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    Default Hydrocarbon Law....when

    [COLOR="Red"]We have almost all have read this law, now we are waiting for it to be published in the gazzette....but when will this happen?

    Preamble
    CHAPTER I: Fundamental Provisions
    ARTICLE 1: Ownership of Petroleum Resources
    ARTICLE 2:Scope of Application
    ARTICLE 3 :Purpose
    ARTICLE 4 :Definitions
    CHAPTER II: Management of Petroleum Resources
    ARTICLE 5 :Comp****ce Of Authorities
    ARTICLE 6: Creating the National Iraqi Oil Company
    ARTICLE 7: Re-Arranging the ministry of oil
    ARTICLE 8: Oil Fields’ development and production
    ARTICLE 9: Grant of Rights
    ARTICLE 10: Mechanisms of negotiations and contracting
    ARTICLE 11:Oil revenue
    ARTICLE 12: Participation of the State
    CHAPTER III: UPSTREAM OPERATIONS
    ARTICLE 13 :Exploration and Production Contract
    ARTICLE 14: obligations of the Holders of Exploration and Production right
    ARTICLE 15: building local expertise
    ARTICLE 16: Unitisation
    ARTICLE 17: Conservation
    ARTICLE 18: Access to Main Pipelines and Field Pipelines
    ARTICLE 19: Ownership of Data
    ARTICLE 20: Restrictions on Production Levels
    CHAPTER IV: Transportation
    ARTICLE 21: Main Pipelines
    ARTICLE 22: Rights and Obligations regarding Pipelines
    CHAPTER V: Natural Gas
    ARTICLE 23: investment of Gas
    ARTICLE 24: Associated Gas
    ARTICLE 25: Flaring of Natural Gas
    ARTICLE 26: Non-Associated Gas
    CHAPTER VI: Regulatory Matters
    ARTICLE 27: Regulations for Petroleum Operations
    ARTICLE 28: Use and Benefit of Land and Rights of Way
    ARTICLE 29: Access to Zones Subject to Maritime Jurisdiction
    ARTICLE 30: Inspection
    ARTICLE 31: Environmental Protection and Safety
    ARTICLE 32: Transfer of Ownership and Decommissioning
    CHAPTER VII: Fiscal Regime
    ARTICLE 33: General Principles of Taxation
    ARTICLE 34: Royalty
    ARTICLE 35: Maintaining Records
    CHAPTER VIII: Miscellaneous Provisions
    ARTICLE 36: Transparency
    ARTICLE 37: implementing anti-corruption laws
    ARTICLE 38: attracting competitive participation
    ARTICLE 39: Resolution of Disputes
    ARTICLE 40: Existing Contracts
    ARTICLE 41: Changing Administrative Boarders [creating new regions]
    ARTICLE 42: Relationship to Existing Legislation
    ARTICLE 43: Entry in Force
    Appendix 1: Discovered and developed fields controlled by the INOC
    Appendix 2: Discovered but not developed yet field controlled by the INOC
    Appendix 3: Discovered but not developed yet field not controlled by the INOC
    Appendix 4: discovery areas
    PREAMBLE
    WHEREAS the Iraqi Republic has entered a new era after the adoption of the
    Constitution In 2005;
    WHEREAS, ARTICLE 111 of the said Constitution declares Oil and Gas as the
    property of the whole nation in all Its Provinces and Governorates;
    WHEREAS, ARTICLEs 110, 112, 114 and 115 seen in the light of ARTICLE 111
    broadly define the authorities and responsibilities of the Federal and Provincial
    authorities within the Petroleum sector;
    WHEREAS, the Iraqi Republic is endowed with rich Oil and Gas resources, a great
    portion of which is already discovered and ready for Development whilst more
    Petroleum resources are yet to be discovered;
    WHEREAS, Iraq's Production capacity during the last decades has been low and at
    great disparity with its exceptionally rich Oil and Gas resources;
    WHEREAS, the Iraqi nation finds Itself at the crossroad to a new and more
    prosperous future which will require quick and substantial funding of reconstruction
    and modernization projects;
    WHEREAS revenues from oil and Gas represent the most important basis for
    redeveloping the country in general and the Iraqi economy In particular on sustainable
    and robust basis in a planned and coordinated manner that takes into consideration the
    objectives of the Constitution Including the unity of the Iraqi Republic, the
    exhaustible nature of Petroleum resources, the need for preserving the environment;
    To help the Iraqi Ministry Of Oil focus on its main duties of creating policies,
    planning, and supervision, while achieving the necessary upgrading to enhance
    operational quality, the oil activates operated solely by the Ministry of Oil have to be
    transferred to technical and commercial entities and institutions including an
    independent national Iraqi oil company, and the Iraqi provinces and regions should be
    given more authorities.
