Detailed Assessment of INOC Law First Amendment

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The following is an executive summary of my detailed assessment of the INOC Law First Amendment, currently debated by the Council of Ministers:

  • The verdict by the Federal High Court-FHC regarding the appeal against INOC Law 4 of 2018 was historical and extremely significant. Briefly the Court refutes almost two-thirds articles of the said law and most of these articles have substantive importance for the good and proper implementation of the law;
  • It seems that the amendments proposed by the Ministry of Oil-MoO are either premised on inaccurate understanding of FHC verdict and its implications or deliberate attempt to undermine and circumvent that verdict;
  • On the other hand, opinion given by the Legal Directorate at the Council of Ministers are more mature, relevant and demonstrates good and accurate interpretation and understanding of the FHC verdict;
  • It is not clear why the urgency and what prompts the Ministry to stress for promulgating the amendment of the law at the current difficult conditions (in every aspects) which the country is facing. Moreover, the justifications presented by the Ministry are hardly convincing to say the least. It is more puzzling when the MoO calls for approving the amendments without going through the due legal process. Also, its reliance on a relatively old, personal and rather confused communication from the chairman of Energy and Oil Committee of the Council of Representative diminishes the strength of the Ministry' argument;
  • The disparities and divergence between the positions and opinions of Legal Directorate of the Council of Ministers and the proposed drafts of amendments by the MoO are very serious indeed with very different legal and operational implications. Hence, the "decision" by the Council of Ministers on the suggested amendments could create a "loop" that needs further and intensive efforts and probably long time to resolve and make them commensurate with the Constitution;
  • The timing causes concerns as the term of the current "caretaking" government and the current Council of Representatives is relatively short as the national election is officially scheduled for June 2021. The efforts and intentions to approve the proposed amendment is, ironically, a replica of passing the ill-fated Law 4 of 2018, i.e., passing unconstitutional law in a hurry while all are preoccupied with election!! They never learned even a lesson;
  • As for the amendments proposed by the Ministry of Oil they suffer from many serious flaws, ambiguities and lack of coherence and consistency; particularly when one look at the entire amended law. The details of the of the comprehensive assessment, in Arabic, of the proposed First Amendment of INOC Law is provided hereunder; it was circulated widely, emailed to all concerned high authorities and posted on many website.

Click here to download the detailed analysis (Arabic) in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

The post Detailed Assessment of INOC Law First Amendment first appeared on Iraq Business News.

Mousa Jiyad Questions Norwegian Tanker Deal

By John Lee.

Iraq Business News Expert Blogger, Ahmed Mousa Jiyad, has demanded an investigation into Iraq's reported contract to buy tankers from a Norwegian company.

The Ministry of Oil announced on 18th August that the Iraqi Oil Tankers Company (IOTC) had concluded a contract with Norway's Batservice Mandal [Båtservice Mandal AS] to build two oil tankers.

According to Mr Jiyad, the company has no experience in building ships of this sort, and filed for bankruptcy last year.

The full text of Mr Jiyad's statement (in Arabic) can be read below:

Issam Al-Chalabi’s 50 Years in the World of Oil

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

A number of Iraq's oil professionals and technocrats have authored books documenting their own experience during the period of their time in the Iraqi petroleum sector. In addition to providing invaluable first-person anecdotes and empirical evidence these works have also delivered to the reader their considered views on - and interpretations of - the course of events and developments that took place across these varied timeframes.

Notable examples include Abdullah Ismael's Iraq's Oil Negotiations, 1952-1968 (1989) that documented and shed new light on the details of more than fifteen years of negotiations between various Iraqi governments and the foreign oil companies that were then controlling oil production in the country. Ismael was the acting deputy for the Ministry of Oil and the rapporteur for the Iraqi side during these long and often contentious negotiations.

Thus, his book has been considered as a highly valuable first-hand source that informs our understanding of the political economy of the relationship between the host government and foreign oil companies across the concession era. Similarly, Ghanim Anaz's Iraq's Oil and Gas Industries in the Twentieth Century (2012) provides an account of the difficult relationship between the Iraqi government and the Iraq Petroleum Company (IPC), informed by his employment at the IPC over that period. In an even more personal testimony, Jabbar Allibi's  Standing in the Storm: the challenges of difficult times provides a detailed account of his work and experience in Iraq's southern oilfields from 1972 through his retirement as an advisor at Iraq's Ministry of Oil in 2009.[i]

Saadallah al-Fathi, a recognised downstream engineer and accomplished professional, published his From the Refining Tower: More than memoirs, less than history (2014), which proved to be an interesting, engaging and enjoyable book to read. Al-Fathi provides the story of his life from early childhood until the publication of the book and the volume is recommended for those who want to know more about development in the Iraqi refining sub-sector as he details many such projects.

One-fifth of al-Fathi's book of 480-pages covers his youth and the years prior to his joining Iraq's Ministry of Oil, while the remainder provides a detailed memoir of his experience, particularly during the Iran-Iraq war and the damages inflicted on the refining sector and a variety of important projects in that era. He also provides insights from the point of his joining OPEC, where he served as Director of Energy Studies from May 1986 until his return to Iraq in July 1994. On 21 April 2002 al-Fathi retired, facing the emotions attendant to saying goodbye to his active leadership in the sector and a great many friends, colleagues and staff following some thirty-nine years.

