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Legal Regulatory Framework of Iraqi Oil - Dissertation Example

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The paper "Legal Regulatory Framework of Iraqi Oil" explores oil and gas sustainable development in Iraq. The application of this sustainable development is analyzed in the context of its legal regulatory framework, specifically the domestic law of Iraqi dealing with oil and gas resources…
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Legal Regulatory Framework of Iraqi Oil
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? SUSTAINABLE DEVELOPMENT OF IRAQI OIL AND GAS IN INTERNATIONAL LAW: PROSPECTS AND CHALLENGES Table of Contents Table of Contents 2 List of Acronyms 3 Abstract 7 1.0 Introduction 10 1.1.Aim of the article and research questions 12 2.0.The concept of sustainable oil development in Iraq 13 There has been a drop in living conditions from 1980 to 2011, because of a drop in the GDP. Translating growth in oil receipts into prosperity for the people of Iraq is a promise as well as a challenge. Legal, regulatory, logistical, political, institutional reform, security, and workforce are formidable aspects that challenge Iraq. A major challenge facing Iraq is the need to increase investment funds to promote sustainable development in the developing nation. In regard to this matter, the state has collaborated with IOCs in a manner that can bring long term developments. The enforcement of laws and regulations specifying the terms and conditions on which foreign participation in the hydrocarbon sector is permitted, and the use of a “corporatized” structure for government-owned entities involved in the development and management of the country’s oil and gas resources can provide a level of transparency that will facilitate public scrutiny and accountability in the area. More than 70% of Iraq’s oil production comes from the fields that are being operated by IOCs under TSC. If all these contracts deliver on their oil plateau production commitments, the result would be a dramatic increase in Iraq’s productive capacity in the coming years; with potential output of more than 12mb/d from these projects by the end of the decade. Response to these developments has led to the promotion of trade and investment treaties with substantive provisions in achieving the set objectives. Lingering questions regarding the sustainable development of Iraqi oil in international law include: 17 (1).Will Iraq’s ambitions be realized? 18 (2). What would the consequences be for Iraq’s economy and for the world oil markets? 18 3.0. Framework for relations between international oil companies (IOCs) and Iraq 18 3.1. Iraq licensing rounds 22 3.2. General objectives for cooperation with Iraq 24 3.3. Strategic objectives for cooperation with Iraq 27 3.4. Iraq’s Oil Contracts 28 3.4.1. Iraqi’s technical service contracts 28 3.4.2 Risk Service Contracts 30 3.4.3 Kurdistan Region’s PSCs/ agreements 31 3.5. Contractual clauses 32 3.5.1. Environmental standard clauses 33 3.5.2. Stabilization clauses 33 3.5.3. Clauses on access to water and other natural resources 35 3.5.4. Clauses on gas flaring 35 3.5.5. Clauses on liability, indemnity, and insurance 36 4.0.Role of the International Law 38 4.1.Petroleum as an immovable public property subject to usage under usufruct rules 39 4.2.The Usufructuary Obligations 40 4.3.Is drilling of new wells possible? 40 4.4.Application of the Usufructuary rule to Iraq 41 4.5.The private property complication 42 4.6.Foreign Interests in Petroleum 42 4.7. Transparency in oil and gas contracts as an ingredient of sustainable development 43 5.0. Iraq investment treaties 46 6.0. General outlook of Iraq 48 6.1. Analysis of the political, economic, social and environmental situation in Iraqi 50 6.1.1. Political and security situation 51 6.1.2. Economic and social situation 52 6.1.3. Iraq in the international context 54 6.1.4. Environmental situation 56 6.2. Development strategy of Iraq 57 6.2.1. UN and Iraq Government Response 57 6.3. Analysis of the viability of current policies and the medium-term challenges 59 6.3.1. Proposed law for governing resources in Iraqi 60 Two legislative laws in regard to oil and gas law draft have been formed: the Hydrocarbons Package law covering the Oil and Gas Framework Law (since October 26, 2008 but has not received final passage), and the Non-Government Organizations Law to legalize non-governmental organizations funding. 6.3.2. Human rights and environmental contractual issues 61 6.3.3 Legal challenges pertaining sustainable development in Iraq 63 6.3.3.1. Shatha al Musawi Vs BP and China National Petroleum Company 64 6.3.3.2. Gulf Keystone Vs Exalibur ventures 65 6.3.3.3. Dana gas Vs. Kurdistan region 66 7. Conclusion 67 8. Bibliography 70 List of Acronyms BGC- Basrah Gas Company  BIT- Bilateral investment treaties CDM- Clean Development Mechanism CNPC- China National Petroleum Corporation CoM- Council of Ministers CoR- Council of Representatives CSR- Corporate Social Responsibility DPSC- Development and Production Service Contract  EITI- Extractive Industries Transparency Initiative EU- European Union EU ETS- European Union Emissions Trading Scheme FDI- Foreign Direct Investment  FTA- Free trade agreements GDP- Gross domestic product IET-International Emissions Trading IOC- International Oil Companies INES-Integrated National Energy Strategy IPCC-Intergovernmental Panel on Climate Change ITL- Iraq—Turkey Line JI-Joint Implementation KRG- Kurdistan Regional Government KP- Kyoto Protocol LTSC- Long Term Service Contracts MNR- Ministry of Natural Resources MoA- Ministry of Agriculture MoO- Ministry of Oil NGO – Non-governmental organisation NOC- National Oil Company PFTSC- producing field technical service contracts TIFA- Trade and Investment Framework Agreement TSC- Technical Service Contracts UN- United Nations UNCC- United Nations Compensation Commission UNCT- United Nations Country Team UNCTAD- United Nations Conference on Trade and Development UNFCCC-United Nations Framework Convention on Climate Change USA- United States of America Abstract The legal regulatory framework of Iraqi oil, particularly the Kurdistan region oil and gas sustainable development is the attention driving this study. The application of this sustainable development will be carefully analyzed in the context of its legal regulatory framework, specifically domestic law of Iraqi dealing with oil and gas resources. Iraqi is the world’s third largest oil exporter, essential for the economy development of this nation. This aspect triggers the purpose of this research. Iraq has oil reserves of at least 112 billion barrels. This oil is not found on high seas but on land. Iraq is not a third world country and furthermore, Iraq has vast experience as well as skills in development of petroleum. Her oil reserves are well dispersed, a fact that makes development more alluring. Various players can find development without straining the infrastructure of a specific area. This oil-producing nation has ambitions to increase its oil production vastly because there are readily available resources. It is vital to note that technical service and production sharing contracts are currently in place with international companies in the development of oil and gas in Iraq. This will imply a tremendous success in the increase of Iraqi’s hydrocarbon potential doubling or even tripling the revenue. The developmental model supported by the MoO is based on PSCs, which have existed in the oil sector since the 1960s. On the other hand, Iraqi’s vision is blocked with political, logistical, legal, economical, regulatory, and financial issues. Legal and institutional framework for the oil market in Iraqi operates under the Iraqi constitution, 2005. A relevant example involves the rights to land and access to the oil within that land. This constitution protects oil and gas resources of the country, in consideration of the social and economic development of the nation. The management of oil and gas are beyond the supremacy of the federal government according to the Iraqi constitution. The disadvantage of this constitution is that, it does not