    WHEREAS. the rehabilitation and further development of the petroleum Industry will
    be enhanced by the participation of international and national investors of recognized
    technical, managerial and operational skills as welt as robust capital resources to help
    upgrade and develop national expertise and efficiency in the petroleum sector;
    WHEREAS, the national private Industry directly and indirectly related to the
    Petroleum sector are in need of proactive encouragement and support to play a
    prominent role in the development of the sector;
    WHEREAS, the positive interplay between the Federal and Provincial authorities
    requires appropriate legislative and institutional framework conditions to ensure
    efficient co-ordination;
    WHEREAS, the introduction of a variety of national and international players in the
    development of the Petroleum sector calls for clear legislative, institutional and
    operational framework conditions to ensure co-ordination and efficiency between the
    Iraqi authorities and the commercial players as well as among these players;
    WHEREAS, the development of the petroleum sector must be closely coordinated and
    harmonized with the development of the society and the national economy in a
    manner that maintains sustainable development for the economy and the environment
    and in the long term decreases dependence on Oil and Gas revenues;
    WHEREAS, the terms and conditions regulating the Petroleum sector are of great
    importance to the whole nation as well as to all Investors in the sector, there is a need
    for a clear, fair, transparent and efficient system of governance that inspires
    confidence, efficiency and co-operation among all participants in the petroleum sector
    be that on the authorities side (Federal, Provincial or Governate level) or among the
    national and International actors;
    THEREFORE .......
    CHAPTER I
    FUNDAMENTAL PROVISIONS
    ARTICLE 1
    OWNERSHIP OF PETROLEUM RESOURCES
    Ownership of oil and natural gas is vested in the entire Iraqi Federal Oil and Gas
    Council in all provinces and regions.
    ARTICLE 2
    SCOPE OF APPLICATION
    A- This law applies to Petroleum Operations in all the territory of the Republic of Iraq,
    including the soil and subsoil on land, as well as inland waters and territorial waters.
    B- The scope of this Law excludes the refining of Petroleum, its industrial utilization
    as well as the distribution and the marketing of Petroleum Products.
    ARTICLE 3
    PURPOSE
    A- This law establishes the regime for the management of Petroleum Operations in
    the Republic of Iraq, taking Into account the existing International agreements
    between the Republic of Iraq and other countries on crude oil transportation.
    B- The law aims to build upon existing co-operation between the relevant Ministries
    in the Federal Government administration, in addition to building a base for
    coordination and discussions among the federal, regional, and provincial oil
    producing authorities.
    ARTICLE 4
    Definitions
    For the purposes of this law, the following terms and expressions shall have the
    meaning indicated as follows, unless the context in which used requires a different
    meaning:
    1- "Discovery": the first Petroleum encountered in a Reservoir by drilling that is
    recoverable at the surface by conventional petroleum industry methods;
    2- "Commercial Discovery": a discovery which has been deemed to be commercial
    for Development purposes by the holder of Exploration and Production right;
    3- region: Kurdistan region or any other regions created in Iraq after issuing this law
    according to the Iraqi constitution
    4- "Good Oilfield Practices" All those practices related to petroleum operations that
    are generally accepted by the international petroleum industry as as good, safe,
    environmentally friendly, economic and efficient In exploring for and producing
    Petroleum
    5- "Good Pipeline Practices" - all those practices related to transportation by pipelines
    including the design, construction, commissioning, maintenance, operation and
    decommissioning of pipelines that are generally accepted in the international
    petroleum industry as good, safe, environmentally friendly, economic and efficient in
    transporting Petroleum:
    6- "Production" - the extraction and disposal of Petroleum;
    7- "Petroleum" - all Crude Oil or Natural Gas, or other hydrocarbons produced or
    capable of being produced from Crude Oil, Natural Gas, oil rocks or tar sands;
    8- "Development": the activities carried out by the holder of Exploration and
    Production right based on either the Field Development Plan or the Main Pipeline
    Development Plan, which aim at Production and transportation of Petroleum;
    9- "Exploration": the search for Petroleum by geological, geophysical and other
    means including drilling of Exploration and appraisal wells;
    10 -"Field" - An area consisting of a single Reservoir or multiple Reservoirs all
    grouped on, or related to, the same individual geological structural feature or
    stratigraphic condition. The field name refers to the surface area, although it may refer
    to both the surface and the underground productive formations.
    11- "Field Pipeline" - a pipeline, including valve stations, pump stations, compressor
    stations and associated installations, collecting crude oil or natural gas from a field or
    a group of fields and delivering it to a transfer point for further transportation;
    12- Pipeline: an entity that consists of a linear pipeline accompanied with other
    components on the ground level including stations of pumping, valves, compression,
    and other accompanied accessories for gauging, supervision, telecommunications,
    remote control, for the purposes of transporting crude oil and natural gas from the
    transfer point to the delivery point.
