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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.

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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.

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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)

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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.

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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.

Posted on

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.

Posted on

Jiyad: EITI Restores Iraq’s Compliance Status

By Ahmed Mousa Jiyad.

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

EITI Restores Iraq’s Compliance Status, with Conditions Attached

The board of the Extractive Industries Transparency Initiative (EITI) decided on 16 October 2019 to reinstates Iraq status as a “compliant” country in conformity with the EITI “Standard” and roles of procedure; this is a welcoming and encouraging development.

The decisions was premised on an extensive thorough and transparent “validation” report done by the international secretariat of EITI, which assessed all what Iraq had taken through series of measures and actions designed specifically to address what had caused the Board to suspend Iraq status with EITI in October 2017.* 

Iraq and, particularly, the Ministry of Oil should be congratulated for reinstating the country’s status with EITI; and, while I fully share the sense of achievement as expressed by the MoO announcement on 20 October 2019, I emphatically call upon the Ministry to do what is needed to sustain and enhance this achievement.

Hence, if this case has any meaning and implications for the future of transparency in Iraq generally and in the extractive industry particularly, a set of reminders are mentioned first followed by a set of suggestions for moving forward.

Important Cautions and Reminders

In order not to lose sight and to avoid the false sense of complacency that is, once again, emanates from “mission accomplished” conviction, it is vital to highlights that EITI Board decision was in fact with qualification and conditional. The Iraqi authorities, the Ministry, the civil society organization among others should be aware of and be informed of the following.

First, according to the final “Scorecard”, Iraq’s overall score was “Meaningful progress”, which means “significant aspects of the requirements have been implemented and the broader objective of the requirements is being fulfilled.”

In other words the “Meaningful progress” is in fact the minimum threshold for maintaining the compliance status. The implications are Iraq should, at the minimum, maintain the “Meaningful progress” and should enhance it significantly towards “Satisfactory progress”. Actually, looking at the Scorecard it is really easy and doable to move from “Meaningful progress” to “Satisfactory progress” or even “Beyond”. But any retreat lower than the “Meaningful progress” could cause, once again, another suspension;

Second, EITI Board decision endorses the “Validation Committee” view that Iraq should take necessary corrective measures and actions. Twelve corrections were specifically mentioned and they are related to “Requirements” 1.2; 1.4; 1.5; 2.6.a; 4.1; 4.5; 4.8; 4.9; 6.1; 7.1; 7.3 and 7.4. Again, these gaps and related corrective measures are primarily directed to those requirements that Iraq scored Meaningful progress aiming at elevating the progress to higher levels i.e., Satisfactory or Beyond. Practically, EITI Board is helping Iraqi authorities by specifying where and how to take corrective actions and thus provide a roadmap for what to do next.

Third, the timeframe for taking these corrective actions and their verification is not open-ended; EITI Board decided that progress in addressing the above mentioned corrective actions will be subject to the next “Validation” due to commence on 16 April 2021. This implies that Iraqi EITI (IEITI) and related authorities has eighteen months to finalize what has to be done on each of these corrective actions to insure Iraq remains a compliant country; the failure to do so would risk a repetition of suspension;

Fourth, the above corrective actions should be understood as they are over and above and additional to other requirements that has scored satisfactory progress. In other words there is no tradeoff between “Meaningful progress” and “Satisfactory progress”; what should be there is progression from “Meaningful progress” to “Satisfactory progress” of “Beyond” for all EITI requirements listed in the scorecard and pursuant to latest EITI Standard adopted in Paris, June 2019.