cover the subject of jurisdiction over hydrocarbon exploration and development. This has been a topic of contention concerning the investment treaties with international oil companies. So far, no concurrence has been reached about the novel federal hydrocarbons legislation since 2006, especially on the issue of revenue sharing between the federal oil and gas council and regions. In spite of the absence of a hydrocarbon law in Iraq, IOCs have signed contracts all over Iraq; which is a legal risk. Additionally, IOCs are not willing to invest on the Iraqi region due to the complex terms and conditions, thus they are decreasing their production quotas. In an attempt to still invest in oil, they are diversifying from Iraq to the Kurdistan region; where the terms and conditions are conducive. In the Kurdistan region, IOCs have the liberty to capture oil with large reserve potential on agreeable commercial terms. Evidently, Iraqi is stalwartly opposed to the handling control over oil development to the IOCs. The concept of oil and gas sustainable development is aimed at defining the future of the Iraqi people amid the past political bloodshed and pandemonium. Growth of international trade and investment in extractive industries has heightened the importance of global commitment to the success of CSR. This has aided the Iraqi populace in areas like health, education, and sanitation. Iraqi’s economic development is dependent on the prevailing conditions in the global oil market, with the oil export revenues equivalent to more than 70% of GDP. Arguments about the details of the contractual arrangements; bring the fundamental question on which entity should have the power to authorize has been a significant challenge pertaining to Iraqi oil development. A lingering problem is the legal status of the concluded contracts, evident from the court cases for instance Gulf Keystone Vs Exalibur ventures, Dana gas Vs. Kurdistan region, and Shatha al Musawi Vs BP and China National Petroleum Company. Iraq’s petroleum is not just a case of potential, it is impossible to consider the future of Iraq without careful and extensive evaluation, analyzing the impact that petroleum will have. The key question ponders on the rights as well as duties under the international law of an occupying power. 1.0 Introduction This article focuses on the challenges and prospects of sustainably developing Iraqi oil in light of international law; with special emphasis on applicable interaction with environmental and human rights laws, particularly to the Kurdistan region. Iraqi is the second largest oil producing nation and exporter in the Middle East, subsequent to Saudi Arabia1. Iraqi is fully dependent upon oil to finance its state2. Iraqi has the resources and plans to increase its oil and natural gas production, at the same time recovering from three decades by means of conflict and instability. From this viewpoint, sustainable development is taken within the milieu of the natural resources in this land. Developments of Iraqi’s hydrocarbon potential can elevate the social and economic development. Iraqi has reserves of at least 112 billion barrels.3 Iraqi’s energy segment holds the key to the country’s future prosperity; making a significant contribution to the stability and security of universal energy markets.4 Iraq investment treaty is founded on partnerships with international companies so as to increase the oil production aptitude, to almost five times the current amount of 3 million barrels daily. This study begins by outlining briefly the current and future state of Iraqi. Next, the framework for relations between the international oil companies (IOCs) and Iraqi is discussed, in relation to the transformation via horizontal and vertical structural diversification. The licensing rounds of Iraq and objectives for this move with various nations are discussed in this paper. The aspects of the contractual issues that portray the reason why IOCs have lost interest in Iraqi contracts, are evident from the fourth licensing round . There has been struggle to control this resource between Iraq and international companies; underpinning the country’s myriad political fault lines.5 The reason that the MoO has offered TSC in place of PSC is connected to MoO’s interpretation of the Iraq constitution. The principles enshrined in the constitutions have caused serious difference of interpretation, opinions, and generate ambiguities to the extent that observers find it necessary to resolve these ambiguities and make the required constitutional amendments. Legal and institutional framework for the oil market in Iraqi is controlled by the Iraqi constitution of 2005, which was implemented in 2006.6 Article 111 of the Iraq Constitution of 2005 states: “Oil and gas are owned by all the people of Iraq in all the regions and governorates”.7 The Iraq government thus construes the PSC model, which permits IOCs an interest in the oil produced and a right from the revenue gained as against the law. This explains why only TSC have been awarded in the four bidding rounds.8 Due to this predicament, the IOCs have fixed their attention northwards to the Kurdistan region.  Restricted by constitutional understanding, the Iraq Government offers IOCs a model TSC, at the same time the KRG offers a PSC with more favorable provisions, as compared to the Iraq government.9 For this reason, the IOCs have shifted their attention from southern and central Iraq to the northern region, where the licensing system is more favorable to the IOCs. The budget analysis approach is used to draw conclusions on the oil production forecast concerning investment allocation and spending, that might bring about development in the country. The general outlook of Iraqi is analyzed next, revealing the political, economic, social, environmental, and legal issues related to this development. This highlights the need for the adaptation of various strategies in the management of oil, which is an essential commodity in Iraqi. Finally, a joint overview of cooperation with IOCs and political dialogues are outlined. This brings out the essence of complete transparency of the oil resource in the term of the project. However, research of sustainable development in Iraqi oil reveals that the be short of discrepancy in horizontal and vertical diversification in the last ten years has destabilized the sustainable development plan; pushing the economy in a maze of  confusion. Iraqi’s vision to obtain long-term value from its hydrocarbon wealth is blocked with political, logistical, legal, economic, regulatory, and financial issues.10 The calculated development of Iraqi oil has slowed significantly for the reason of officially permitted validity of particular regional oil and gas PSCs, and unfair provisions that the contracts aim to impose on the IOCs. A detailed analysis of Iraqi’s economic, environmental, and social aspects for world oil market will be discussed in regard to international law. 1.1. Aim of the article and research questions The purpose of this article is the essence of a sustainable development in the transformation of extracted and depleting oil and gas into over-ground national assets. The current relevance of this article is to analyze the contributions addressing sustainable development with the aid of statistical data, terminologies, and methodologies. The importance of this paper is mainly on the petroleum sector, with careful analysis of oil; which is a natural resource that can be easily exhausted. Questions in relation to Iraqi oil production and its revenues distribution include: 1. What is Iraqi’s production ambition and possible scenarios for the next decade? 2. How fast does Iraqi want to develop its hydrocarbon wealth? 3. What degree of investment is required to achieve the goals? 4. What role will the international oil companies play in such a partnership? 5. How can the international oil companies’ involvement ensure that Iraqi’s government’s control, and sovereignty are respected and sustained free from external influences? 6. Which framework should Iraqi adopt in developing the best regulatory and fiscal framework for the necessary expansion of its oil production? 