    13- "Main Pipeline" - The principal pipeline, including valve stations, pump stations,
    compressor stations and associated installations built by the transporter, for the
    transportation of crude oil or natural gas from one or several fields or sources inside
    or outside Iraq;
    14- "Field Development Plan" - a scheduled programme and cost estimate specifying
    the appraisal and development activities required to develop and produce petroleum
    from a specific field or group of fields by the holder of an exploration and production
    contract, prepared in accordance with this law and the relevant provisions in the
    Regulations for Petroleum Operations and the Exploration and Production Contract
    covering that contract Area;
    15- "Main Pipeline Development Plan" - A scheme and cost estimate specifying all
    activities to be carried out by the transporter for the transportation of petroleum by
    pipeline inside Iraq and across the territory of neighbouring States, prepared in
    accordance with this Law, the relevant provisions in the regulations for Petroleum
    Operations and the Exploration and Production Contract covering that Contract Area
    and any relevant bilateral agreements.
    16- "Decommissioning Plan": a scheme for the closure of Petroleum Operations and
    restoration of the operating environment including the removal and disposal of all
    installations;
    17- "Iraqi Person"- Any citizen with Iraqi nationality or any company or institution
    with legal personality established and registered pursuant to Iraqi legislation, with its
    headquarters in Iraq and having at least 50% of its share capital held by national
    citizens or by Iraqi public or private companies or institutions;
    18- "Foreign Person" Any non-Iraqi citizen or any company or institution with legal
    personality established and registered pursuant to Iraqi legislation, and , having less
    than 50% of its share capital held by national citizens or by Iraqi public or private
    companies or institutions;
    19- "Petroleum Operations" - all or any of the activities related to Exploration,
    Development, Production, separation and treatment, storage, transportation and sale
    or delivery of Petroleum at the Delivery Point, Export Point or to the agreed Supply
    Point inside or outside Iraq. And includes Natural Gas treatment operations and the
    closure of all concluded activities;
    20- "Natural Gas" - all hydrocarbons which are in a gaseous state at atmospheric
    conditions of temperature and pressure, that might be associated or not with liquid
    hydrocarbons, as well as the residue gas remaining after the extraction of liquid
    hydrocarbons from the reservoir;
    21-"Associated Natural Gas": Natural Gas which under reservoir conditions is either
    in solution with liquid hydrocarbons or as gas-cap gas which overlies and Is in contact
    with Crude Oil;
    22- "Non-associated Natural Gas" - The free Natural Gas other than Associated
    Natural Gas;
    23- "Operator" -the entity designated by the Government, in consultation with the
    holder of Exploration and Production right, to conduct Petroleum Operations on
    behalf of the latter;
    24- Producing province: any Iraqi province that produces crude oil and natural gas
    continually on rates more than 150 thousand barrels a day.
    25- "Reservoir" - a separate accumulation of Petroleum in a geological unit limited by
    rock characteristics, structural or stratigraphic boundaries, contact surfaces between
    Petroleum and water in the formation. Or a combination of these, so that Petroleum
    Production from any portion of the accumulation will affect the pressure in the
    accumulation as a whole;
    26- "Contract Area": the area within which the holder of an Exploration and
    Production right is authorized to explore for, develop and produce Petroleum;
    27- "development and Production Area": a part of the Contract Area which following
    a Commercial Discovery has been delineated according to the terms and conditions of
    the Exploration and Production Contract;
    28- "Crude Oil" - all hydrocarbons, regardless of specific gravity, which are produced
    and saved from the Field in liquid state at atmospheric pressure and temperature,
    including asphalt, tar and the liquid hydrocarbons known as distillates or condensates
    obtained from Natural Gas within the Contract Area;
    29- 'Transporter" - the entity designated by the Council of Ministers to receive Crude
    Oil or Natural Gas from the holder of Exploration and Production right at the Transfer
    Point and deliver Crude Oil for export or Natural Gas to the holder of Exploration and
    Production right at the Delivery Point.
    30- "Production Measurement Point" - the place(s) at which volumes and qualities of
    Crude Oil or Natural Gas to be transferred at the Transfer Point are measured;
    31- "Transfer Point" - the inlet flange(s) of the outgoing Pipelines from the
    Production Measurement Point, where the Transporter shall receive Crude Oil or
    Natural Gas from the holder of Exploration and Production right;
    32- "Delivery Point" - the point(s) of the loading facility at which Crude Oil reaches
    the inlet flange of the receiving tank-ship or such other point inside or outside Iraq, as
    agreed to under the Exploration and Production Contract. In the case of Gas it Is the
    flange of the inlet to the receiving installation for Natural Gas;
    33- "Supply Point" - the place at which Crude Oil or Natural Gas is transferred from a
    Main Pipeline or a Field Pipeline to a different type of transport, processing or use;
    34- "The Ministry" - is the Ministry of Oil in the Republic of Iraq and other
    companies and organizations specifically authorized by it;
    35- Specialized institute: Ministry of Oil, National Iraqi Oil Company, or regional
    institute
    36- Regional institute: specialized ministry in the regional government.
    37- Federal Oil and Gas Council: The council formed by article 5 c of this law
    38- The Bureau of Independent Experts: The Bureau hired by the Federal Oil and Gas
    Council in accordance to this law.