Planning the Way Forward

The IEITI, chaired by the Minister of Oil, is responsible for and should take all necessary actions and measures through agreed-upon plan regarding the following:

First, IEITI should read carefully the documents prepared and presented by EITI that led to EITI Board decision on 16 October 2019. The purpose is specifically to prepare a checklist on what has to be done, how, when, by whom and implement the planned actions well before 16 April 2021;

Second, make specific suggestions regarding how to improve the quality and coverage of the IEITI Annual Report; the IEITI Work-Plan; the IEITI Activity Report and any other publications by IEITI. All such documents should, preferably, be subject to external quality control before releasing them to the public since the experience of the last ten years indicates that these reports, particularly the annual reports are full of inaccuracies, flaws, copy & paste, wrong data among others;

Third, how to make MSG more proactive, productive and have effective role in particularly the following: drafting the ToRs for the Independent Administrator; preparation process of the annual report through more participatory approach; the coverage of the annual report pursuant to the latest EITI Standard; insure grater and growing impacts and encourage wider societal engagement and connectivity among other;

Fourth, IEITI should be an example of transparency by publishing on its website all what is related to its activities including records of MSG meetings, MSG members attendance verified by their signatures; issues debated and how decisions are taken, etc;

Fifth, insure full and timely data disclosure on every aspects of the extractive industry in the country, particularly by the Ministry and its State Companies operating in the upstream petroleum sector including both volumes and fiscal indicators; such data disclosure should be posted monthly and accessible through IEITI website;

Sixth, grant priority to the development of the human and systemic national efforts of the IEITI National Secretariat and their involvement in particularly the preparation of the annual reports, in the development of the needed database, in providing technical and professional supporting activities, in organizing workshops and activities among others;

Seventh, IEITI suffers from declining external financial support and funding that bound to impact the level and frequency of its activities. That was due largely to the removal of Iraq from the priority screen of NRGI; the suspension of Iraq by EITI in October 2017 and by the significant reduction of the World Bank funding. Luckily, Iraq had concluded recently (or in fact renewed) it is cooperation agreement with Norway’s NORAD’s Oil for Development program and, thus, IEITI is strongly advised to capitalize on this agreement and utilize different opportunities it offers;

Eighth, the entire above are feasible, doable and useful; IEITI should start promptly working on them. It might be relevant for IEITI to convene a well prepared “professional, action oriented workshop” for specialist and expert with proven track record to address the above aiming at drafting the workable and functional roadmap.

 

* I have covered, monitored and written extensively on IEITI since its inception; for background information and analysis on IEITI and that phase onwards, interested readers find more on my contributions, in Arabic and English, that are accessible through the following links:

http://www.iraq-businessnews.com/category/oil-gas/ahmed-mousa-jiyad/

http://www.akhbaar.org/home/search/?sq=Ahmed%20Mousa%20jiyad

http://www.alnoor.se/author.asp?id=7149

 

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.

Posted on

Jiyad: EITI Restores Iraq’s Compliance Status

By Ahmed Mousa Jiyad.

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

EITI Restores Iraq’s Compliance Status, with Conditions Attached

The board of the Extractive Industries Transparency Initiative (EITI) decided on 16 October 2019 to reinstated Iraq status as a “compliant” country in conformity with the EITI “Standard” and roles of procedure; this is a welcome and encouraging development.

The decisions was premised on an extensive thorough and transparent “validation” report done by the international secretariat of EITI, which assessed all what Iraq had taken through series of measures and actions designed specifically to address what had caused the Board to suspend Iraq status with EITI in October 2017.* 

Iraq and, particularly, the Ministry of Oil should be congratulated for reinstating the country’s status with EITI; and, while I fully share the sense of achievement as expressed by the MoO announcement on 20 October 2019, I emphatically call upon the Ministry to do what is needed to sustain and enhance this achievement.

Hence, if this case has any meaning and implications for the future of transparency in Iraq generally and in the extractive industry particularly, a set of reminders are mentioned first followed by a set of suggestions for moving forward.

Important Cautions and Reminders

In order not to lose sight and to avoid the false sense of complacency that is, once again, emanates from “mission accomplished” conviction, it is vital to highlights that EITI Board decision was in fact with qualification and conditional. The Iraqi authorities, the Ministry, the civil society organization among others should be aware of and be informed of the following.