2.0. The concept of sustainable oil development in Iraq Sustainable development is becoming increasingly significant to Iraq’s national context.11 As defined by the Iraq governments national development plan (2010-2014) and the UN development assistance framework(UNDAF) for 2011 to 2014, attaining this objective will require reframing strategies of national development as well as implementing policies towards environmental as well as long term economic development. In 2011, Iraq’s oil revenues reached roughly 83 billion US dollars and the oil as well as gas accounted for an estimated 60% of GDP, 90% of government revenue and 99% of exports. Therefore, governance priorities will focus on management of oil as well as gas resources and resultant revenues in a strategic as well as sustainable manner. However, with the U.S and its allies having occupied Iraq there has been little well-informed discussion concerning the occupation. It is not surprising to read that the U.S is interested in its policy concerning Iraq by desiring to get oil from Iraq. These kinds of claims as well as disclaimers frequently omit any reference to the considerable organ of international law concerning the rights as well as duties. So, how does the Iraqi oil obfuscate the occupation picture? 12 Iraqi’s economy is dependent on the petroleum sector, which is the solution from three decades of war.13 Oil and gas development in Iraq are the keys to the reconstruction, social, and economic development in Iraq. Iraqi’s ambition to expand its oil and gas output is not limited by the size of its hydrocarbon resources, or by the production costs. IOCs are the vehicles for Iraqi’s sustainable development.14 Thus, security in this nation ravaged by war and conflict is essential in its development. Peacekeeping enhances protection to civilians and the developing institutions. For instance in Iraqi, the UN deployed troops on peacekeeping missions with an intention of peace restoration. However, these missions have also shown negative consequences for instance sex trafficking.15 With Iraqi being a member state of the UN, peacekeeping is relevant for the sustainable development of Iraqi oil, in regard to the international community. Because of the allegations of sexual abuse by peacekeeping forces, UN has initiated several initiatives. They are the zero-tolerance policy and a current one called the three-pronged strategy.16 These policies address all misconducts by peacekeeping troops including sexual abuse and exploitation, as well as outlines the remedial action when a misconduct occurs.17 The UN three-pronged formula is aimed at developing democracy, providing security, and reviving the economy. The United States is working comprehensively with Iraqi leaders to make progress on all three tracks of the strategy. This is by restoring the country’s neglected and damaged infrastructure with an aim of restoring and expanding the essential services.18 Moreover, other goals include the establishment of market-based economic reforms, and greater transparency and accountability in the public sector. The international community has been a major help in these efforts, however, there is still more that needs to be done by the international communities. This includes foreign direct investment, which will play a significant role in fueling Iraqi’s economic growth. Over 60 percent of these oil reserves are located in the south of Iraq. Three-fourths of Iraq's natural gas resources are linked with oil.19 Most of The non-associated reserves are intense in several fields in the North, including Bai Hassan, Ajil, Chemchemal, Jambur, Kor Mor, al-Mansuriyah.20 Critical issues revolve around the production of oil in Iraqi. They include the legality of the finalized contracts; the situation of international oil companies who concluded contracts, reduction of production plateau targets, petroleum law and relevant provisions, government take and payment to and privileges of the international oil companies, and renegotiating the contracts.21 The pyramid of legal and regulatory frameworks governing the petroleum sector policy and development influencing its formulation and execution is composed of many levels each has distinct authority with legal and legislative instruments. There has been a drop in living conditions from 1980 to 2011, because of a drop in the GDP. Translating growth in oil receipts into prosperity for the people of Iraq is a promise as well as a challenge. Legal, regulatory, logistical, political, institutional reform, security, and workforce are formidable aspects that challenge Iraq. A major challenge facing Iraq is the need to increase investment funds to promote sustainable development in the developing nation.22 In regard to this matter, the state has collaborated with IOCs in a manner that can bring long term developments. The enforcement of laws and regulations specifying the terms and conditions on which foreign participation in the hydrocarbon sector is permitted, and the use of a “corporatized” structure for government-owned entities involved in the development and management of the country’s oil and gas resources can provide a level of transparency that will facilitate public scrutiny and accountability in the area.23 More than 70% of Iraq’s oil production comes from the fields that are being operated by IOCs under TSC.24 If all these contracts deliver on their oil plateau production commitments, the result would be a dramatic increase in Iraq’s productive capacity in the coming years; with potential output of more than 12mb/d from these projects by the end of the decade. Response to these developments has led to the promotion of trade and investment treaties with substantive provisions in achieving the set objectives.25 Lingering questions regarding the sustainable development of Iraqi oil in international law include: (1).Will Iraq’s ambitions be realized? (2). What would the consequences be for Iraq’s economy and for the world oil markets? 3.0. Framework for relations between international oil companies (IOCs) and Iraq Iraqi uses the nationalized industry framework of its oil industry since the early 1970s. 26 The framework for relations between IOCs and Iraq is according to the principles preserved in the Iraq constitution. This states that oil and gas is the property of the populace of Iraq in all governorates. The state makes all the decisions and takes all the revenue according to article 112 of the Iraqi constitution.27 There have been concerns as to which aspect of hydrocarbon regime may be managed and approved by the regional governments; the proposed hydrocarbon law can only solve these issues. In the nonexistence of Hydrocarbon laws, the MoO relies on its interpretation of the Iraq constitution declaring that PSC are opposing to the interpretation of Article 111 of the Iraq constitution, and the contracts must be permitted by the Federal government which infers Article 112 as needing federal government attention in oil and gas management. The comprehension of the MoO preserves a stringent domination of petroleum development via national oil companies. The Kurdistan region achieved self-governance in the year 2005, enabling this region to pass the oil and gas law of the Kurdistan region, and law no. 22 of 2007 (oil and gas law), and hydrocarbon laws. Article 115 of the Iraq constitution allows the laws of the Kurdistan constituency above federal laws.28 This article is written when no consensus has been reached in regard to oil and gas revenue distribution and management. The Kurdistan oil and gas law was endorsed in the year 2007, governing oil exploration in Kurdistan.29 In regard to the oil and gas law, KRG has signed 50 contracts in total with IOCs such as Total, Chevron, and Exxon.30 Ensuring that oil and gas contracts sustain sustainable improvement requires four divergent levels: 1. The processes through which contracts are negotiated 2. The terms of the contracts themselves 3. Arrangements for resolving disputes between foreign investors and public authorities 4. Alignment between sustainable development and the wider policy environments in which oil and gas contracts are negotiated. The quintessence of Iraq