Iraq

EITI Status Inadequate progress / suspended
Joined EITI in 2010
Latest Data From 2015
Website EITI Iraq
Last updated 13 February 2019

Overview

Through its 80 known oil fields, Iraq is estimated to have almost 10% of the world’s proven reserves (143 billion barrels) and 2% of the world’s natural gas reserves, making it the largest EITI implementing country by oil and gas reserves. The Rumaila and West Qurna fields together hold more proven oil reserves than the entire United States. According to the International Energy Agency, Iraq has the potential to earn USD 5 trillion in oil revenues between 2013 and 2035. For the same time period, it is estimated that Iraq will provide 45% of global production growth and become the world's second largest exporter of oil. Internal conflict and cut-backs in investment due to low oil prices are among the factors hampering Iraq's ability to reach this potential.

In Baghdad-administered Iraq, the industry is completely state-owned, with the oil marketing company SOMO selling crude to 40 accredited international companies on behalf of four producing companies, South Oil Company, North Oil Company, Missan Oil Company and Midland Oil Company. According to the latest IEITI Report, over 4.38 million barrels per day were produced in 2016 (including production in Iraqi Kurdistan). The eleven international Technical Service Contracts (TSCs) that have been signed hold the promise of a total production of over 13 million barrels per day. If this figure were ever achieved, Iraq would become the largest oil producer in the world. The current goal of the Ministry of Oil is to reach a production capacity of 6.5 million barrel per day by 2022.

The semi-autonomous Kurdish Regional Government (KRG) has a series of production sharing agreements with international companies.

All officially exported oil from Iraq, including from Kurdistan, goes through the Iraq-Turkey pipeline with ports at Basra and Ceyhan (in Turkey). Any oil in that pipeline is officially the property of SOMO, the Iraqi state-owned oil company. 

Iraq's state-owned oil marketing company SOMO
Mechanisms of contracting and executing crude oil export agreements
Iraq's Ministry of Oil

News, blogs and more

Tax and legal framework

Iraq's natural resources are governed by a uniquely centralized structure where the government through the Ministry of Oil owns, produces, transports, sells and accounts for all the oil produced and exported or used domestically. Article 111 in the Iraqi Constitution sets the legal foundation for the development of the sector, noting that "oil and gas are owned by all the people of Iraq in all the regions and governorates.” Article 112, calls for a balanced distribution of oil revenues throughout the country to be regulated by a specific law. In the absence of said law, Article 110 gives the Federal Government exclusive authority to determine foreign sovereign economic and trade policy, in addition to “regulating commercial policy across regional and governorate boundaries within Iraq.”

In the absence of a Federal law as prescribed by Article 112 of the Constitution to determine a national energy strategy, a series of short term agreements were made between 2009 and November 2014 to govern the relationship between the Federal Government and the KRG in terms of oil and gas production. There is currently no law regulating private investment in solid minerals. The KRG enacted its own Kurdistan Region Oil and Gas Law in 2007.

The fiscal framework is correspondingly limited to a corporate income tax for International Oil Companies operating under so-called Technical Service Contracts that shall not exceed 35% of the remuneration they receive for their services. This is specified in the Technical Service Contracts used in Iraq's five licensing rounds to date.

Production

Natural resources

Iraq has approximately 9.5% of the world’s proven oil reserves (143,069 million barrels) and major natural gas reserves (at least 3,158 BCM, estimated to be 5% of the world total). In spite of this potential, production over the last decade has been relatively low at around 2.0 - 4.3 million barrels per day due to the ongoing violence.

In addition to Iraq’s oil and gas resources, it possesses some of the world’s richest reserves of sulfur and phosphate as well as other minerals. The 2016 IEITI Report states that Geosurv-Iraq of Iraq estimates the proved phosphate reserves in the country to be 10 billion metric tons - among the top-ten largest reserves in the world. The mining sector is not currently developed, however, and the IEITI Report does not register any private company payments to the government in the sector.

CommodityReservesUnitSignificance
Oil148.8billion barrelsapprox. 9.5% of aggreagate oil reserves in the world
Gas3.5trillion cubic meters
Phosphate10billion metric tonnes
2016 IEITI Report and BP Statistical Review of World Energy 2018

Oil and gas production

Initializing chart.

Revenue collection

Oil and gas revenues for 2016 amounted to USD 43.6 billion, primarily from crude oil sales to 40 international crude oil buyers. Although total production has increased over the last few years, revenues peaked in 2012 and have since fallen due to the internal conflict and lack of investment in infrastructure.

YearCrude oil export revenues (USD million)
201389,214.5
201484,129.8
201549,058.2
201643,622.9

 

OPEC’s second largest producer sees its revenues fall

Initializing chart.

Reconciled revenues by company

Revenue allocation

Iraq's natural resources are 100% state-owned. The state-owned enterprise SOMO sells oil and gas on behalf of the state. 95% of revenues from the sale of oil and gas are deposited in the UN-mandated Development Fund for Iraq at the Federal Reserve Bank of New York. The DFI is managed by the Central Bank of Iraq on behalf of the Ministry of Finance. The remaining 5% are deposited in the United Nations Compensation Fund in accordance with UNSCR 1483 (2003), although these payments were suspended in the 2015-2017 period due to security constraints. There are subnational transfers linked to oil and gas revenues in Iraq, 'Petrodollar allocations', although these have only been transferred to al-Basrah Province in 2015-2016.