As a testimony to the value of Fathi's book, it has, in addition to the author's introduction, three forwards written by well-known and respected oil professionals: Mishall Hmudat, Issam al-Challabi and Dr. Falih al-Khyat. Though I fully concur with what Mishall Hmudat wrote in his forward to the book, where he argued that al-Fathi's work was 'more historical than analytical' as a study, I am nevertheless of the opinion that the book provides a good reading of the development of the downstream sector in Iraq as well as a significant amount of inside information rarely accessible to the public.

While clearly joining this long line of predecessors, Issam Al-Chalabi's recently published 50 Years in the World of Oil: memoirs and autobiography (2019) is in a class of its own for many reasons. Al-Chalabi is a well-known and respected oil professional with more than twenty years in leadership positions within Iraq's petroleum sector. From the then powerful 'Follow-up Committee for Oil Affairs and Agreements Implementation' until he was removed from the post of Minister at 47 years of age, al-Chalabi has established himself as a sage voice, one who faced retirement with much still left to offer his country.

50 Years in the World of Oil provides interesting insights and inside information, allowing the reader to see how important issues were debated and decided upon by the top political circle under the Ba'ath regime of Saddam Hussein. A wealth of data, information and documents that add value to the narratives of the book are provided in support of al-Chalabi's writing. In this way, the book is unique in its coverage, constituting a valuable addition to the library of the Iraqi petroleum sector and a must-read reference on the development of the sector during this period of Iraqi history.

My relationship with Issam began in 1981 and went through three different phases: the first was a brief 'boss-staffer' relationship when he became INOC Deputy President in July 1981 while I was with INOC's Economic Studies of the Reservoirs and Field Development. That short period witnessed the beginning of INOC downsizing with the abolishment of the Economic Studies department; I was thereafter transferred to INOC's Economic Advisor Bureau, before in January 1982, transferring to the Council of Ministers- External Economic Relations Committee (EERC), which inherited and replaced the 'Follow-up Committee'.

The second phase of our relationship lasted between January 1982 and July 1988, when I left Iraq for the United States on a Fulbright-Fletcher visiting scholarship. During that phase, I was representing EERC on teams for many major oil projects, such as the second expansion of the Iraq-Turkey Pipeline, the second phase of Iraq's pipeline across Saudi Arabia (IPSA2), and the lubricant plant in Baiji's refining complex among other projects executed by the State Company for Oil Projects (SCOP). He and I also participated, through official delegations, in many bilateral economic cooperation committee meetings with representatives from Italy, France, the former Yugoslavia as well as the former Soviet Union, often focussing on project financing and debt rescheduling.

The third phase began while when we both joined the Iraqi diaspora, with Issam residing in Amman, Jordan while I settled in Norway. During this third phase our cooperation and contacts came to be focused on addressing various aspects of Iraq's petroleum sector. We have met on many occasions, joined coordinated efforts on specific issues such as INOC law, oil and gas law, bid rounds among others as Iraq transitioned from the Ba'th regime to a post-Saddam state apparatus. Hence, reading 50 Years in the World of Oil brought back vivid memories, both good and bad, pleasant and sad, of what the petroleum sector and those who worked in it, had gone through.[ii]

It is rather difficult to review books comprised of autobiography and personal testimonies as they usually represent views on and accounts of events from the perspective of the witness over their long professional life. The difficulty becomes more acute, particularly when such views are about who said or did what, why and under what circumstances. There is a problem of verification, especially in the absence of formal records, as such events occurred inside the corridors of power under a ruthless dictatorial régime. Challabi has highlighted these difficulties well, successfully providing explanations and whatever available materials he can to document the course of events, he nonetheless has had to rely primarily on his memory, as he notes in the book. Since this important book is written in Arabic and faces limited circulation for purchase outside bookshops in Jordan and Lebanon, it becomes necessary to provide here a brief overview of the book's structure and its contents for the reader of this journal prior to providing a few analytical remarks.

Structurally, 50 Years in the World of Oil comprises introductory items, eighteen chapters, a final word, as well as annexes and lists of references in both Arabic and English. Moreover, there are tables, maps, illustrative figures, copies of 'official communications and orders', texts of relevant laws, newspaper clippings and scanned copies of articles, formal statements and many photos. The brief introduction expresses the author's attempt to write the book as early as the end of 1990, when it was blocked from publication for not receiving an authorization from the 'Presidency Office' (Chalabi 11). When Chalabi followed-up on his request, he received clear warning and an implicit threat, 'It is better for him to forget the matter' (Chalabi 582)!!  That probably explains, and justifiably so, why the book was not published until some twenty-eight years later. This is why, in April 2018, the author decided to return to the writing of the book, depending on his memory and by reviewing what was available at his disposal of various materials. 50 Years in the World of Oil was completed by the end of 2018 and published in Arabic in early 2019. The book's size and inclusion of such detailed content as well as documents belies this short period and indicates the work Chalabi had completed decades earlier.