oil and gas development is restricted within the frameworks of national developmental plans. The frameworks ensure a sustainable development in Iraq, which is a natural resource (oil and gas) dependent economy. This consists of two important steps pertaining to the production and revenue allocation. Iraq oil development is expected to bring vast transformation, regarded as structural diversification.31 This core transformation from deplete-ability to renewability is known as structural diversification, which consists of horizontal and vertical diversifications.32 Horizontal macro-economy structural diversification manifests itself in on all zones of the national economy across its geographical area. Budgetary analysis is a relevant tool in assessing horizontal sustainable development.33 Four parameters are considered they include investment vs. consumption allocation, allocation vs. implementation, sectoral allocation, and oil dependency.34 Focusing on the years 2004 to 2013, investment allocation summed up to 143111 trillion Iraqi dinars-IDs; revealing a gradual increase from $5.2 billion in the year 2004 to $47 billion in the year 2013.35 The increase in investment allocation is brought about by the oil export revenues increase from $52 billion in 2007 to $94 billion in 2012. Investment allocation increased gradually from 15 % in 2004 to 40% in 2013.36 In the years 2012 and 2013, the energy sector scored the highest concerning budget expenditure allocation. Energy sector share in 2012 was 26%, which increased to 29.2% in 2013. The share of agriculture was 3.1% in 2012, which decreased to 2.7% in 2013 a decline was also noted in the industrial sector, which was 1.8% in 2012 and 1.7% in 2013.37 This data reveals that the economy of Iraq is more dependent on oil, gas, and electricity as the core source for revenue generation. Vertical diversification is mainly concerned with the development of Iraq in the petroleum sector. Three subsectors upstream, midstream and downstream represent the value chain of the petroleum sector. Concerning the upstream sub-sector, Iraq borrowed a plan known as the Big-Push Strategy.38 Bid rounds did this and defined terms, found in the contracted oil production anticipated targets. The large (green) and very large (brown) oilfields were regarded in the contract as well, in terms of the related time-horizons. Figure 1: Investment allocation and investment spending 2004-2013 (trillion ID)39 Source: "Iraq Business News." Iraq Business News. http://www.iraq-businessnews.com/ (accessed January 21, 2014). The chart above displays the budget laws for investment allocation and actual investment spending. The straight line represents the extrapolation of the actual investment spending. 3.1. Iraq licensing rounds IOCs’ involvement began through unswerving concession in the company of the Chinese CNPC to translate the production-sharing contract for Alahdab concluded in 1997; into LTSC finalized in November 2008, this is the single oilfield awarded through direct negotiation.40 The other oil and gas fields bound to IOCs were awarded in the course of four bid rounds between June 2009 and October 2010.41 Fifteen contracts were signed covering 17 fields counting 3 gas fields and 14 oilfields.42 The conception of ‘field operating divisions’ in the initial bid round gave a chief role to the IOCs in the decision-making, management and procedure of all the giant oil fields. Twelve oil technical service contracts were awarded in the initial two rounds, and three non- associated natural gas technical service contracts awarded in the third round. 43The fourth round held in May 2012 consisted of 12 exploration projects.44 Out of the 12 fields with awarded service contracts in the initial two rounds, six fields were considered very large.45 PFTSC was awarded by the Iraqi government for three of the very large fields based on the fact that were already in production before the signing of contacts, and the contacts’ scope involving an increase in the production levels.46 These three fields include Rumalia, West Qurna 1, and Zubair surplus associated was to be utilized under the BGC joint venture. The left behind nine service contracts uses a framework called development and production technical service contract.47 Summary of Iraqi’s four licensing rounds is as shown in table 1:48 Table 1: Iraqi’s four licensing rounds:49 Round Prequalified bidders no. Important dates Bid projects’ scope outcome 1 35 June 30, 2009 results announced To develop 6 oil and 2 non- associated natural gas fields One contract was awarded to Rumaila field. Three other oil contracts were signed later. 2 9 December 12, 2009 results announced To develop 10 oil fields 7 contracts were awarded. 3 contracts. 3 contracts did not have any bidders. 3 13 October 20, 2010 results announced. To develop 3 non- associated natural gas fields including two from the first round. 3 fields were awarded to 2 international consortia 4 46 Promotional conference: august 2011. Final tender: November 2011 Bidding event: may 2012 To explore 12 oil and natural gas blocks Not yet determined 3.2. General objectives for cooperation with Iraq The petroleum industry operations pose a number of challenges ranging from social, human rights, environmental, economic and corruption. The intendment is for business to adopt a human face, and thus maximize the natural and human resources to accomplish its economic objectives in a sustainable manner. Iraq in collaboration with and partial financing from the World Bank commissioned in 2011 an international consulting company known as Booz & Co.50 The aim of this was to conduct an extensive study for the energy sector, comprising of petroleum and electricity generation. INES was launched on 12 June 2013 with an objective, “Develop the Energy sector in a coherent, sustainable and environment-friendly manner to meet domestic energy needs, foster the growth of a diversified national economy, improve the standard of living of Iraqi citizens, create employment, and position Iraq as a major player in regional and global energy markets”.51 International oil companies do not seek to export an Iraqi model for governance in the petroleum sector; the chosen solutions and policies are tailored to the benefit of Iraqi.52 IOCs are driven by energy security needs; thus, they are aggressively pursuing global oil and gas resources.53 IOCs are driven by CSR operations, essential in strengthening domestic capabilities, contractual arrangements, and public-private partnerships. This is responsible in IOCs’ response to optimistic contributions to the monetary and social progress in the Kurdistan area. Large IOCs in Kurdistan have come up with in-house CSR teams, focusing on long term projects beneficial to the community.54 These companies include Gazprom, ExxonMobil, and Chevron. This is beneficial to specific themes of importance such as poverty reduction, and job creation; these are the main CSR initiatives in Iraq. Iraq as a developing country is interested in CSR due to a defensive and proactive jurisdiction, relevant in international trade. The role of the Iraq government is to create an environment whereby CSR is encouraged and expected from companies.55 CSR engagement helps develop capacity within public policy and regulatory institutions, with an aim to release existing resources, and to leverage additional resources via partnership.56 A memorable CSR contribution in Kurdistan was a $40 million made by Oryx petroleum Corporation Limited for the support of the Kurdistan Children’s Hospital.57 Another company led by CSR initiatives in the Kurdistan region is Western Zagros, which assists the community in sustaining sound health and life improvement.58 In contrast, not all regions in Kurdistan receive help in the form of CSR from IOCs. This is evident from the recommendations made from a conference organized by a Norwegian NGO and Almasalh for Development and Human Resources NGO. Recommendations from this conference revealed the distress most populace and the environment go through. As noted, the IOCs are situated in poor isolated regions, and as per a field survey done by the respective NGO; harm in the areas was