Iraq

EITI Status Meaningful progress
Joined EITI in 2010
Latest Data From 2017
Latest Validation 2018
Website EITI Iraq
Last updated 15 June 2020

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 increase oil production by 1.3m barrels per day, to 6m bpd by 2030. 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 Iraq's latest EITI Report covering 2017, published in December 2019, over 4.4 million barrels per day were produced in 2017 (including production in Iraqi Kurdistan). A signatory to OPEC's output cuts in March 2020, Iraq committed to cut oil production to 3.8m bpd in the second half of 2020.  

The semi-autonomous Kurdish Regional Government (KRG) has a series of production sharing agreements with international companies. The KRG publishes reports on production, exports and revenues in its jurisdiction. 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 Iraq's state-owned oil marketing company SOMO. 

Iraq's state-owned oil marketing company SOMO
Iraq's Ministry of Oil
Between a Rock and a Hard Place: Iraq’s Pledge to Cut Oil Production

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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 and in November 2019 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 Service Contracts, equivalent to 35% of profits (calculated as remuneration fees paid to IOCs). This is specified in the 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 (147,200 million barrels) and major natural gas reserves (at least 3.6 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 2017 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
Oil147.2billion barrelsapprox. 9.5% of aggreagate oil reserves in the world
Gas3.6trillion cubic meters
Phosphate10billion metric tonnes
2017 IEITI Report and BP Statistical Review of World Energy 2019

Oil and gas production

Initializing chart.

Revenue collection

Oil and gas revenues for 2017 amounted to USD 60.5 billion, primarily from crude oil sales to 81 international crude oil buyers. Although total production has increased over the last few years, revenues peaked in 2012 and only started to recover in 2017, due to internal conflict, lack of investment in infrastructure and lower international oil prices.

While Iraq's 2016-2018 EITI Reports do not include reconciliation of extractives revenues in the Iraqi Kurdistan region, given Iraq's adapted implementation for these years, some information on the Kurdistan Regional Government's oil and gas revenues, consumption and exports is publicly available in bi-annual reviews prepared by Deloitte and EY. 

YearCrude oil export revenues (USD million)
201389,214.5
201484,129.8
201549,058.2
201643,622.9
201760,461.4

 

OPEC’s second largest producer sees its revenues fall
Kurdistan Regional Government Ministry of Natural Resources website
Kurdistan Regional Government of Iraq - Reports on oil production, export, consumption and revenue

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 2015-2017.

Iraq's 2017 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.
  • EITI Report covers government payments to companies for remuneration fees, cost recovery and internal service payments (to national oil companies). 
  • Iraq's national oil companies have published their financial statements for 2016-2017 on their respective websites for the first time.  

Implementation

Iraq was accepted as an EITI Candidate country by the Board on 10 February 2010. The first EITI Report covering 2009 was published in December 2011. As of May 2020, Iraq has published EITI Reports covering eight fiscal years (2009-2017).  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. The EITI Board declared Iraq compliant with the EITI Rules on 12 December 2012. 

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 approved 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. 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 approved the request in April 2019 for the 2016-2018 EITI Reports.

The current objectives for Iraq's EITI implementation (in the 2020 work plan) include improving the enabling environment for the extractive industries, enhancing the transparency and accountability of national and international oil companies, enhancing the environmental sustainability of the extractive industries and improving the broader governance of natural resource management. 

Governance

The multi-stakeholder group is chaired by the Minister of Oil and includes representatives from the Ministry of Oil, Ministry of Finance, Federal Board of Supreme Audit, state-owned oil companies, civil society and the private sector. The Champion is Mr. Ihsan Ismaael, Minister of Oil.

Timeline

Validation

On 16 October 2019, Iraq was found to have made meaningful progress in implementing the EITI Standard following its second Validation. Prior to this, the country had been suspended following its first Validation, in which it was found to have achieved inadequate progress in implementing the EITI Standard in October 2017.

First Validation: Board decision in full
Second Validation: Board decision in full
Validation report

Assessment card: Progress by requirement

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EITI Reports and other key documents

Financial statements of the Development Fund for Iraq (DFI) and successor accounts

Published Date: 
March, 2020

This is a compendium of publicly-accessible financial statements for the account to which Iraq's oil and gas export revenues are transferred.  

The financial statements of the Central Bank of Iraq's Development Fund for Iraq (DFI) and its successor accounts, such as the Oil Proceeds Account (DFI-2), at the Federal Reserve Bank of New York are audited annually to international standards. Other supporting documentation,

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Kurdistan Regional Government of Iraq - Reports on oil production, export, consumption and revenue

Published Date: 
February, 2020
Publisher: 
Kurdistan Regional Government

This is a compendium of all publicly-accessible KRG reports on oil production, consumption, exports, and revenues covering 2015, 2017-2019. 

The Kurdistan Regional Government (KRG) releases quarterly or bi-annual reports conducted by Deloitte on the region’s oil production, consumption, exports, and revenues. The KRG has committed to continuing the practice of contracting international audit firms (Deloitte and EY) to undertake these reviews. Deloitte was appointed by the KRG's Regional Council for Oil and Gas Affairs to review oil production, export,

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Iraq 2018 annual progress report

Published Date: 
February, 2019
Publisher: 
Iraq EITI

This is Iraq's 2018 EITI annual progress report (in Arabic), published in February 2019 in accordance with Requirement 7.4. 

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Iraq Validation 2019

Published Date: 
March, 2019
Publisher: 
EITI

In October 2017, the EITI Board agreed that Iraq had made inadequate progress in implementing the 2016 EITI Standard. See Board decision (here

In this second Validation, the EITI International Secretariat has assessed the progress made in addressing the 22 corrective actions established by the EITI Board following the first Validation. See more under background below. 

Timeline of Validation and related materials

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Validation of Iraq 2017 - reports

Published Date: 
September, 2017
Publisher: 
EITI International Secretariat

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]Iraq's EITI multi-stakeholder group's comments on the draft Validation Report [

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View all documents related to Iraq in our publications library

Contacts

National Coordinator

Alaa MOHIE EL-DEEN

National Coordinator Iraq EITI
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International Secretariat

Alex Gordy

Alex Gordy

alexgordy
Validation Director
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