The first chapter covers two topics: the historical development of the discovery of petroleum from as far in the past as Iraq's antiquity, through the colonial competition to control Iraqi oil, before Chalabi turns to a thorough examination of the development of modern Iraq's oil reserves (Chalabi 19-98). Chalabi provides a comparative context alongside this examination, noting contemporaneous developments in the region and internationally. The annex to the chapter provides data on drilling activities and their cost from 1927 to 1987; exploration activities across 1947-1960 and then 1971-1989; and major fields discovered between 1968 and 1988, including year of discovery, name and numbers of the 'main reservoirs' in each field. This is very useful information aiming, obviously, to help provide comparison between the two eras: the foreign oil companies' concession era and that of INOC. In chapter two, Chalabi addresses pipeline networks and the politics surrounding their development and construction (Chalabi 99-170). Again, he provides a brief history of Iraq's pipelines since the discovery of oil in Kirkuk in 1927, with considerable detail of Iraq's attempts - as a semi-landlocked country - to diversify oil export outlets since the early 1980s. He provides details and inside information on various pipeline projects, the politics behind them, details of their execution, negotiations and bilateral agreements with the concerned transit countries, options that were under considerations and many more related matters.

It was of interest to know that Iraq considered a pipeline through the Arabian Gulf to the shores of Oman, though financial cost and geopolitical considerations discounted this option (Chalabi 118).[iii] At the end of the chapter the author endorsed the Iraqi-Jordanian pipeline that has been stranded since the mid-1980s, proposing for its capacity to be increased to 2mbd. However, he did not present a calculated economic argument in support of his call.

Oil production and export development are covered in chapter three (Chalabi 173-221). Here, Chalabi asserts that oil production increased from 1.5mbd in 1968 to 3.4mbd in July 1990. From what was contained within this chapter, these achievements could be attributed to three interrelated factors: oil nationalization, INOC's effects and national efforts - or direct investment with specified cooperation with non-concession International Oil Companies (IOCs). Moreover, the ministry presented a seven-point plan to reach production capacity of 6mbd by 1995 (Chalabi 186-193). Interesting to note a risky January 1990 personal encounter between the author and Sadam Hussain occurred, resulting in the Iraqi dictator telling Chalabi of his demand to increase Iraqi production capacity to 10 million barrel daily-mbd (Chalabi 180) and how he, the Minister, sailed through that awkward situation rather safely!! That being said, Chalabi did not name this small and supposedly not well-known oil company, information that would have been of invaluable benefit to his reader. In particular, this would impact our perception had the chairman he names stood behind the idea of 10mbd as well as whether that same company remained active in 2018 during the fifth bid round (Chalabi 184). Chalabi devotes enough space to address, with some repetition, the relationship between Iraq and IOCs at different phases over the 1921-2018 period, focusing in particular on the post-2003 period and the five bid rounds (Chalabi 225-266).

INOC has an important and special status in the history of Iraqi petroleum development, as well as the country's economy and politics, particularly due to its role and achievements since its formal establishment in 1964. In 50 Years in the World of Oil the author addressed INOC over this long history and in the fifth chapter he provides narratives regarding the demise of INOC beginning in 1987. As early as Saddam Hussain's 6 April 1987 visit to the Ministry of Oil, only a few short days after al-Chalabi's ascendance to the helm of the Ministry, the Iraqi dictator asserted the idea of abolishing INOC. Then, in yet another risky encounter with Saddam, Chalabi proposed the 'merger' of INOC within the structure of the Ministry rather than seeing it abolished altogether. This compromise was accepted (Chalabi 275). A more detailed examination of the merger is illustrated in chapter six (Chalabi 303-333). What should be mentioned at this juncture is that 'Decision 267' of 26 April 1987 asserts that the 'Merger of INOC Headquarters' (Article first-1) refers to the 'abolished' INCO (Article third-1).[iv] This creates the appearance of a case of legal ambiguity that could be interpreted in many different ways with contrasting implications. Surprisingly, the INOC chapter in the book makes no reference to the appeal before the Federal High Court against reinstating INOC by Law nr. 4 of 2018 (Chalabi 269-299), though al-Chalabi is certainly one of the strong supporters of that appeal.[v] Moreover, the chapter seventeen which examines the post-Ba'th regime period and development of the new Oil and Gas Law, does not address INOC either, though it occupies significant space in that law. The chapter on the Kurdistan Regional Government's (KRG) approach and efforts in the oil sector is rather brief, though it provides data on the main producing fields, production, reserves and involved IOCs through production sharing contracts (Chalabi 337-352). However, I believe the chapter requires updating as the landscape in 2018 is rather different from a decade ago when this chapter was penned, with newcomers replacing many departing actors with early hopes and ambitions un-realised.