discovered. The oil production operations are in villages, which lack basic amenities. Despite the publicized CSR initiatives by IOCs, not all villages receive this help. The recommendations pointed fingers at some of the IOCs for deceiving the villages by distributing basic needs to the community rather than CSR initiatives. According to the recommendations from the conference; the Kurdish government must pass legislation on IOCs’ affairs as has India, whereby the environment and the community will be taken care of in regard to social matters.59 In addition, the government is to monitor the work of the IOCs and ensuring all the laws are followed.60 3.3. Strategic objectives for cooperation with Iraq The strategic objectives for cooperation with Iraq include access to oil and gas reserves,61 access to oil and gas markets, long term strategic partnership,62 risks diversification,63 access to capital, managing local government and regulatory environment,64 and opportunities across the value chain. The benefits of Iraqi include energy security and access to oil and gas resources,65 development of domestic resource, access to technology, and access to global project management expertise.66INES vision makes up the backbone for future national development projects up to the year 2030. Concerning the upstream oil subsector, INES proposes three states of affairs of 13 mbd, 9 mbd and 6 mbd with different development and plateau production periods. The strategic objective is aimed at increasing oil production by the end of the year 2014 at a rate amid the medium and high production profiles. A minimum target production level is estimated to be at 4.5mbd. Afterwards, production is expected to occur at the level of the medium production profile; to generate a significant influx of petroleum export revenues. 3.4. Iraq’s Oil Contracts Iraq has a range of probable contracts to choose from when dealing with IOCs. This includes TSC,67 risk service contract (adopted by federal government) and production sharing contracts (adopted by Kurdistan Regional government).68 Technical service contracts represent even more the elevating importance of the adaptation of service contracts.69 This is because of the scale of venture, the production plans and the disputes ahead of the IOCs and the Iraqi regime, and number of the IOCs involved.70 Technical Service contracts framework has the potential to alter the scenery of the geopolitics of energy globally; on the other hand, these contracts cover huge previously untapped resources that are unavailable in the country, favoring Iraq’s oil production forecast.71 3.4.1. Iraqi’s technical service contracts Iraq’s technical service contracts represent a financial and legal framework that host governments of an oil-producing nation use to engage with IOCS with a long-term oil and natural gas development goal. TSC framework restricts the handing over of reserves and extracted natural resources to the IOCs.72 This framework also controls the profit gained by the IOcs by an agreement upon the signing of the contract.73 TSC offer the host governments a means of having IOCs in the country, but restricting their environment.74 Iraq’s development plans in the petroleum sector via the recent technical service contracts with IOCs demonstrate the increasing dependence of oil producing nations on service contracts.75 The service contracts permit the IOCs to have more control over the oil supply. TSC agreement signed with the IOCs will provide command of 94% of Iraq’s producing oil fields to the IOCs for 20-25 years in the course of their management of the “field operating divisions.” The MoO has built a NOC via which the government has control of the operations and oil production. IOCs function as contactors; in addition, the compensation is per barrel production, which is determined in a bidding procedure.76  Profit gained other than remuneration fee per barrel resumes to the NOC. As per the framework of service contracts, gigantic untapped natural resources are covered with the service contracts that might otherwise have been unavailable in Iraq. This could result in an unprecedented increase in the global supply of conventional oil in both the short and long term. In regard to the short term, Iraq’s increase in oil production via the TSC framework has aided in alleviating the potential global negative effects of Iran oil export decline because of EU and USA sanctions and embargos ever since July 2012.77 Although service contracts have been adopted, it is uncertain if they are economically efficient and if these contracts provide the right incentives for international oil companies to invest in Iraqi.78 3.4.2 Risk Service Contracts Risk service contracts entail a situation whereby Iraq as the host government seeks to exert greater control over the oil production vision; by using private companies to risk cases of exploration and exploitation of its resources.79 The host government possesses the exclusive rights for the produced crude oil. Moreover, the contracted IOCs provide the required funds and technical services in the process of exploration, development, and production. If the resources are present, the company receives a cash payment for its efforts; if not, the company is not remunerated. In cases of found resources, the foreign private company does not share in the revenue produced.80 This contractual type might favor the host country only if the county has the necessary technological knowledge and access to capital.81 These contracts are out of favor; posed by the aspects of rigorous fiscal terms and significant potential risks; resulting in a challenge in optimizing oil production paths during the designing of oilfield development plans.82 The impending jeopardy and remuneration for IOCs is disproportionate under risk service contracts. This is because the rigorous fiscal terms, service fee ceilings, high bonuses, government participation, and service fees hinder the income level and excess return to the IOCs caused by increases of output and oil price.83 3.4.3 Kurdistan Region’s PSCs/ agreements The Kurdistan oil production binds production-sharing contracts and the Kurdistan legislative body permitted the oil and gas law on 6th August 2007.84 KRG has agreed on oil and gas production contracts under the Kurdistan oil and gas law.85 From the year 2007, KRG has signed 49 oil and gas Production Sharing Contracts with IOCs, 86 in favor of sustainable development.87 In production sharing contracts, the questions of who gets the revenue from the oil, and who manages the manner in which oil is developed are the main concerns.88IOCs are permitted in their production sharing contracts to help the community around the area they are located. These consensus are signed with the KRG, under the terms, payments are made annually.89 From the payments, MNR apportions finances for capacity building projects. These make up the current economic development provisions in PSCs. At the same time as production, sharing companies give the impression of giving the state possession and control of oil and gas resources, the state is bound by the restrictions in the contract.90 Factors affecting the implementation of such contracts include optimal maximum production capacity, well drilling, capital cost ceilings, and potential sources of economic inefficient outcomes- feasibility constraint between the production levels of two consecutive periods. Many of these contacts specify that, in the case of any dispute, a resolution would be made in international tribunals; such as the international chamber of commerce in Paris.91 The tribunals tend to favor the investment moderately than matters of national interest or sovereignty.92 The con of production sharing contracts is that these investment contracts are self-standing and self-referential.93 3.5. Contractual clauses Many contracts signed by both IOCs and Kurdistan region government contain stabilization clauses.94 These clauses can prevent future laws or tax policies applying to the oil development project at hand.95 This is due to the different interpretations of certain contractual clauses, which have generated a rift between the legislative and executive