First, according to the final “Scorecard”, Iraq’s overall score was “Meaningful progress”, which means “significant aspects of the requirements have been implemented and the broader objective of the requirements is being fulfilled.”

In other words the “Meaningful progress” is in fact the minimum threshold for maintaining the compliance status. The implications are Iraq should, at the minimum, maintain the “Meaningful progress” and should enhance it significantly towards “Satisfactory progress”. Actually, looking at the Scorecard it is really easy and doable to move from “Meaningful progress” to “Satisfactory progress” or even “Beyond”. But any retreat lower than the “Meaningful progress” could cause, once again, another suspension;

Second, EITI Board decision endorses the “Validation Committee” view that Iraq should take necessary corrective measures and actions. Twelve corrections were specifically mentioned and they are related to “Requirements” 1.2; 1.4; 1.5; 2.6.a; 4.1; 4.5; 4.8; 4.9; 6.1; 7.1; 7.3 and 7.4. Again, these gaps and related corrective measures are primarily directed to those requirements that Iraq scored Meaningful progress aiming at elevating the progress to higher levels i.e., Satisfactory or Beyond. Practically, EITI Board is helping Iraqi authorities by specifying where and how to take corrective actions and thus provide a roadmap for what to do next.

Third, the timeframe for taking these corrective actions and their verification is not open-ended; EITI Board decided that progress in addressing the above mentioned corrective actions will be subject to the next “Validation” due to commence on 16 April 2021. This implies that Iraqi EITI (IEITI) and related authorities has eighteen months to finalize what has to be done on each of these corrective actions to insure Iraq remains a compliant country; the failure to do so would risk a repetition of suspension;

Fourth, the above corrective actions should be understood as they are over and above and additional to other requirements that has scored satisfactory progress. In other words there is no tradeoff between “Meaningful progress” and “Satisfactory progress”; what should be there is progression from “Meaningful progress” to “Satisfactory progress” of “Beyond” for all EITI requirements listed in the scorecard and pursuant to latest EITI Standard adopted in Paris, June 2019.

Planning the Way Forward

The IEITI, chaired by the Minister of Oil, is responsible for and should take all necessary actions and measures through agreed-upon plan regarding the following:

First, IEITI should read carefully the documents prepared and presented by EITI that led to EITI Board decision on 16 October 2019. The purpose is specifically to prepare a checklist on what has to be done, how, when, by whom and implement the planned actions well before 16 April 2021;

Second, make specific suggestions regarding how to improve the quality and coverage of the IEITI Annual Report; the IEITI Work-Plan; the IEITI Activity Report and any other publications by IEITI. All such documents should, preferably, be subject to external quality control before releasing them to the public since the experience of the last ten years indicates that these reports, particularly the annual reports are full of inaccuracies, flaws, copy & paste, wrong data among others;

Third, how to make MSG more proactive, productive and have effective role in particularly the following: drafting the ToRs for the Independent Administrator; preparation process of the annual report through more participatory approach; the coverage of the annual report pursuant to the latest EITI Standard; insure grater and growing impacts and encourage wider societal engagement and connectivity among other;

Fourth, IEITI should be an example of transparency by publishing on its website all what is related to its activities including records of MSG meetings, MSG members attendance verified by their signatures; issues debated and how decisions are taken, etc;

Fifth, insure full and timely data disclosure on every aspects of the extractive industry in the country, particularly by the Ministry and its State Companies operating in the upstream petroleum sector including both volumes and fiscal indicators; such data disclosure should be posted monthly and accessible through IEITI website;

Sixth, grant priority to the development of the human and systemic national efforts of the IEITI National Secretariat and their involvement in particularly the preparation of the annual reports, in the development of the needed database, in providing technical and professional supporting activities, in organizing workshops and activities among others;

Seventh, IEITI suffers from declining external financial support and funding that bound to impact the level and frequency of its activities. That was due largely to the removal of Iraq from the priority screen of NRGI; the suspension of Iraq by EITI in October 2017 and by the significant reduction of the World Bank funding. Luckily, Iraq had concluded recently (or in fact renewed) it is cooperation agreement with Norway’s NORAD’s Oil for Development program and, thus, IEITI is strongly advised to capitalize on this agreement and utilize different opportunities it offers;

Eighth, the entire above are feasible, doable and useful; IEITI should start promptly working on them. It might be relevant for IEITI to convene a well prepared “professional, action oriented workshop” for specialist and expert with proven track record to address the above aiming at drafting the workable and functional roadmap.