Chalabi had an important role in Iraq's external petroleum and economic relationship through OPEC (examined in chapter 8) as well as on the bilateral level with many countries, which he details through specific chapters: Kuwait (chapter 10), Iran (chapter 11) and with Jordan, Syria, Turkey, Yemen, Indonesia and the United States (chapter 12). In these chapters, Chalabi reveals some important information, provides considered remarks and notes events and meetings he experienced during his ministerial term, particularly prior to the invasion of Kuwait on 2 August 1990. Matters relating to the petroleum processing industry, mainly associated gas utilization and the refining sub-sector, were addressed in chapters 9 and 15 respectively. Due to executing many projects, notably the north and south gas projects and their related operations, Iraq utilized more than ninety-five per cent of the associated gas prior to the devastating invasion of Kuwait (Chalabi 394). Similarly, refining capacity increased gradually, though fifty per cent of total refined products was fuel oil and due to misalignment between supply and demand, Iraq was compelled to import petroleum product to the tune of $35.6 billion during the period between 2003 and the end of 2016 (Chalabi 598).

The author provides data and an estimation of oil production, exports and earnings from 1927 through 2018 in chapter 16. The remaining chapters (13, 14 and 18) saw Chalabi assess his own performance and achievements, while also addressing personal matters. The most painful part must have been what was discussed in chapter 14, where he was admitted to the hospital for treatment arising from exhaustion. In spite of his health, he was directed to attend a 29 October 1990 meeting chaired by Saddam Hussain, following which he was dismissed as minister at the age of forty-seven (Chalabi 562-566). 50 Years in the World of Oil description of that meeting, which Chalabi characterized as a 'trial', conveys that he believes he was unjustifiably dismissed, with the narrative provided reading as a dramatic plot between others looking to usurp his ministerial authority. Such a reading is buttressed by the unfair treatment he received following his dismissal, leading to his decision to depart Iraq. In looking back, one might suggest that he was lucky to leave alive.

This excellent comprehensive work was, as mentioned earlier, completed in a rather short period, relying primarily on the memory of the author. Considering the length of the period covered, the volume of writing provided, as well as the personal and policy details and data provided, 50 Years in the World of Oil is bound to have some shortcomings regarding methodology, format and style as well as Chalabi's personal perspective on substantive matters that other participants may have seen differently. There are a number of errors included in the printed version, including some names and dates need rechecking. The tables of data included would be more useful if they had uniform descriptive titles, units of measurement and followed a unified format and most of the scanned copies are rather difficult, if not impossible, to read. Moreover, referencing should be made consistent with the included bibliography and be as comprehensive as possible in the information provided. Finally, the sequence of the chapters could be redone to reflect a more logical flow of issues examined.

On substantive matters there are a small number of inaccuracies (see especially 238 and 265) that need checking, updating and correction; a degree of selectivity in coverage (especially regarding the INOC 'merger' and information on the ill-fated proposal of 1964/65 to establish a 'Baghdad Oil Company' (Chalabi 270-71 and 304); a very questionable comparison with implicit similarity and effects that the author tried to draw regarding 'reserves depletion' that resulted from production sharing agreements by the U.S.-based Hunt oil company in Yemen where the author surmises that a similar outcome will befall the service contracts of the Iraqi bid rounds in southern Iraq (Chalabi 518)!

All the above remarks are easy to address if and when the author decides to produce a second edition of the book.

Chalabi has, undoubtedly, made a serious and worthy contribution to the study of the Iraqi petroleum sector and the policy process by authoring this impressive book. It is enjoyable to read, rich in data, documents and information and, surely, serves as an excellent reference on an extraordinary era in the history of the petroleum sector as well as that of modern Iraq.

 

References

Allibi J. (2010) (Standing in the Storm: the challenges of difficult times). Damascus: Alsarraj for Modern Printing.

Anaz G. (2012) Iraq's Oil and Gas Industries in the 20th Century. Nottingham, U.K.: Nottingham University Press.

Al-Chalabi I. (2019) (50 Years in the World of Oil - Memoirs and autobiography), Beirut: Arab Establishment for Studies and Publications. ISBN:  978-614-419-945-(HC);

Al-Fathi S. (2014) (From the Refining Tower: More than memoirs, less than history). Amman: Dar Al-Ayam for Publishing and Distribution.

Ismael A. (1989) Oil Negotiations 1952-1968). London: Dar Allam.

 

[i] See: Ahmed Mousa Jiyad. (2011) 'Global, national and local perspectives on Iraqi oil', in International Journal of Contemporary Iraqi Studies, 5 (1), p 152-159. The moderately favourable impression the book left of Allibi and his policy recommendations were quickly swept away due to the failure of his subsequent policies, destructive practices as well as significant question with regard his personal integrity during his term 2016-2018 term as Iraq's Minister of Oil.

[ii] I am very grateful to Issam for sending me a copy of his book and for the Journal of Contemporary Iraq & the Arab World for accepting my suggestion for it to be reviewed. My sincere thanks go also to Tariq Shafiq, who brought the book from Amman to London before posting it to me,  for his invaluable and refreshing information as well as providing some pages from the Ismael and Anaz books referred to above.