    CHAPTER II: MANAGEMENT OF PETROLEUM RESOURCES
    ARTICLE 5: COMP****CE OF AUTHORITIES
    A. The Council of Representatives
    First: shall enact all Federal legislation on crude oil and natural gas;
    Second: council of representatives shall approve all international petroleum treaties
    that Iraq signs with other countries that are related to petroleum operations
    B. Council of Ministers
    First: The council of ministers shall be responsible for recommending proposed
    legislations on the development of the country's Petroleum resources for introduction
    into the National Assembly.
    Second: The Council of Ministers is the comp****t authority to formulate Federal
    Petroleum policy and supervise its implementation. It also administers the overall
    Petroleum Operations including the formulation of Federal policy on all matters
    within the scope of this law including i.e. Exploration, Production, Transportation,
    Marketing, the proposal of Petroleum -legislation, and the approval of such
    regulations as may be necessary from time to time on the said matters.
    Third: In carrying out the above functions, the Council of Ministers shall ensure that
    the Ministry adopts appropriate and effective mechanisms for consultation and coordination
    with the regional and producing provinces authorities in accordance to the
    constitution.
    C. Federal Oil and Gas Council
    First: To assist the Council of Ministers in creating Petroleum policies and related
    plans, arranged by the ministry in coordination with the producing provinces and
    regions, and to put important legislations for exploration and production based on
    ARTICLE 9 of this law the ministers council creates an entity to be named “the
    Federal Oil and Gas Council”. The Prime Minister or his/her representative shall be
    the president of this council, and the council should include:
    1- Federal Government’s Ministers from the ministries of oil, treasury, planning, and
    cooperative development.
    2- The director of the Iraqi central bank
    3- A regional government minister representing each region.
    4- A representative from each producing province not included in a region
    5- Executive managers of from important related petroleum companies including the
    national Iraqi oil company and the oil marketing company
    6- Three or less experts specialized in petroleum, finance, and economy to be hired
    for a period not exceeding 5 years based on a resolution from the council of ministers.
    The Council shall represent all the different basic components of the Iraqi people.
    Second: the Federal Oil and Gas Council holds the responsibility of putting federal
    petroleum policies, exploration plans, fields’ development and main pipelines plans
    inside Iraq, and this council has the authority to approve any major changes in such
    plans and policies.
    Third: the Federal Oil and Gas Council reviews and changes the exploration and
    production contracts that give the rights of petroleum operations according to
    ARTICLE 10 of this law inside Iraq.
    Fourth: the Federal Oil and Gas Council approves and changes the types of
    exploration and production contracts prepared in accordance to the standards
    mentioned in this law, and chooses the appropriate contract type for the field nature or
    exploration area in a way that guarantees the maximum benefits for the Iraqi people.
    Fifth: the Federal Oil and Gas Council creates the special instructions for negotiations
    pertaining to granting rights or signing development and production contracts, and
    setting qualification criteria for companies.
    Sixth: To assist the Federal Oil and Gas Council in reviewing exploration and
    production contracts and petroleum fields’ development plans, the council rely on the
    assistant of a bureau called the “independent consultants’ bureau” that includes crude
    oil and natural gas experts, both Iraqis foreigners, this council decides their number,
    and they should be qualified and have a good reputation and long practical experience
    in exploration and production operation and in petroleum contracts, and they should
    be chosen by consensus of the council and contracted for a renewable one year
    contract. The independent consultants’ bureau gives its recommendations and advice
    to the Federal Oil and Gas Council in issues related to rights contracts, fields’
    development plans, and any other related issues requested by the Federal Oil and Gas
    Council.
    Seventh: the Federal Oil and Gas Council is the comp****t authority to review and
    approve the transfer of rights among holders of Exploration and Production right and
    associated amendment of contracts provided this does not adversely affect the
    national content including the percentage of national participation.
    Eighth: the Federal Oil and Gas Council is responsible for ensuring that Petroleum
    resources are discovered, developed, and produced in an optimal manner and in the
    best interest of the people in accordance with legislation, regulations and contractual
    conditions as well as recognised international standards.
    Ninth: Members of the Federal Oil and Gas Council can suggest policies and law
    drafts to the Federal Oil and Gas Council.
    Tenth: The Federal Oil and Gas Council have the right to create any entities important
    for implementing its duties
    Eleventh: The Federal Oil and Gas Council have the right to create its bylaws, and the
    council shall adopt its decision concerning creating petroleum policies, plans,
    contracts’ models, and contracting and negotiations’ instructions based on a 2/3
    majority of the members in attendance.
    D. Ministry of Oil
    First: The Ministry is the comp****t authority for proposing Federal policy, laws and
    plans.
    Second: The Ministry creates legislation as well as issuing regulations and guidelines
    to implement the feral plans.
    Third: The Ministry undertakes the necessary monitoring, supervisory, regulatory and
    administrative actions required to ensure the proper, coordinated, and unified
    implementation all over Iraq.
