Photo by lachicaphoto from Flickr, available under a creative commons license
Three years ago, Iraq joined the Extractive Industry Transparency Initiative. In implementing this standard, the Iraqi government must publish all the payments it receives from oil companies. The oil companies operating in Iraq must in their turn publish the payments they make. These figures are reconciled in reports and offer to the Iraqi public, for the very first time, concrete data about what they get for their natural resources.
So what has been the impact of three years of EITI in the country? Has it been successful? What more could be done for Iraqis to be able to use this data to hold their government to account?
Read this piece by Eddie Rich, Deputy Head of the EITI Secretariat, to find some of the answers to these questions...
Iraq is by far the largest EITI implementing country in terms of oil and gas reserves. Iraq has about over 140 billion barrels of proven oil reserves and 3,158 BCM of gas reserves in 2011 (3.3% of OPEC total gas reserves), making the country the fourth-largest oil reserves in the world (9.6% of the world’s total reserves), and the country with the largest oil reserves to implement the EITI to date (Source: OPEC 2013 Annual Statistical Bulletin).
You don’t have to be a student of history to know that this oil wealth has hardly been a blessing. It funded an oppressive regime and several wars. Even today, it is a major point of contention, especially between Baghdad and the semi-autonomous region of Kurdistan which began exporting crude oil in 2012. The EITI won’t solve these issues, but having all parties agree the facts on the ground is an excellent basis for a constructive debate about how to manage the sector.
Given that, it was certainly encouraging that Iraq was declared EITI compliant on an auspicious date: the 12th day of the 12th month of 2012.
On 31st December 2013, Iraq published its third EITI report. This one covers 2011. It tells Iraqis how much oil was produced and how much of it was exported and how much that sold for. When this accounts for 97% of government revenue these are surely the first figures msot Iraqi citizens would wish to know about the sector.
Like the first two reports, it covers the payments from the 34 accredited oil and gas buyers. Iraq is presently the only EITI country to reconcile its full export sales. Given that almost all of these companies are extra-territorial and not subject to Iraqi law, this is an impressive process and shows the way for other countries in which state oil sales make up a considerable amount of total income eg. Nigeria, Indonesia, perhaps in the future, Mexico. The reports also contain details about the signature bonuses from the technical service contracts. The report explains a great deal about the operations of the various state owned companies in the sector – operators and marketers. In 2011 for the first time, the report includes the amounts of crude oil used for internal consumption distributed to refineries, electricity generation directorates and national gas companies. Corporate taxes
from extractive companies and signature bonuses from the International Oil Companies are also included.
The semi-autonomous Kurdish Regional Government (KRG) has a series of production sharing agreements directly with international companies. Due to disputes between the KRG and the central government over the legitimacy of these agreements, KRG revenues are not yet included.
It will be important for both sides to try to work together to identify areas for improvement.
So there is much to celebrate, but no reason to be complacent...
... read the rest of Eddie’s blog on our website.