I am deeply thankful to both Professor Tareq Ismael for his invaluable suggestions and comments on this review article and to the editorial assistant for excellent editing of the text.

[iii] An Iraqi oil professional, Hamza Al-Jawahiri, circulated his article a couple years ago claiming similar route as his new idea!!

[iv] Decision 267 became effective upon its publication within the official Gazette, Al-Waqaee Al-Iraqiya الوقائع العراقية, nr. 3149, 5 November 1987.

[v] See the memo by Iraqi oil experts in support of the appeal against INOC law http://www.akhbaar.org/home/2018/6/244870.html posted on 2 June 2018, accessed 8 March 2019.

 

*A slightly revised version of this Book Review Article was published on the Journal of Contemporary Iraq & the Arab World, Volume 13 Number 2 & 3, pp. 289-294, Intellect Limited, https://doi.org/10.1386/jciaw_00013_5

 

Click here to download the full report in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

Mousa Jiyad: Transparency in the Iraqi Petroleum Sector

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Transparency in Iraq petroleum sector - More symbolic formality than impacting effectiveness

The petroleum sector is the only sector of the Iraqi economy that has been subject to a formal, articulated, transparency regime for almost a decade, as result of the new emerging international entity, the Extractive Industry Transparency Initiative (EITI).

As totally new concept in Iraqi governance mindset, transparency was introduced post 2003 invasion and Iraq went through distinct phases in its association with EITI from application in 2009 as candidate to a compliant country by end 2012 to suspension in late 2017, and since then Iraq works hard to re-instate its compliancy status.

This article discusses and assesses Iraq experience with transparency and the path it followed in its implementation of this new concept for prudent management of its finite natural resources of petroleum. Specifically, what prompted or compelled Iraq to adopt EITI norms; what measures it had taken to gain the compliant status; why that status was suspended; what has Iraq to do if it wants to regain that status and, above all, what are the outcomes and how sustainable are they.

Though Iraq EITI (IEITI) experience is characterized as bureaucratic formality and symbolic, the article would argue that good, comprehensive and regular reporting on transparency enhances transparency and contributes to good governance in the petroleum sector. Hence, the article argues further, that what is needed is how to transform IEITI into real, effective and impacting change agency.

Click here to download the full report in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

Jiyad: Oil Market Collapse Damages the Iraqi Economy

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Oil Market Collapse, Damages the Iraqi Economy and Changes Oil Geopolitics

The collapse of the global oil market is undoubtedly unprecedented in its timing, magnitude, spread and devastating impacts across the globe. A strange and unpredicted association of a few, but major, factors had contributed to the current threat, causing much uncertainty and vulnerability on national and global levels.

The revised "OPEC+" production cut agreed on 12 April prompted initial minor improvement in oil price, but there remains very many serious concerns that such reduction is much below what is needed to bring stability to and balances a saturated global oil market.

This article aims at estimating the collapse in oil market on Iraq first then on both Russia and Saudi Arabia, as they are accused for "OPEC+" failure early last March that ignited the oil price war, and assesses the geopolitical and political economy consideration that contributed to and further complicate the impasse.  The article provides a summary of two articles written and published in Arabic recently and an update on recent deliberation by "OPEC+" and G20 Energy Ministers to rescue the situation and bring some stability to global oil market under  existing threat of Coronavirus to the world biosecurity.

My two articles attempt to provide comparative assessment of the impact of the collapse with particular focus on short-term horizon, i.e., the remaining nine months of this year under different Brent oil price scenarios on Iraq, first article , while the second focuses on Russia and Saudi Arabia.

Click here to download the full report in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

New Book on Extractive Industry in Iraq

By Padraig O'Hannelly.

We are proud to announce that IBN Expert Blogger Ahmed Mousa Jiyad has just published a new book.

"Governing Modalities of the Extractive Industry in Iraq, Resource-Revenue Management Issues" is structured to address and analyze four broad topics, review development of related issues and answer some seventeen main questions and many others within:

I - Legal and Institutional Framework Governing Extractive Industry Sector in Iraq;

II - Revenue distribution;

III - Revenue volatility;

IV - Government spending.

Moreover, for each of the topics above mentioned, the research work endeavors to:

(a) Explain the current (up to 2015) state of affairs; and,

(b) Answer the questions listed for each topic.

Throughout the research the emphasis was on three important components:

  • Instruments, Policies and Institutions;
  • The constitution, various related laws, legal frameworks and modalities (Instruments);
  • Adopted polices, strategies, actions and plans (Policies) and involved state federal, regional or provincial entities, ministries, councils, committees and bodies (institutions).

The book is now available for purchase by clicking here.

Iraq Approves Fifth Round of Gas Contracts

By John Lee.

Iraq has reportedly approved contracts in a fifth bidding round for gas exploration contracts.

According to Reuters, the exploration deals relate to the development of fields in the eastern governate of Diyala that are expected to produce more than 750 million cubic feet of natural gas within 3 years.