    Fourth: On the basis of policies, regulations, guidelines and requirements under
    ARTICLE 5/D/First and 5/D/Second above, and in accordance with the overall
    economic and social policies of the Federal Government, the Ministry shall in
    consultation with the petroleum producing provinces and regional authorities draw up
    Federal policies and plans on Exploration, Development and Production on an annual
    or as needed basis. Such policies and plans shall address both the short term as well as
    the long term requirements. The geographical distribution and timing of actions and
    projects shall comprise proposals from the Provinces and Governorates in accordance
    to Appendices 1, 2, 3 and 4. The suggestions for petroleum policies and related plans
    are to be submitted to the Federal Oil and Gas Council to be reviewed and approved.
    Fifth: The Ministry is the comp****t authority to represent the Iraqi Republic in
    regional and international forums.
    Sixth: The Ministry is empowered to negotiate international and bilateral agreements
    related to Oil and Gas with other countries and organizations subject to approval in
    accordance with the Constitution.
    Seventh: The ministry is responsible of monitoring petroleum operations to ensure
    adherence with the laws, regulations, and contracting terms. In addition to its
    administrative and technical monitoring duties, the ministry shall carry out
    verification of costs and expenditures incurred by the holders of rights to ensure
    correct and justified cost recoveries for the purpose of determining revenues accruing
    to government. The ministry shall through inspection, technical audits and other
    appropriate actions verify conformance with legislation, regulations, contractual terms
    and internationally recognised practices. The ministry must coordinate with regions’
    governments and producing provinces to create specialized entities that carry out the
    ministry’s responsibilities.
    Eighth: The Ministry has the right to execute contracts related to Oil and gas supply
    services other than Exploration and Production Contracts and in other applicable
    legislation.
    E. Iraqi National Oil Company
    First: The Iraqi National Oil Company (INOC), in accordance with ARTICLE 6 of
    this law, can participate in exploration and production operations inside Iraq on behalf
    of the Iraqi government. INOC is obligated to sell its share of crude oil to the Oil
    Marketing Company based on the delivery price that covers the cost in addition to a
    reasonable profit that would facilitate the company’s development in exploration and
    production.
    Second: The tasks and scope of operation of INOC shall include carrying out Oil and
    Gas Exploration, Development, Production, Transportation, Storage, Marketing and
    sales down to the Delivery Point in accordance with the rights and obligations under
    this Jaw including the necessary contracts, permits and approvals applicable to all
    other holders of rights.
    Third: INOC shall have the right to participate as a commercial partner in
    international projects related to the transportation, marketing and sale of Oil and Gas.
    It may also participate in Exploration and Production contracts outside the Republic
    of Iraq subject to approval by the Council of Ministers.
    Fourth: INOC shall form fully owned Subsidiary companies in selected areas in Iraq
    based on the location of fields, size of petroleum reserves, production capacity and
    cost benefit analysis, or based on rearrangements and task management of existing
    companies based on its work capacity leading to better efficiency based on
    appropriate bylaws and procedures to be issued for the purpose.
    Fifth: INOC shall have the right to establish in association with others affiliated
    companies or acquire shares in existing companies inside the Republic of Iraq. INOC
    may also undertake the same outside the Republic of Iraq subject to the approval of
    the Council of ministers.
    Sixth: INOG shall have the right to acquire tangible and intangible assets belonging to
    natural or legal entities for the purpose of achieving its objectives and in accordance
    with the law.
    F. Provincial Authorities
    The provincial authorities shall have the following comp****cies:
    First: The Province authorities shall undertake the necessary preparations in order to
    propose to the Federal authorities activities and plans on behalf of the Province to be
    included in the Federal plans for Petroleum Operations. It shall further assist the
    Federal authorities in discussions leading to the finalisation of the Federal plan as
    required.
    Second: Participate in the licensing process regarding activities within its respective
    province related to exploration and production of discovered but undeveloped fields
    mentioned in appendix number 3 according to mechanisms motioned in ARTICLE 9
    with the participation of a representative from the Ministry and based on contracting
    types prepared by the Federal Oil and Gas Council and in accordance to regulations
    issued by Federal Oil and Gas Council with qualified international oil companies
    adherent to the bases put by the Federal Oil and Gas Council.
    Third: Be represented in discussions carried out by the Oil and Gas Commission In
    accordance with ARTICLE 5 of this law.
    Fourth: Collaborate with the Ministry to undertake the monitoring and supervision of
    Petroleum Operations to ensure adherence to legislation, regulations, guidelines and
    the specific terms of the relevant Exploration and Production Contracts. Such
    functions shall be carried out in close coordination and harmonisation with the
    Ministry to ensure uniform and consistent implementation throughout the Republic of
    Iraq.
    ARTICLE 6
    Iraqi National Oil Company
    A- The Iraqi National Oil Company (INOC) a holding company fully owned by the
    Iraqi Government and based in Baghdad. INOC is financially and administratively
    independent and is based on commercial bases.
    B- Its scope of operations shall include:
    First: Managing and operating existing producing fields mentioned in appendix 1, and
    both the North Oil Company and the South Oil Company are linked to it.
    Second: Participation in the Development and Production of discovered and yet not
    developed fields mentioned in appendix 2.
    Third: Carrying out for Exploration and Production operations in new areas outside its
    respective areas in adherent to this law through applying for Exploration and
    Production rights in the new areas based on competition.