branches in petroleum development.96 The most apparent and lingering problem is the legal status of the concluded contracts.97 The executive branch, CoM, and MoO view these contracts within its authorization, despite the fact that the CoR, legal, and professional bodies view the concluded contracts as illegal intrusion of parliament rights.98 3.5.1. Environmental standard clauses Most Iraqi TSCs and KRG PSC signed contain a reference to both domestic environmental law and international standards. These contracts lack how the two standards would be reconciled in the event of a conflict.99 The terms “good oilfield practices” and or “good production practices” are used in environmental standard clauses. These terms can be defined as the standards and practices as per the degree of skill, prudence, and foresight that would be expected of IOCs operations, and adherence to the accepted standards of the international petroleum industry; this is inclusive of clear environmental principles set. Environmental protection is of concern, in relation to the petroleum industry regulations. Contracts containing such terminologies refer to both domestic environmental law, international environmental agreements, and international industry standards. Although there have been current legislative measures put in place, based on the lack of political will-power of the government, and their lack of implementation of these measures, as well as corruption, no noticeable progress has been noted so far.100 However, there has been public participation in environment protection and sustainable development. 3.5.2. Stabilization clauses Stabilization clauses in the Kurdistan region halt the law that applies to the investment (oil production) at the period of signing the contracts.101 Such clauses compromise the sovereignty of the state as well as imposing a “chilling effect” according to the UN high commissioner on human rights; this discourages Iraq government from passing a new legislation, for which they would have to pay in lost revenues.102 Iraq government is prevented from passing labour laws, environment laws, anti discrimination laws, and economic policies. Stabilization clauses therefore conflict with the state’s obligation to progressively realize human rights.103 For instance, Law 150 introduced in 1987, is still in force in Iraq.104 This law treats all public zone employees as civil servants; segregating them from trade union membership; making it inconsistent with Iraq’s constitution.105 Occasionally, the stipulation of the clause is direct at preventing expropriation by the host government or expressly permits expropriation but provide for an applicable amount of damages on such an event. Such clauses throttle any future law that might be seen as a threat to the profitability of the investment. For example, the PSC model under the KRG contains sections involving the period of contract, cost and profit provisions, national interests, work requirements, and relinquishment.106 This weakens its confusing reference to international standards used by the IOCs. 3.5.3. Clauses on access to water and other natural resources Iraqi is willing to give away any valuable natural resource under the terms of oil and gas contracts. Iraq does not have any clauses relating to exploration. A contract from the Kurdistan Regional Government of Iraq is even broader, giving the contractor the right to “freely use sand, water, electricity, and any other natural resources located inside or outside the Contract Area for the Petroleum Operations”.107 This mirrors flaws in policy formulations, to deal with the limitations. A prolongation of such a situation could be the source of situation such as the fast depletion of natural resources, which compromises the wellbeing of future generations.108 Large quantities of water and other natural resources are taken from the system, thus straining the capacity, and reducing the amount available for the inhabitants of Kurdistan. This leads to investors demands for natural resources being prioritized over the needs and rights of the populace; this is because of the legal provision in the agreement. In the long run, the populace suffers due to lack of these vital resources. 3.5.4. Clauses on gas flaring Gas flaring is a major concern to the World Bank in oil producing countries, as it leads to drastic climatic change as a major economy. This organization endeavors to halt wasteful gas flaring by urging nations and companies to cut down flaring by 30% in the next five years.109 Although the implementation of this action is difficult, it has shown to make financial and developmental sense by turning the waste gas into profitable developmental investments. Iraqi restricts flaring to cases of an emergency or for safety reasons. To reduce flaring, Iraq signed an agreement with Royal Dutch Shell to create a novel joint venture, Basrah Gas Company, to incarcerate flared gas in Basrah Province.110 This agreement was regarded as utilization of fared gas from Rumaila, West Qurna 1, and Zubair.111 Although this agreement was signed and enforced in September 2008, this agreement is considered as downstream not upstream, inclusive of completely diverse legal and financial regime.112 The 25-year project costing $17 billion has a planned fabrication capacity of up to 2 Bcf per day. Under the agreement, processed gas would go to the state-owned South Gas company for domestic use.113 June 2013, data reveals that the confinement of natural gas has increased from 250 million standard cubic feet per day (scf/d) to nearly 450 million scf/d. 3.5.5. Clauses on liability, indemnity, and insurance TSC issued by Iraqi expresses provisions on liability that covers environmental damage. The IOCs are liable except in instances where fault can be attributed to the state. Via indemnity clauses, IOCs obligated to compensate states for any costs acquired resulting from a third-party liability suit. Terms like “environmental damage” and “pollution” are matters of contention if not clearly defined in the contract.114 Development arguments comprise of who is liable for the environmental pollution and damage. As appropriate, such matters have to be included in the contracts so that the liable party can acknowledge the damage.115 Without a doubt, oil pollution results in negative environmental, social and economic consequences.116 The effects of a particular oil spill may depend on many factors, including the volume and the type of oil spilled the season and the location of the spill in relation to the nature and geography of the site. Matters of liability for environmental damage and pollution in the case of oil development in Iraq involve IOCs and the state. Therefore, contracts should specify which party is liable for any action that may result in environmental damage and or pollution.117 The essence of indemnity clauses is IOCs’ commitment to reimburse states for any costs acquired leading from a third-party liability suit. Liability/ indemnity clauses advocate for contractors to have insurance cover, thus taking care of pollution and or environmental damage.118 In addition, many fatal oil pollution cases have resulted to various protocols and amendments. Oil pollution harm to collective ecological interests symbolizes a key challenge to the liability framework. Environmental clearance in Iraq is necessary before any new petroleum operation can take place.119 Any organization found to be polluting the environment will face sanctions, which may vary from forced closure of the offending facility, fines up to 10 million Iraqi dinars, imprisonment or a combination of all three sanctions. In addition, the government must provide approval for the operator’s unforeseen event for dealing with any crude oil spills, fires, accidents, and emergencies before conducting any drilling activities. For instance, Iraqi Drilling Company contracted Kuwait Energy and Dragon oil to drill a well at Block 9, Basra province. Iraqi drilling company has hired environmental insurance providers to environmental base line survey, and environmental impact assessment. In addition, contractors have been hired to perform de-mining duties.120 Under the KRG Law of