 

* I have covered, monitored and written extensively on IEITI since its inception; for background information and analysis on IEITI and that phase onwards, interested readers find more on my contributions, in Arabic and English, that are accessible through the following links:

https://www.iraq-businessnews.com/category/oil-gas/ahmed-mousa-jiyad/

http://www.akhbaar.org/home/search/?sq=Ahmed%20Mousa%20jiyad

http://www.alnoor.se/author.asp?id=7149

 

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.

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Transparency in Iraqi Upstream Petroleum Sector

By Ahmed Mousa Jiyad.

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

Transparency in the Arab Countries’ Upstream Petroleum Sector- Iraq as case study*

While upstream petroleum sector is either dominant or has significant importance in many Arab economies of MENA region, the transparency of the sector is alarmingly lacking; this is manifested by their “formal” association with Extractive Industry Transparency Initiative (EITI), which is extremely limited and their Resource Governance Index (RGI) and Corruption Perception Index (CPI) that are too poor.

This presentation comprises three parts;

The first part addresses, briefly, the essence of transparency and what it entails:

  • Full disclosure & availability of and accessibility to related Data & Information;
  • Openness, answerability, accountability;
  • Multiplicity of involved, reporting or concerned entities;
  • Objective, Independent & Verifiable Indicators;
  • Transparency is not rhetorical claim; it is evidence-based;
  • Reconciliation of data: Materiality, Identifiably, Measurability;
  • Constitutional Premises (ownership) Right and Rights Based Development- RBD

Also, this part provides a selection of most known international entities specialized in the matter; these are EITI, Natural Resource Governance Institute (NRGI), Transparency International (TI), Publish What You Pay (PWYP) and the Fund for Peace. Each of these entities has its distinct methodology, working procedures and publications. In addition to them, this part refers to the IMF’ Fiscal Transparency Code.

 

The second part exhibits charts on the standing of the Arab countries based on the latest available data and information from three international entities: EITI, NRGI-RGI and TI-CPI.

As on September 2019 only Mauritania has “meaningful progress” standing with EITI; Iraq was “suspended” since October 2017 due to “inadequate progress” and Yamen was “suspended” on February 2015 due to “political instability”, then in October 2017, Yemen was “delisted” and, thus, could be invited to reapply to the EITI once conditions were again favourable for implementation.

Obviously, the above manifests extremely poor standing (in number of countries and their status) with EITI.

The NRGI’ RGI measures the quality of resource governance in countries that together produce 82 percent of the world’s oil, 78 percent of its gas and a significant proportion of minerals, including 72 percent of all copper. RGI is the product of 89 country assessments (eight countries were assessed in two sectors), compiled by 150 researchers, using almost 10,000 supporting documents to answer 149 questions.

NRGI’s RGI for 2017 (oil and gas only) covers 89 countries and provides their “Score” on a scale of 100 and “Rank” of 89. RGI 2017 classifies the standing of countries according to their scores into: Good (>74); Satisfactory (60:74); Weak (45:59); Poor (30:44) and Failing (<30).

All the 12 Arab countries covered by RGI scored less than 60 out of 100. Countries with Weak score are Tunisia, Kuwait and Oman. Those scored poorly are Qatar, UAE, Bahrain, Egypt, Iraq, Saudi Arabia, Algeria and Yamen. Finally, Libya scored failing.

TI’ CPI 2018 draws on 13 surveys and expert assessments to measure public sector corruption in 180 countries and territories, giving each a Score from zero (highly corrupt) to 100 (very clean) and their Ranks accordingly.