    Fourth: INOC shall also own, manage and operate the Main oil and Gas Pipeline
    network and the export ports in the Republic of Iraq and enter into contracts with
    existing and future shippers of oil and Gas in accordance with this law. The company
    continues its responsibilities in operating the Main oil and Gas Pipeline network and
    the export ports in Iraq during a transitional period not exceeding two years until
    rearranging the ministry of oil companies. Then, the Federal oil and gas Council
    decides the entity responsible of operating the Main oil and Gas Pipeline network and
    the export ports in Iraq based on a proposal submitted by the ministry after
    coordinating with the INOC in adherent to this law and after the approval of the
    ministers council.
    Fifth: To ensure and develop the coordination and collaboration with regions and
    producing provinces, the INOC establishes subsidiary companies which it owns in
    total and which will control the petroleum operations in the regions and producing
    provinces; these subsidiary companies will be represented on the INOC board and
    will be paid for the cost they incur in addition to a specific reasonable profit in order
    that they can develop and enhance their operations
    Sixth: The board of the INOC oversees the INOC and its subsidiary companies; in
    accordance to the INOC law, the board includes members from the federal
    government, the regions, and the producing provinces
    Operation 7
    Ministry of Oil
    A- The ministry, according to law, must create the important institutional and
    methodology changes to cope with its new responsibilities and duties. In particular,
    the ministry has to create a new department as soon as possible specialized in
    planning, developing, and following up the process of obtaining rights. This new
    department must consist of members of the ministry trained and specialized in
    operating bids and auctions and conduct professional negotiations with oil companies
    to sign contracts of exploration and production rights in adherent to the ministry’s
    authorities and in accordance to ARTICLE number 9 of this law. In addition, this
    department must include in each and every negotiations representatives from the
    related producing provinces. It is permissible that the negotiation and rights teams
    include expert advisers with a distinguished international reputation and experience.
    B- The law of rearrangement the ministry of oil must include the suggested
    mechanisms that will be the basis of re-structuring the relationship between the
    ministry and other related companies and regulating entities in a way that guarantees a
    full separation between on the one hand the production companies and oil services
    and on the other hand the regulatory, monitory, supervisory, departments in the
    ministry. In addition, the production departments must be separated yet integrated
    from the services departments in a way that guarantees increasing productivity and
    maximizing profits.
    ARTICLE 8
    Fields development and oil and gas exploration
    A- Regarding the priorities aimed at restoring and increasing production related to
    existing fields, the INOC is the operator and is authorized to directly sign services
    contracts or administrative contracts with appropriate oil or services companies, in
    case this was needed to accelerate reaching to the goals stated in the ARTICLE.
    B- The ministry, and after coordinating with regions and producing provinces, and in
    adherence to ARTICLE 9 of this law, is to propose to the Federal oil and gas Council
    the best methods to develop the discovered but yet not developed fields.
    C- The ministry prepares model exploration and production contracts to be approved
    by the Federal Oil and Gas Council and to be appended to this law. These model
    contracts must guarantee the best levels of coordination between the oil ministry,
    INOC, and the regions each according to their specific responsibility in relation to
    both this law and the international oil companies.
    D- The utmost efforts must be put into insuring speedy and efficient development of
    the fields discovered but partially or entirely not yet developed when this law is
    enacted, and it is permissible to develop these fields in collaboration with reputable
    oil companies that have the efficient financial, administrative, technical, operational
    capabilities according to the contracting terms and the regulations issued by the
    Federal Oil and Gas Council.
    E- The Federal oil and gas Council, the oil ministry, INOC, and the regional entities
    have to carry out an exploratory program in Iraq to asses the oil and gas assists,
    compensate production, and add new reserves.
    F- The ministry must provide the federal oil and gas council with a comprehensive
    proposal for oil and gas exploration throughout the Republic of Iraq in coordination
    with the regions and the producing provinces, sorting out the areas according to their
    oil and gas potentials, implemented within a short time table in order to guarantee
    increasing reserves and continuing and developing production
    ARTICLE 9
    GRANT OF RIGHTS
    A- The rights for conducting Petroleum Operations shall be granted on the basis of an
    Exploration and Production contract between the Ministry or the regional entity and
    an Iraqi or Foreign Person, natural or legal, which has demonstrated to the Ministry or
    to the regional entity the technical comp****ce and financial capability that are
    adequate for the efficient conduct of Petroleum Operations according to what the
    Federal oil and gas Council and mentioned in ARTICLE 5/C/Fifth, and in accordance
    to the mechanisms of negotiations and contracting mentioned in ARTICLE 10 of this
    law.
    B- The licensing process shall be based on transparent and accountable tendering and
    shall take into account recognised practices by the international petroleum industry. It
    shall adhere to the following principles and procedures:
    First: Competitive licensing rounds based on clearly defined terms and terms of
    application as well as the criteria to be used in the selection of successful candidates.
    Second: The contractual terms offered to applicants shall be specified in model
    contracts accompanying the letter of invitation.