Environmental Protection and Improvement (Law No. 8 of 2008), all organisations performing an activity which affects the environment must produce an environmental impact study and report it to the KRG Ministry of Environment prior to commencing such an activity. The law has provisions to incentivize the development of ideas in environment improvement; however, there are also sanctions available to the Ministry when organizations breech the law. This includes fines of up to 200 million Iraq dinars, imprisonment, forced closure of the facility, or a combination of the three.121 4.0. Role of the International Law In the uprising of a conflict between international law as well as public opinion, the genesis is the law itself.122 International investment law difference of opinion involves issues triggered by regulatory measures endorsed by host state governments for publicity.123 In such cases, transparency concerns lie with the interests of stakeholders and public, as they are affected by particular facades of the government’s functioning. Occupation duration under International Law is a matter of policy or military inevitability, and the mandates of The Hague and Geneva Conventions have defined durations.124 Even though the Conventions of The Hague apply to war, the conventions of Geneva state that they also apply during war or any other conflict. Petroleum is like any other property right of which consists of a rights as well as opportunities. In several situations, international companies do not get oil but simply get the right to sell as well as receive part of the proceeds. While the owner of the oil in most cases being the government, have all the rights. Therefore, under international law, the Iraqi people are the owners and controllers of their oil production fields. 4.1. Petroleum as an immovable public property subject to usage under usufruct rules Queries regarding whether oil reserves considered immovable property has been affirmatively answered. 125 It was treated as such in the litigation concerning the issue.126 A query that is more complex is the extent as well as nature of duties and rights of the usufructuary or administrator of petroleum production fields. The guarantee of a usufruct is its right to use minus depleting the asset capital. The comparison of the fruit from the tree is frequently used. Concerning mining, as an historic exception has been there to the proposition stating that assets must be returned undiminished after a given time.127 4.2. The Usufructuary Obligations The usage of this term in the Hague regulations 1907 necessitates a careful analysis prior to unquestioning applications concerning Iraq’s oil fields. 128. The usufruct right has been described as “the enjoyment right of a thing, property that is entrusted to another, as well as drawing from the same all profit, advantage, and utility production without alterations of the substance thing. The duty of the usufruct is to maintain the property and if need be carry out repairs. In addition, the property right was devolved from the Roman era where it was comprehended that a usufruct could work already open mines but could not open a new one. The exception of the open mine is generally adhered to. 4.3. Is drilling of new wells possible? The case of Iraq as a production province with thousands of production wells as well as several high productive formations, the issue of drilling new wells could be hindered for several years.129 It could take years to bring back existing wells to maximum production, water floods installation, as well as other maintenance pressure techniques and additional penetrating zones in existent wells. However, inefficiency, lack of oilman would be low by the prospect of being unable to drill more wells in areas where there is potential of existing wells. Alan Gerson claims that in spite of drilling new oil wells in existing fields, exploration can open up new areas.130 This is so because discovery of new fields can in fact improve the value of real estate whereby owners can have reversionary interests subject to temporary interests of an occupant. 131 Gerson’s position concerning Israel was that it was entitled to exploratory well drills in the West Bank and the Sinai offshore areas. This argument would carry more weight in Iraq’s case whereby reserves are so huge that depletion is far-fetched. Might an owner in Iraq’s position refute to a usufructuary who, after several years, returns petroleum asset that are very high in incoming earning. Authors Johnson and Claggett, claim that the article 55 history is indicative of unanimous views that the usufructuary was obliged to not ruin the substance of property held.132 This interpretation has been widely challenged by a number of authors including the U.S state department. The consensus was in E.R Cummings favor: “in conclusion an occupying power has no right to exploit oil from a given area… when resources of oil were not exploited before commencement.”133 This was the stand the U.S State Department took concerning the matter of which was in its memo.134 The people that are familiar with operations of petroleum are aware that numerous activities are undertaken to improve production without need for drilling new wells. Wells may be reworked with replacements of pumps as well as tubing, water injection, re-fracing, acidization or natural gas. Furthermore, new equipment like tanks, pipelines, valves, and heater-treater does have an effect on levels of production. 4.4. Application of the Usufructuary rule to Iraq Iraq’s vast reserves justify a different approach. If a country’s amount of natural resources is finite, then the usufructuary is obligated to return it without depletion. Iraqi reserves at the present rate would exceed more than 126 years of production. In addition, as anyone engaged in petroleum evaluation knows, current production levels are more significant that reserve levels. Therefore, the usufructuary has a duty to act as a judicious operator and improve the value of the asset by continuously developing the drilling fields. 4.5. The private property complication Both the Geneva and Hague Conventions have provisions concerning the taking and seizure of private property.135 Under international law, the public-private classification is handled very differently.136 If public property is moveable, it can be taken by the occupying power to pay occupation costs, whereas immovable property can be used in pursuant of the rules of usufruct for similar purposes.137 This includes rights to work mines as well as oil fields. Private real as well as personal property cannot be seized without compensation. Should the property be seized, it must be paid with an attached receipt indicating value fixed. In addition, seizure must be in proportion to country’s resources. The U.S army during desert storm took a completely prepared form for requisition making into the battlefield. 4.6. Foreign Interests in Petroleum With clear proscriptions against taking private property with no justification as well as compensation raises various concerns over the related private petroleum assets in Iraq’s petroleum sector.138 These interests include refineries, petrochemical plants as well as other 139infrastructure. More significantly, it includes the private contract rights owned by the national as well as the non-nationals, with such things as oil and gas concessions as well as agreements on production and drilling contracts. If valid, such property rights remain inviolate, even though natural war disruption might give rise to claiming for damages to those rights.140 Despite imposed sanctions on Iraq after the Gulf war, numerous nations as well as their oil companies have been engaged in negotiations of many kinds and intensities.141 In short, the commitment value even though superficially valid, is often subject to queries to the performance point and later as long as the agreement caters for both interested parties.142 For example, the French have claimed concessionary right over the 10-30 billion Majnoon barrel fields, of which Iraq has attempted to withdraw those rights because of France’s continuous compliances with UN sanctions. 