Syria, Yemen, Sudan, Iraq and Lebanon each scored less than 30; Egypt, Algeria, Kuwait, Tunisia, Morocco, Jordan and Saudi Arabia scored over 30 up to 50; Oman, Qatar and UAE scored over 50 to 70.

Since both RGI and PCI are composite indexes, there is strong correlation between Scores and Ranks: low scores are associated with high rank numbers; high rank number means at the bottom of the list.

In conclusion all the standing of Arab countries is alarmingly very poor and disappointing with EITI, NRGI and TI.

 

The third part of the presentation focuses on Iraq as a case study on transparency through its association and experience with EITI.

Briefly, Government of Iraq (GoI) launched (2007/8) the International Compact with Iraq (ICI) in cooperation with the UN and the WB. ICI specifically calls to, “Establish and implement mechanisms to ensure transparency of petroleum sector flows”.

The government publicly announced its commitment to work with all stakeholder groups at the 4th EITI Global Conference in Doha, Qatar, in February 2009, and then made formal commitment to EITI at the Iraq EITI (IEITI) launching conference on 10-11 January 2010; a month later the country was accepted, by EITI Board, as a Candidate.

The first validation report, prepared by EITI’ International Secretariat- IS staff, endorsed by Adam Smith International- ASI, prompted EITI Board to announce, on 12 December 2012, Iraq as “Compliant” country under EITI rules and process. On 3 April 2013, IEITI organized big event in Baghdad celebrating this achievement by Iraq.

A team from EITI-IS visited Iraq during 1-9 April 2017 and held numerous meetings in Baghdad and, also, in Dubai (UAE); IS Report presents the findings and initial assessment of the data gathering and stakeholder consultations and followed EITI usual and unified “Validation Procedures” and applied the “Validation Guide” in assessing Iraq’s progress with the EITI Standard.

Iraq was found to have inadequate progress in implementing the EITI Standard in October 2017. The country status as “compliant member” was suspended and, according to EITI rules, was given a grace period to rectify the shortcomings to achieve at least “Meaningful” progress on all identified requirements.

Why and what went wrong

The presentation highlights and discussed questions relating to why and what had led to such suspension under the following headlines:

  • “Mission accomplished” and sense of complacency; frequency of MSG meetings and attendance curve
  • Wrong understanding of what “compliant” status really means;
  • Focus on “release on time” not on the quality and contents of the IEITI Annual Reports;
  • IEITI Annual report mostly Copy & Paste; most Parts are prepared by MoO/ MIM officials and full of flaws and inaccuracies;
  • Structure & composition of the MSG: dominated by Government representatives, IOCs not active, CSO lack understanding of Extractive Industry and language;
  • Big Secretariat, weak national capacity contribution and complete reliance on the Administrator;
  • Opposing domestic views: useless/invisible; event-base; abused by authorities and two extreme views (Rosy vs. UN full control!):
  • Surprising passivism on Corruption!!!!!!;
  • IEITI itself is a Black Box
  • Limited impacts that led to diminishing international support and lack of funding e.g., NORAD; NRGI: from “priority country” to “Limited engagement” to only in “RGI”;

What are next and the way forward

In this part, the presentation reviewed responses and actions taken by the Iraqi authorities since the suspension: From the initial “muteness” and “passivism” October -2 November 2018,….., to 4 Nov 2018 alerting article; Committees & changes,  …; February 2019 Baghdad Conference; EITI-IS second validation; EITI Global Conference, Paris- June 2019.

In case of re-instating Iraq “Compliant” status, IEITI still has to take specific necessary measures and actions for real impacts instead of making rhetorical statements; such measures and actions were proposed, justified and discussed during the presentation. The PowerPoint slides are attached herewith.

* Presentation delivered before the 12th Middle East and North Africa Oil & Gas Conference, organized by Target Exploration www.targetexploration.com, Imperial College, London, UK. 18 September 2019. I am very grateful to Target Exploration for sponsoring my participation.