    Third: The form and terms of the model contract shall take account of the specific
    characteristics and requirements of the individual area, field or prospect being offered,
    including whether the resources are discovered or not, the risks and potential rewards
    associated with the investments under consideration, and the technological and
    operational challenges presented.
    Fourth: All model contracts shall be formulated to honour the following objectives
    and criteria:
    1- National control,
    2- Ownership of the resources,
    3- Optimum economic rent to the country,
    4- An appropriate return on investment to the Investor,
    5- Reasonable incentives to the investor for ensuring solutions which are optimal to
    the country in the long-term related to:
    a- Improved and enhanced recovery,
    b- Technology transfer.
    c- Training and development of Iraqi personnel,
    d- Optimal utilisation of the Infrastructure,
    e- Environmentally friendly solutions and plans.
    Fifth: The Model Contracts may be based upon Service Contract, exploration risk
    contract, or exploration and production contract provided they are adapted to best
    meet the objectives and criteria under 9/b above which serve the best interest of the
    Republic of Iraq.
    Sixth: Only pre-qualified companies by the ministry or the regional entity shall be
    considered in any licensing round. The criteria for prequalification shall be specified
    in the Invitation to bidding according to the regulation and instructions put by the
    Federal oil and gas Council.
    Seventh: Evaluation of pre-qualified applicants shall aim at establishing a short list of
    successful candidates for negotiations.
    Eighth: The selection and ranking of successful applicants shall be on the basis of the
    quality and relevance of the proposed work plan and the anticipated economic rent to
    the nation.
    Ninth: The overall allocation of Exploration and Production rights throughout the
    Republic of Iraq shall aim at achieving variety among oil companies and operators
    with different background, expertise, experience and approach so as to enhance
    efficiency through positive competition, benchmarking of performance and
    transparency. The possibility of using consortia of selected companies, particularly in
    large fields, should be considered.
    Tenth: Not later than two months after the endorsement of approval of Exploration
    and Production contracts
    C- The granting of rights for the activities referred to in ARTICLE 9/A shall always
    respect national interests, including but not restricted to those related to defence,
    navigation, research and development, conservation, health and safety and a high
    level of environmental protection.
    d- The Ministry is to regulate the form and manner in which rights are granted under
    this ARTICLE in a manner consistent with this law and the regulations of the Federal
    Oil and Gas Council.
    ARTICLE 10
    Mechanisms of Negotiations and contracting
    A- The Ministry, the INOC, or the regional entity, based on their respective
    specialties and responsibilities, and after completing initial procedures for granting
    rights as indicated in ARTICLE 9, there will be an initial signing of exploration and
    production contracts with the selected contractor
    B- The exploration and production contracts mentioned in ARTICLE 10/A must
    include the following: “the contract is valid unless it the Federal Oil and Gas Council
    objects, in accordance to this law (number …. Of 2007). This includes the
    negotiations and contracting mechanisms, contracting models, and any related future
    changes in this concern issued by the federal oil and gas council”
    C- The initial contract mentioned in ARTICLE 10-B must be submitted to the federal
    oil and gas council within thirty days from the day of the initial signing or it will be
    considered cancelled
    D- The federal oil and gas council must adhere to the following steps when deciding
    on the contracts submitted to it by Ministry, INOC, or the regions:
    First: Submitting the initial contract mentioned in ARTICLE 10/C, if the Federal Oil
    and Gas Council finds it advisable, to the independent consultants bureau for analysis
    who will provide their opinion and assess whether the contract adheres to the model
    contracts approved by the Federal Oil and Law Council and to its regulations
    pertaining to exploration and production rights in accordance to ARTICLE 9
    Second: In case the initial contract has serious discrepancies as compared to the
    model contracts and regulations approved by the Federal Oil and Gas Council, the
    Federal Oil and Gas Council will make a decision on the contract based on the
    recommendations of the independent consultants bureau; the decision requires a 2/3
    majority of the members in attendance.
    Third: The Ministry, INOC, or the regional entity must be informed of the rejections
    of the initial contract in accordance to the legal reasons within (60) sixty days of
    receipt of the initial contract by the Federal oil and gas Council, and the contract is to
    be considered approved in case no decision was made by the Federal Oil and Gas
    Council within the mentioned period. In case the Federal Oil and Gas Council could
    not hold a meeting within 60 days of receiving the initial contract due to extraordinary
    reasons, the council must take a decision regarding the contract within the second (45)
    forty five days using all the possible means, and the contract will be considered
    approved in case no decision was made by the Federal Oil and Gas Council within the
    mentioned period.
    C- The Ministry, INOC, or the regional entity must fix the reasons behind the
    rejection of the Federal Oil and Gas Council trough changing the initial contract in the
    necessary way to get approved and submit it again according to the regulations
    mentioned in this ARTICLE.
    ARTICLE 11
    Petroleum revenue
    A- According to the constitution (articles 106, 111, 112, 121 third) regarding the
    ownership of the oil and gas resources, the distribution of its revenues, and
    monitoring the federal revenue distribution, the ministers council must submit a
    federal law draft to the representatives council regulating these matters in adherence
    to the sections of this article.