The contracts have been criticised by IBN Expert Blogger Ahmed Mousa Jiyad – https://www.iraq-businessnews.com/2018/05/16/5th-round-oil-licences-poor-management-dubious-contracts-bad-results/

(Source: Reuters)

Iraq EITI issues latest Annual Report

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

Iraq Extractive Industry Transparency Initiative Issues its latest Annual Report

Iraq Extractive Industry Transparency Initiative (IEITI) issued a few days ago its latest annual report, it is about 2017 and it is the ninth since formation of IEITI. Ernst & Young (EY) was contracted to prepare the report; EY prepared IEITI annual reports for 2011, 2012 and 2016.

The report was issued as per the deadline set by EITI, and was issued a few months after EITI reinstates Iraq status as a compliant country; the suspension took effect in October 2017. Hence and as expected, the report was aimed at addressing issues that led to the suspension and also testifies the concerted efforts by Iraqi authorities, particularly IEITI to attaining that objective.

The annual report was released, for the first time, rather simultaneously in Arabic and English; both texts were posted on IEITI website. The report is long (154 pages) comprises seven section, executive summary, introduction by IEITI’ CEO and four annexes.

In preparing this review I used the English version with crosschecking the Arabic when necessary.

As I did in my reviews of all previous reports, I went thoroughly through the report and made many remarks on its methodology, findings, data, narratives as well as substantive and format maters.

To begin with, most narratives of the current report is repetition, mostly copy & paste, of 2016 report and its “Annex” that was released early 2018 except, of course, the data relating to 2017. The remarks on the current report are detailed and many; they are thematically grouped in the following categories:*

  • One: Weak quality control of data and information;
  • Two: Confused and inconsistent methodology;
  • Three: Data reconciliation;
  • Four: Data discrepancies;
  • Five: Annual comparison;
  • Six: Information and data that need re-checking and correction;
  • Seven: KRG data and information;
  • Eight: The mining sector.

Considering the finding of the review, it becomes necessary to address these findings, check the accuracy and relevance of data and information, revise the entire report and produce a new version.

* Summary of the review was written in Arabic and was circulated within my network of contacts.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.

Constitutional Amendments Relating to Petroleum Issues

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

Constitutional Amendments Relating to Petroleum Issues

The “October Uprising” is sustained, vertically and horizontally, causing on one side regrettable loss of human lives, inflicting serious damage and destruction to public, business and private properties among other things, and on the other advancing, forcefully, many legitimate important demands, some of which are accepted by the authorities and political blocks; the constitutional amendments is one of them.

Many actions were quickly taken regarding this particular demand.  To begin with, the protesters themselves designate specific “Tent for Re-Writing the Constitution” located at the central gathering place, i.e., Tahrir Square, and invited experts, legal specialists, academics and others to submit their proposals to and participate in the ongoing debate at the “Tent”.

The House of Representatives (the Parliament) formed special temporary entity, Constitutional Amendments Committee-CAC, which has to finalise its mandate within four months. Again, CAC at the commencement of its duty called for contribution from outside sources and devised different ways and means for that purpose. Similarly, the Office of the Presidency (of the Republic), formed a parallel committee (the Presidency Committee for the Constitutional Amendments- PCCA) for the same purpose; both committees are of official formal nature, causing confusions and doubt on the real intention of the establishment.

Responding to the protesters demand, the proposals by the United Nations Mission in Iraq, UNAMI, include amendment of the Constitution and its readiness to provide technical support in this regard. This was seen, by many commentators, as a step towards “internationalization” of the matter and calls for external interventions; a replica off 2005. On the political platform, a dozen of “political blocks” that has influential position in the prevailing system since 2003 issued a statement supportive to amending the constitution. Finally, other entities, writers and professionals expressed the same urgent demand to re-write the current constitute or even have a completely a new one.

In the light of the above, this article is a modest contribution in this endeavour.

Based on my continuous follow-up and evaluation of actual practices and formal positions that have adopted or relied upon different interpretation of constitutional articles, I am emphatically convinced it is necessary, inevitable and urgent to amend those constitutional articles. This is particularly vital for articles that are related, directly and indirectly, to oil, gas and energy issues, especially those related to upstream petroleum sub-sector, i.e., exploration, development and production, and export of oil.

This is a summary of a more detailed and lengthy report written in Arabic and posted directly, among others, to a significant number of high-level officials at the three branches of government.

At the outset and before proceeding with the contents of this contribution, it is vital to make a few important notes:

First, I used, in preparing this contribution, the text of the constitution published in the Iraqi Official Gazette (Alwaqaee Aliraqiya) No. 4012 on 28/12/2005.

But this text, according to new and apparently many credible assertions, is different from the text that was distributed to and voted on by the Iraqi people in 2005. The published text comprises 144 articles while the circulated text for voting contains 139 articles; the added articles were and still are highly controversial ones.

This raises serious fundamental concerns and problems relating to the legitimacy and constitutionality of the added articles and even the entire text of the officially recognized constitution; what was published in the Official Gazette is, procedurally, the valid constitution, while the text voted by the people is, or should be the mandatory/real constitution!! 15 years of what appears to be a fraudulent and deception should end and end soon, according to good number of observers!