143 4.7. Transparency in oil and gas contracts as an ingredient of sustainable development Iraq is an EITI member nation, thus transparency in oil and gas contracts is a component of sustainable development in Iraqi as it is based on oil improvement and gas revenue management.144 Being a participatory EITI country, oil, gas, and mining organizations are expected to make public what they pay to the regime, also governments are required to publish publically what they receive from companies.145 Thus, government officials, parliamentarians, civil society organisations and media agencies must take part in transparency of contracts.146 Generally, investment from other nations is regarded as an aspect of national sustainable development. Therefore, attaining the best possible deal is important in the maximisation of the contributions made by the outside investors to sustainable development, i.e. environmental sustainability, and poverty eradication.147 Situations of investment contracts trigger concern to both investors and the host governments. For instance, investors may be concerned on competition issues due to the publicity of sensitive data, host governments may be concerned that future investors may invoke favorable treatment granted in past contracts so as to get better terms, that the government may fail to offer.148 To solve these concerns, a specific confidentiality agreement may be signed during the early stages of negotiation. This will protect the confidentiality of any financial, technical, and or any commercially valuable information exchanged during the negotiation process.149 The key laws and regulations that make up the general legal framework regulating oil activities include Law no. 80 of 1961,150 Law no. 97 of 1967,151 Law no. 123 of 1967,152 and resolution no. 864 of September 1980.153 Iraqi NOCs operate the oil and gas industry. There are no royalty provisions under the current Iraqi legislation or the Ministry of Oil’s TSCs and DPSCs. However, the royalty provisions under the KRG’s model PSC are set at 10% for export crude oil and natural gas; it is probable for individual PSCs to provide different terms. The corporate tax rate for an oil and gas company in Iraq is set at 35 per cent; this rate also applies to subcontractors and supporting companies working in the oil and gas sector of Iraq. other applicable taxes include: axes include: capital gains – 15 per cent; interest is charged at the applicable income tax rate – 35 per cent for oil and gas companies; stamp fees imposed on any contract – 0.2 per cent of the contract value; and social security contribution for employers in the oil and gas sector – 25 per cent.154 In addition, there are specified depreciation rates for various assets of oil and gas companies. This includes electrical systems technology, high-pressure vessels, equipments, liquid gas tanks, bulldozers, and precision equipments.155 Loss relief is present, which can be offset against future profits for a period of five years. Nevertheless, no losses can be offset against previous income receipts. In the Kurdistan region, KRG’s model PSA provides for a corporation tax rate not above 40 per cent, in line with the KRG’s Law of Taxation.156 KRG’s Oil and Gas law provides for a number of other tax charges, which include surface tax; personal income tax; corporate income tax; customs duties and any other similar taxes; windfall profits or additional profits tax; and any other tax or levy or charge expressly provided for in a petroleum contract.157 5.0. Iraq investment treaties Iraqi has signed 35 bilateral treaties and 9 multilateral agreements.158 Iraqi has bilateral FTA with Egypt, Jordan, Algeria, Oman, Lebanon, Qatar, Yemen, United Arab Emirates, Sudan, Tunisia, and Syria.159 The nation of Iraqi is a signatory to multilateral agreements, consisting of (Facilitation) “Taysir” agreements with Arab nations.160 Iraq is a signatory to TIFA with the USA, as a strategy to increase trade and investment cooperation.161 This agreement was authorized in December 2012 by the government of Iraqi. In addition, Iraqi is a member of OPEC, but it is not subject to the organisation’s production and export quota.162 Iraqi collaborated with international organizations to come up with multilateral agreements. These agreements were based on financial contributions to general funds, and global programs. The bilateral agreements aim to preserve the strategic, political, and economic stability of Iraqi and IOCs partnership in the changing Iraqi. Bilateral and multilateral agreements have been presented in the accord of friendship, partnership, and cooperation between various states and Iraq.163 This sets out a framework for the project concerning Iraqi’s wider international economy. Contracts ought not to be confused with investment treaties, which are concluded between two or more states to regulate establishment and treatment of all investments by nationals of one state in the territory of the other state(s).164 BITs enhance a high level Political Dialogue through structured meetings between the Prime Ministers, Ministers and Vice Ministers as well as semi annual meetings between the Foreign Affairs Ministers chairing the High Level Joint Commission.165 BITs aim to preserve the strategic, political, and economic stability of the partnership in the changing Middle East region.166 The main objectives of this Partnership, developed to support priorities outlined in the Government of Iraq’s National Development Strategy and the International Compact with Iraq are: - To provide an appropriate framework for political dialogue - Respect for democratic principles, the rule of law and human rights - To promote trade and investment, and harmonious economic relations in order to foster sustainable economic development - To provide a basis for legislative, economic, social, financial and cultural cooperation 6.0. General outlook of Iraq In the last 25 years, the economic involvement of Iraqi in the world market has declined dramatically.167 These fluctuations were brought about by the damage of oil infrastructure during the Iran- Iraq war of the 1980s; which was followed by a multinational military response and multilateral economic sanctions because of the 1990 invasion of Kuwait.168 Iraq’s economic stability is dependent on the exports of crude oil in view of the fact that it was the end of the World War II. The task of building Iraq by the Coalition Provisional Authority after 2003 US invasion, requires the rebuilding of its infrastructure, economic, and social institutions by the privatization of Iraq’s economy and allowing foreign investment.169 According to the Coalition Provisional Authority order number 39,170 under the title foreign investment, the economy of Iraq changed after 2003 allowing limitless foreign investment without any limitations on the banishment of returns. These policies are in concurrence with the current international principles on foreign direct investment. Years of war as well as excesses of the Hussein regime, Iraqi’s oil potential has been largely unexplored, with only 17 out of 80 discovered oilfields being developed.171 There is a strong alignment connecting the requirements of the global market for growth in Iraqi’s production, and the needs of Iraqi for revenue to build the base of a modern successful economy172. Oil production in Kurdistan has increased from 75,000 barrels in 2011 to 200,000 barrels in 2013. As per the forecast, 1 million barrels per day is expected by the year 2015. This increment will allow the growth of capital investment and infrastructure development. This includes the construction of transportation pipelines, market opportunities, export and downstream equipments. Iraqi oil production is expected to increase due to the government contracting international oil companies173. The predicted production trend is as shown in the figures below: Figure 2: Iraqi oil production forecast (billion b/d- year)174 Figure 3: Oil production in Kurdistan Region, millions of barrels 6.1. Analysis of the political, economic, social and environmental situation in Iraqi The UN Security Council in reaction to th Read More
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