Click here to download the PowerPoint slides presented at the conference.

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.

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Monetization Strategies for Development of Border Oil Fields

By Ahmed Mousa Jiyad.

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

Monetization Strategies for Joint Development of Border Fields in MENA Region

Many hydrocarbons fields and exploration blocks, with billons barrels of petroleum, straddle sovereign borders (both onshore and offshore) in the Middle East and North Africa- MENA region, present significant development opportunities as well as potentially risk and source of conflict.

So far, they have been mostly source of conflicts, contentious and acrimonious relationship; it’s about time to pursue the other mutually beneficial approach whenever possible and feasible.

The number, prospects and potential of border fields in MENA Region indicate to billions barrels of oil equivalent -BOEs of proven hydrocarbon (oil, gas and condensates) reserves, with more to add through further exploration and technological advancement, generating  billions of cash flows with attractive returns on investment.

Brief examples and as of today’s data and information are the following:

  • Iraq has (24) border oilfields with Iran, Kuwait and Syria;
  • Iran has (23) border fields/blocks with Iraq, Saudi Arabia, Kuwait, Qatar, UAE, Oman and Turkmenistan;
  • Arabian Gulf Region is crowded with too many structures, including Saudi Arabia-Kuwait Neutral Zone (Al-Khafji & Al-Wafra);
  • The Mediterranean: Lebanon vs. Occupied Palestine (Israel); Cyprus vs. Turkey; Egypt vs…..!!
  • Red Sea: Egypt vs, Sudan (Halayib and Shalateen)
  • Other MENA countries…….

Empirical evidence and analytical premises suggest that sovereign border hydrocarbons fields or exploration blocks could be developed either through “competitive” or “collaborative” strategies; the first follows “rule of capture” or “use it before losing it”, while the second adopts “feasibility & optimization”;  the first is harmful to the field, its structure and reservoir(s) while the second adheres to efficiency considerations, prudent natural resource management and international best practices; the first is premised on “sovereign exclusivity” while the second is formulated on “Bi/trilateral inclusivity”; the first is “conflict-prone”  while the second serves “mutuality of interests”; the first is “short-term focused” while the second has “phasic orientation” and finally, from investment vs. net revenue perspectives, the first is “own-risk” while the second is “burden and benefit-sharing”.

What should be highlighted is that collaborative development of a border field could be done through two broad (comprising various versions) distinct modalities with different investment, revenue structures and legal modalities: unitization (mostly trilaterally structured) or joint venture (mostly bilaterally structured).

For this purpose the presentation proposes TELG Approach for monetizing these resources, which basically integrates four fundamental broad spheres of professional knowledge-base and analysis and the needed institutional, managerial and governance setups applicable to the collaborative mode of border fields development in both modalities- unitization and joint venture.

TELG Approach is helpful for unitization requirements of both onshore and offshore across-sovereign borders as well as across contracted areas within each country.

After discussing the essence of cross-border fields exploitation as “Hotelling game”, basic contesting strategies, phases of unitization agreements and elaborate on TELG approach and its requirements, the presentations provides examples on the “ambiguity” of legal provisions on unitization in the Iraqi service contracts, the July 2019 Iraq-Kuwait contract with ERCE and a list of modalities governing UK-Norway unitization of fields.

The presentation ends with call upon Arab related entities such as OAPEC, ESCWA and the Economic and Social Council of the Arab League among others to take necessary and serious measures to address unitization, and request Arab petroleum professionals to produce international best-practice guide and formulate basic model for unitization agreement in efforts to help in efficient exploitation of such natural resources in a prudent and effective way and finally provide Illustrative Hypothetical Case for Unitization Negotiation Game.

This presentation was delivered before the 12th Middle East and North Africa Oil & Gas Conference, organized by Target Exploration at Imperial College, London, UK. 19 September 2019; I am very grateful to Target Exploration for sponsoring my participation.

Click here to download the PowerPoint slides presented at the conference.

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.