Iraq's 2016 EITI Report

Policy recommendations and reforms

Iraq’s national oil companies are audited by the Iraqi Board of Supreme Audit (BSA) based on local Iraqi accounting standards. When originally developed in the 1980s, these standards were based on International Accounting Standards (IAS). Since then the BSA’s standards have been updated, but not in accordance with the IAS. During the course of reconciling differences for the first IEITI Report, the Independent Administrator found that differences in the accounting standards created an “understanding gap between national oil companies as compared with the industry practice”.

All of Iraq EITI’s reports recommend that “National Oil Companies should be audited in accordance with International Accounting Standards and International Financial Reporting Standards”.

The EITI reports also recommend that buyers provide their audited financial statements yearly to the state’s oil marketing company, SOMO, to ensure that these are in fact available upon request. The Government of Iraq has not yet implemented these recommendations.

Innovations

The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.

  • EITI Report covers export sales of oil, disaggregated by buying company.
  • EITI Report includes detailed production figures and a chapter on mining in Iraq.

Implementation

In an unprecedented gathering of civil society representatives from all over the country, Iraq EITI refreshed part of its multi-stakeholder group in December 2014.

In February 2014, Iraq EITI submitted a request for adapted implementation, being unable to guarantee the comprehensive disclosure of material payments collected by the KRG. The Board agreed with the request for the 2012 and 2013 EITI Reports. 

Following protracted negotiations between the IEITI and the Kurdish Regional Government (KRG), the Iraq EITI produced an update of its 2010 report in May 2013, including a chapter on Kurdistan’s oil and gas production and revenues from exports, assessed by the Supreme Audit Board.

On 9 August 2012 the Iraq EITI Council agreed a final Validation report. The EITI Board declared Iraq compliant on 12 December 2012.

The first EITI Report covering 2009 was published in December 2011. The 2009 EITI Report covered export sales of all officially exported oil from Iraq, including from Kurdistan, which go through the Iraq-Turkey pipeline with ports at Basra and Ceyhan (in Turkey). Any oil in that pipeline is the property of SOMO, the Iraqi state-owned oil company. 

Iraq was accepted as an EITI Candidate country by the Board on 10 February 2010.

In December 2018, Iraq EITI submitted a new request for adapted implementation, being unable to guarantee the comprehensive disclosure of material payments collected by the KRG. The Board is currently considering this request. 

Timeline

Validation

 Iraq's Validation against the 2016 Standard commenced on 1 January 2017. Iraq was found to have achieved inadequate progress in implementing the EITI Standard in October 2017. The country was therefore suspended, and the next validation will commence on 24 April 2019. 

Iraq's progress by requirement

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EITI Reports and other key documents

2016 Iraq EITI Report

Published Date: 
December, 2018
Publisher: 
Iraq EITI

This report summarizes the results of Iraq's EITI reconciliation of payments and revenues for 2016 and provides information pertaining to the mining, oil and gas sectors in Iraq.

It does not include reconciliation of data related to the extractive industries in Kurdistan Region. This data was requested from the Kurdistan Regional Government but was not provided, although the 2016 EITI Report includes some information about the extractive industry in KRG based on publicly-available information. 

Read more

2015 Iraq EITI Report

Published Date: 
November, 2016

This report summarizes the results of the Iraq EITI reconciliation processes and provides information pertaining to the Oil and Gas Sector and the Extractive Industries in Iraq.

It does not include reconciliation of data related to the extractive industries (including oil & gas) in Kurdistan Region. This data was requested from the Kurdistan Regional Government but it was not provided, however, IEITI Stakeholder Council has requested the inclusion of information about the extractive industry in KRG based on publicly available information.

Read more

Validation of Iraq 2017 - documentation

Published Date: 
October, 2017
Publisher: 
EITI

Iraq's Validation commenced on 1 January 2017. On 26 October 2017, the EITI Board found that Iraq has made inadequate progress in implementing the 2016 EITI Standard. 

The following documentation laid the basis for the Board's decision, attached below:

Initial data collection and stakeholder consultation [English Arabic]Draft Validation report [English

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Iraq 2014 EITI Report

Iraq 2014 EITI Report

Published Date: 
April, 2016
Publisher: 
Iraq EITI

This report summarizes the results of these reconciliation processes, in addition to, information pertaining to the Oil and Gas Sector and the Extractive Industries in Iraq.

It does not include reconciliation of data related to the extractive industries (including oil & gas) in Kurdistan Region. This data was requested from the Kurdistan Regional Government but it was not provided, however, IEITI Stakeholder Council has requested the inclusion of information about the extractive industry in KRG based on publicly available information.

Read more

2013 Iraq EITI Report

Published Date: 
December, 2015
Publisher: 
Iraq EITI

This EITI Report covers Iraq's extractive sector in 2013. It was published in December 2015. 

Read more
View all documents related to Iraq in our publications library

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International Secretariat

Eddie Rich

Eddie Rich

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