Filling the vacuum created by the failure of the Iraqi federal government to pass a comprehensive oil and gas law, the Kurdistan Regional Government (KRG) has passed its own oil and gas law. The law appears to fill the gap created by the lack of a federal law and ambiguities within the Iraqi Constitution concerning the role of federal and regional governments in the area of oil and gas operations (for more on this, see my article below).
The Law appears to grant 17% of oil and gas revenues arising from production in the KRG administered areas of Iraq to the KRG with some being allotted to the federal government.
Regarding the specific terms of the KRG Law, more details will be presented on this blog as they become available. This will include a link to the English text of the Law as effective.
For the international prospector eying investments in Iraqi Kurdistan, concerns regarding legal stability will remain. Specifically, there is still the prospect of this KRG law forming a flashpoint in a legal dispute (or worse) with the Federal Iraqi Government. Indeed, it was conflict between the KRG regionalist position and the federalist position asserted by Sunni and some Shi'i members of the Iraqi parliament that has hitherto delayed the passage of federal legislation (note: this is a bit of over simplification as there are many different reasons why the oil and gas law failed to pass earlier this year). Nonetheless, the new KRG law may act to marginally increase the interest of foreign oil companies in Kurdistan. Indeed, even in the absence of the KRG Law, some companies went ahead and entered into agreements with the KRG.