas contracts with foreign
firms.
The central importance of oil and gas revenue for the Iraqi economy is widely recognized by
Iraqis, and most groups accept the need to create new legal and policy guidelines for the
development of the country’s oil and natural gas resources. However, Iraq’s Council of
Representatives (parliament) has not taken action to consider proposed legislation to date because
of ongoing political disputes. In September 2009, U.S. Ambassador to Iraq Christopher Hill
predicted that proposed legislation would not be considered prior to national elections planned for
early 2010. The chairman of the Iraqi parliament’s oil and gas committee also recently expressed
doubt that the legislation will be considered by the current parliament.
Iraqi critics and supporters of various proposed solutions differ strongly on a number of key
issues, including the proper role and powers of federal and regional authorities in regulating oil
and gas development; the terms and extent of potential foreign participation in the oil and gas
sectors; and proposed formulas and mechanisms for equitably sharing oil and gas revenue.
Concurrent, related discussions about the administrative status of the city of Kirkuk and proposed
amendments to articles of Iraq’s constitution that outline federal and regional oil and gas rights
also are highly contentious. In October 2009, the Council of Ministers prepared its proposed 2010
budget, which includes a deficit of more than $15 billion for the second straight year because of
lower global oil prices and stagnant production and export levels in Iraq. Iraq is seeking a loan
from the IMF to cover a portion of the expected 2010 deficit, as U.S. officials continue to warn
that reduced Iraqi revenues and spending jeopardize investments needed to stabilize the country.
The military strategy employed by U.S. forces in Iraq has sought to create a secure environment
in which Iraqis can resolve core political differences as a means of ensuring national stability and
security. However, it remains to be seen whether proposed oil and gas legislation and ongoing
interim efforts to development Iraq’s energy resources will promote reconciliation or contribute to
deeper political tension. U.S. policymakers and Members of Congress thus face difficult choices
with regard to engaging Iraqis on various policy proposals, related constitutional reforms, and oil
and natural gas development contracts, while encouraging Iraqi counterparts to ensure that the
content of proposed laws, amendments, and contracts reflects acceptable political compromises.
This report reviews policy proposals and interim contracts, analyzes the positions of various Iraqi
political actors, and discusses potential implications for U.S. foreign policy goals in Iraq. See also
CRS Report RL31339, Iraq: Post-Saddam Governance and Security, by Kenneth Katzman. Iraq: Oil and Gas Legislation, Revenue Sharing, and U.S. Policy
This is too long to post all here, so here is the link to this PDF: [You must be registered and logged in to see this link.]
Sharing, and U.S. Policy
Christopher M. Blanchard
Analyst in Middle Eastern Affairs
November 3, 2009
Congressional Research Service
7-5700
[You must be registered and logged in to see this link.]
RL3406
Iraq: Oil and Gas Legislation, Revenue Sharing, and U.S. Policy
Congressional Research Service
Summary
Development in Iraq’s oil and natural gas sector is proceeding, in spite of continuing delays in
agreeing to hydrocarbon sector and revenue sharing legislation to define new terms for the
management of the country’s significant oil and natural gas resources. Both the Bush
Administration and the 110
th
Congress considered the passage of oil and gas sector framework
and revenue sharing legislation as important benchmarks that would indicate the Iraqi
government’s commitment to promoting political reconciliation and providing a solid foundation
for long-term economic development in Iraq. Obama Administration officials and some Members
of the 111
th
Congress have expressed similar views. In the absence of new Iraqi legislation,
interim revenue sharing mechanisms have been implemented, while both the national government
and the Kurdistan Regional Government have signed oil and natural gas contracts with foreign
firms.
The central importance of oil and gas revenue for the Iraqi economy is widely recognized by
Iraqis, and most groups accept the need to create new legal and policy guidelines for the
development of the country’s oil and natural gas resources. However, Iraq’s Council of
Representatives (parliament) has not taken action to consider proposed legislation to date because
of ongoing political disputes. In September 2009, U.S. Ambassador to Iraq Christopher Hill
predicted that proposed legislation would not be considered prior to national elections planned for
early 2010. The chairman of the Iraqi parliament’s oil and gas committee also recently expressed
doubt that the legislation will be considered by the current parliament.
Iraqi critics and supporters of various proposed solutions differ strongly on a number of key
issues, including the proper role and powers of federal and regional authorities in regulating oil
and gas development; the terms and extent of potential foreign participation in the oil and gas
sectors; and proposed formulas and mechanisms for equitably sharing oil and gas revenue.
Concurrent, related discussions about the administrative status of the city of Kirkuk and proposed
amendments to articles of Iraq’s constitution that outline federal and regional oil and gas rights
also are highly contentious. In October 2009, the Council of Ministers prepared its proposed 2010
budget, which includes a deficit of more than $15 billion for the second straight year because of
lower global oil prices and stagnant production and export levels in Iraq. Iraq is seeking a loan
from the IMF to cover a portion of the expected 2010 deficit, as U.S. officials continue to warn
that reduced Iraqi revenues and spending jeopardize investments needed to stabilize the country.
The military strategy employed by U.S. forces in Iraq has sought to create a secure environment
in which Iraqis can resolve core political differences as a means of ensuring national stability and
security. However, it remains to be seen whether proposed oil and gas legislation and ongoing
interim efforts to development Iraq’s energy resources will promote reconciliation or contribute to
deeper political tension. U.S. policymakers and Members of Congress thus face difficult choices
with regard to engaging Iraqis on various policy proposals, related constitutional reforms, and oil
and natural gas development contracts, while encouraging Iraqi counterparts to ensure that the
content of proposed laws, amendments, and contracts reflects acceptable political compromises.
This report reviews policy proposals and interim contracts, analyzes the positions of various Iraqi
political actors, and discusses potential implications for U.S. foreign policy goals in Iraq. See also
CRS Report RL31339, Iraq: Post-Saddam Governance and Security, by Kenneth Katzman. Iraq: Oil and Gas Legislation, Revenue Sharing, and U.S. Policy
This is too long to post all here, so here is the link to this PDF: [You must be registered and logged in to see this link.]
