After over 8 years of war and violence, it appears that Iraq’s oil industry is showing some very tangible signs of growth and promise. A report in the San Francisco Chronicle yesterday noted that over 40 companies (including some major international giants) have been approved to bid in exploration upcoming opportunities in the country. Indeed, the multinationals have been active in the semi-autonomous Kurdistan region in northern Iraq for years, and it is widely known that Turkish giants are exceptionally present in the industry there (the Energy Exchange of London will be hosting an Iraq oil conference in Istanbul in September). Although political tensions exist, particularly in regions such as Kurdistan and the south, Iraq is poised to become one of if not the hot spot in the industry in the very near future.
Who is involved?
It seems that everybody wants to be involved in the action. The fourth licensing round led to the qualification of a diverse list of countries – examples include U.S., Russia, Egypt, Croatia, Kuwait, and Italy. Just today, Russia’s Lukoil was awarded a contract to drill 23 wells in the southeast (see the article here) which it will be doing with U.S. giant Baker Hughes.
What is the legal framework?
To say that Iraq’s regulatory framework for hydrocarbons is vague and onerous is a bit of an understatement. The main corpus of the law was initially drafted in approximately 2006-2007 and it is still unclear as to whether it will be approved. There has been a tug of war between the Iraqi cabinet and the Parliament on this law and there has been recent movement to finalize it. There is also the 2007 Refining Law, which sets forth certain standards on operations and foreign involvement.
Stay tuned for more information on this exciting sector.