Second, the constitutional amendments are govern by articles 126 and 142, and both give any “region” a veto right, with different qualifications, to reject any amendments even if they are accepted and endorsed by the majority of Iraqi voters; what sort of democracy and federation is this1?.

Moreover, based on previous parliamentary deliberations there is a controversy regarding the validity of article 142 causing serious division among the members of CAC; that prompts CAC, a few days ago, to seek opinion from the Supreme Federal Court to resolve and decide on the matter.

I believe the Court, based on the principle of substantially changing circumstances and availability of compelling new material evidence, would make a decision that facilitates and supports the necessary constitutional amendments; the Court cannot risk to be seen acting against the mounting demand for amending a flawed sovereign law.

Third, I certainly see that there are many articles in the Constitution that must be amended or deleted and new articles could be added, in addition to those relating to petroleum issues. In this regard, it might be necessary to distinguish between “political realism” that is premised on “politics is the art of the possible” (promoted by the political establishment) and the “reality of the intifada” that aims to “make the not-possible possible” (promoted by the “uprising” and substantiated by the swift actions to vote, in the parliament, on laws that are proposed, but shelved, many years ago and measures to combat corruption and kleptocracy): to overcome the mistakes and practices of a decade and a half long with a constitution that becomes imperative to modify or even to replace it.

In this regard, thematic contributions, with specific and consistent proposals, are vital and more effective in the current efforts to amend the Constitution. Hence, professionals, experts and associations, among others, should have their say in the ongoing debate and consultations according to their expertise and area of specialisation; if we do not act now, when will we!!

Fourth; despite the structural importance of the petroleum sector in the Iraqi, imbalance, economy, which is well known to everyone, the term ” petroleum policy” is not mentioned in the constitution, while a long list of many other “policies” have been mentioned and highlighted.

What is even more surprising, and suspicious as well, that petroleum sector was not included in the “exclusive powers of the federal authorities”; this certainly constitutes a very serious flaw, by intention or omission, when preparing and approving the constitution and, thus, must be addressed.

Therefore, due to practical considerations and evidence-based analysis , this contribution aims at presenting some specific proposals exclusively designed to amending articles relating, directly and indirectly, to petroleum  issues (oil and gas), keeping in mind the role of these issues and there, unquestionable, repercussions on the sustainable development of the Iraqi economy.

The following methodology was followed in addressing each constitutional article that I found relevant to the subject matter and thus included in this mission:

First: Specify the article under evaluation in terms of: article number, sub-article(s) and the actual text: in whole or in part;

Second: adopt “text analysis approach” considering the three related factors: purpose of the legislator, the practices and conduct of the implementer (executive) and the sovereignty of the text.

This, by necessity, is the most important, most detailed and longest part in the entire exercise since it deals, basically, with issues relating to basic questions: what, which, why and how.

Third: based on such text-analysis, evidence based and relevant material facts, specific textual proposals are suggested, these can be through amendment or cancellation or substitution or addition of a new article(s).

The results of this work are:

  1. There are nine articles that are directly related to and indirectly impacting petroleum issues; these articles are: 80; 110; 111; 112; 114; 115; 121; 126; 141;
  2. The analysis and evaluation of the above articles resulted in fourteen different proposals.

Details of the analysis, the premises for each proposal and the text of each suggestion are included in a research report written in Arabic, which is circulated widely and reposted on many websites and accessible through many, including, the following:

https://www.akhbaar.org/home/2019/11/265005.html

http://www.tellskuf.com/index.php/mq/86059-nn2411.html

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.

Constitutional Amendments Relating to Petroleum Issues

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

Constitutional Amendments Relating to Petroleum Issues

The “October Uprising” is sustained, vertically and horizontally, causing on one side regrettable loss of human lives, inflicting serious damage and destruction to public, business and private properties among other things, and on the other advancing, forcefully, many legitimate important demands, some of which are accepted by the authorities and political blocks; the constitutional amendments is one of them.

Many actions were quickly taken regarding this particular demand.  To begin with, the protesters themselves designate specific “Tent for Re-Writing the Constitution” located at the central gathering place, i.e., Tahrir Square, and invited experts, legal specialists, academics and others to submit their proposals to and participate in the ongoing debate at the “Tent”.

The House of Representatives (the Parliament) formed special temporary entity, Constitutional Amendments Committee-CAC, which has to finalise its mandate within four months. Again, CAC at the commencement of its duty called for contribution from outside sources and devised different ways and means for that purpose. Similarly, the Office of the Presidency (of the Republic), formed a parallel committee (the Presidency Committee for the Constitutional Amendments- PCCA) for the same purpose; both committees are of official formal nature, causing confusions and doubt on the real intention of the establishment.

Responding to the protesters demand, the proposals by the United Nations Mission in Iraq, UNAMI, include amendment of the Constitution and its readiness to provide technical support in this regard. This was seen, by many commentators, as a step towards “internationalization” of the matter and calls for external interventions; a replica off 2005. On the political platform, a dozen of “political blocks” that has influential position in the prevailing system since 2003 issued a statement supportive to amending the constitution. Finally, other entities, writers and professionals expressed the same urgent demand to re-write the current constitute or even have a completely a new one.

In the light of the above, this article is a modest contribution in this endeavour.

Based on my continuous follow-up and evaluation of actual practices and formal positions that have adopted or relied upon different interpretation of constitutional articles, I am emphatically convinced it is necessary, inevitable and urgent to amend those constitutional articles. This is particularly vital for articles that are related, directly and indirectly, to oil, gas and energy issues, especially those related to upstream petroleum sub-sector, i.e., exploration, development and production, and export of oil.

This is a summary of a more detailed and lengthy report written in Arabic and posted directly, among others, to a significant number of high-level officials at the three branches of government.

At the outset and before proceeding with the contents of this contribution, it is vital to make a few important notes:

First, I used, in preparing this contribution, the text of the constitution published in the Iraqi Official Gazette (Alwaqaee Aliraqiya) No. 4012 on 28/12/2005.

But this text, according to new and apparently many credible assertions, is different from the text that was distributed to and voted on by the Iraqi people in 2005. The published text comprises 144 articles while the circulated text for voting contains 139 articles; the added articles were and still are highly controversial ones.

This raises serious fundamental concerns and problems relating to the legitimacy and constitutionality of the added articles and even the entire text of the officially recognized constitution; what was published in the Official Gazette is, procedurally, the valid constitution, while the text voted by the people is, or should be the mandatory/real constitution!! 15 years of what appears to be a fraudulent and deception should end and end soon, according to good number of observers!

Second, the constitutional amendments are govern by articles 126 and 142, and both give any “region” a veto right, with different qualifications, to reject any amendments even if they are accepted and endorsed by the majority of Iraqi voters; what sort of democracy and federation is this1?.

Moreover, based on previous parliamentary deliberations there is a controversy regarding the validity of article 142 causing serious division among the members of CAC; that prompts CAC, a few days ago, to seek opinion from the Supreme Federal Court to resolve and decide on the matter.

I believe the Court, based on the principle of substantially changing circumstances and availability of compelling new material evidence, would make a decision that facilitates and supports the necessary constitutional amendments; the Court cannot risk to be seen acting against the mounting demand for amending a flawed sovereign law.

Third, I certainly see that there are many articles in the Constitution that must be amended or deleted and new articles could be added, in addition to those relating to petroleum issues. In this regard, it might be necessary to distinguish between “political realism” that is premised on “politics is the art of the possible” (promoted by the political establishment) and the “reality of the intifada” that aims to “make the not-possible possible” (promoted by the “uprising” and substantiated by the swift actions to vote, in the parliament, on laws that are proposed, but shelved, many years ago and measures to combat corruption and kleptocracy): to overcome the mistakes and practices of a decade and a half long with a constitution that becomes imperative to modify or even to replace it.

In this regard, thematic contributions, with specific and consistent proposals, are vital and more effective in the current efforts to amend the Constitution. Hence, professionals, experts and associations, among others, should have their say in the ongoing debate and consultations according to their expertise and area of specialisation; if we do not act now, when will we!!

Fourth; despite the structural importance of the petroleum sector in the Iraqi, imbalance, economy, which is well known to everyone, the term ” petroleum policy” is not mentioned in the constitution, while a long list of many other “policies” have been mentioned and highlighted.

What is even more surprising, and suspicious as well, that petroleum sector was not included in the “exclusive powers of the federal authorities”; this certainly constitutes a very serious flaw, by intention or omission, when preparing and approving the constitution and, thus, must be addressed.

Therefore, due to practical considerations and evidence-based analysis , this contribution aims at presenting some specific proposals exclusively designed to amending articles relating, directly and indirectly, to petroleum  issues (oil and gas), keeping in mind the role of these issues and there, unquestionable, repercussions on the sustainable development of the Iraqi economy.

The following methodology was followed in addressing each constitutional article that I found relevant to the subject matter and thus included in this mission:

First: Specify the article under evaluation in terms of: article number, sub-article(s) and the actual text: in whole or in part;

Second: adopt “text analysis approach” considering the three related factors: purpose of the legislator, the practices and conduct of the implementer (executive) and the sovereignty of the text.

This, by necessity, is the most important, most detailed and longest part in the entire exercise since it deals, basically, with issues relating to basic questions: what, which, why and how.

Third: based on such text-analysis, evidence based and relevant material facts, specific textual proposals are suggested, these can be through amendment or cancellation or substitution or addition of a new article(s).

The results of this work are:

  1. There are nine articles that are directly related to and indirectly impacting petroleum issues; these articles are: 80; 110; 111; 112; 114; 115; 121; 126; 141;
  2. The analysis and evaluation of the above articles resulted in fourteen different proposals.

Details of the analysis, the premises for each proposal and the text of each suggestion are included in a research report written in Arabic, which is circulated widely and reposted on many websites and accessible through many, including, the following:

https://www.akhbaar.org/home/2019/11/265005.html

http://www.tellskuf.com/index.php/mq/86059-nn2411.html

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.