    B- The oil revenues include all the government revenues from oil and gas, royalties,
    signing rewards and production rewards of petroleum contracts with foreign or local
    companies.
    C- The revenues mentioned in article 11/A must be deposited in an account called
    “the oil revenue treasury” specifically for this reason. The Federal Financial Revenues
    Law shall create the mechanisms of managing this treasury and distributing it in a just
    way in accordance to the constitution.
    D- Another treasury must be created under the name “The Future Treasury”, and a
    certain ratio of oil revenue must be deposited in this treasury regulated by the law.
    ARTICLE 12
    PARTICIPATION OF THE STATE
    A- The Republic of Iraq shall aim at achieving substantial national participation in the
    management and Development of its Petroleum resources in adherence to Article 111
    of the constitution.
    B- The Exploration and Production rights with regard to existing producing fields are
    hereby given to the INOC. The formal granting of additional Exploration and
    Production rights to INOC regarding not yet developed Fields shall be affected by the
    Federal Oil and Gas Council in accordance to article 6 and appendix 2 of this law.
    C-The Main Pipeline network inside Iraqi territories is hereby assigned INOC or any
    specialized companies created by the ministry. The formal procedure for this
    assignment and necessary approvals shall be affected by the Federal Oil and Gas
    Council in accordance with article 21 this Law.
    D- The Republic of Iraq reserves the right to participate in Petroleum Operations on in
    any phase of Petroleum Operations on terms and conditions that are established by
    contract.
    E- The Federal Oil and Gas Council is authorised to designate INOC to exercise the
    Republic of Iraq's participation share in accordance with Article 5/C of this law.
    CHAPTER 3
    FIELDS EXPLORATION AND DEVELOPMENT ACTIVATES
    ARTICLE 13
    EXPLORATION AND PRODUCTION CONTRACT
    A- An Exploration and Production Contract shall give the holder an exclusive right to
    conduct Petroleum Exploration and Production in the Contract Area. In addition, the
    contract shall give the holder the right of transportation in accordance with ARTICLE
    21/A of this law.
    B- Except if additional time is needed to complete the operations to assess a
    Discovery, the exclusive Exploration and Production right shall be granted as follows:
    1- A First Period shall be a maximum of four years.
    2- Subject to having fulfilled all commitments by the holder, the specialized entity
    may grant a Second Period of two years provided however that a substantial work
    programme is committed to under this period.
    C- A Third Period of Exploration can for special considerations of continuity be
    granted by the specialized entity provided however that such extension is justified by
    the quality and substance of the work programme and does not exceed two years.
    D- All extensions shall be subject to the provisions concerning the relinquishment of
    Contract Areas in adherent to the petroleum regulations.
    E- In the event of a Discovery, the exclusive Exploration and Production right may be
    retained by the holder for the purposes of completing the operations initiated within a
    specified area to assess or determine the commercial value of a Discovery for an
    additional period of two years or, in the case of a non-associated Natural Gas
    Discovery, for an additional period not to exceed four years.
    F- On the basis of a Field Development Plan prepared and approved in accordance
    with this law and the relevant contract, INOC and other holders of an Exploration and
    Production right may retain the exclusive right to develop and produce Petroleum
    within the limits of a Development and Production Area for a period to be determined
    by the Federal Oil and Gas Council not exceeding 20 years dating from the date of
    approval of the Field Development Plan, depending on considerations related to
    optimal oil recovery and utilisation of existing infrastructure. In cases which for
    technical and economic considerations warrant longer Production period, the Council
    of Ministers, on newly negotiated terms, has the authority to grant an extension not
    exceeding 5 years. The remaining acreage outside the Development and Production
    Area shall be relinquished at the end of the Exploration and Production right.
    G- The appointment of an Operator shall be approved by the specialized entity in
    accordance to the appointment procedures mentioned in the Initial Contract and based
    on the terms and conditions issued by the Oil and Gas Council. The operator’s must
    me mentioned in the initial contract.
    ARTICLE 14
    OBLIGATIONS OF THE
    HOLDERS OF EXPLORATION AND PRODUCTION RIGHT
    A holder of Exploration and Production right is obliged, mutatis mutandis, to:
    A- Conduct Petroleum Operations in accordance with the terms of this law, the
    Regulations for Petroleum Operations as well as other applicable legislation and Good
    Oil Field Practices;
    B- Promptly report any Discovery within the Contract Area to the Ministry;
    C- Conduct the necessary delineation and evaluation of the Discovery with a view to
    determining its commercial potential and keep the Ministry fully informed of progress
    and results;
    D- In the event of a Commercial Discovery, prepare and submit to the specialized
    entity, in accordance with the Regulations for Petroleum Operations, a Field
    Development Plan for the Discovery:
    E- Prepare and submit a revised Field Development Plan for any material amendment
    to the original Plan for approval by the specialized entity
    F- Implement the Field Development Plan or the revisions thereto once these have
    been approved by the specialized entity;
    G- Submit a Decommissioning Plan to the Ministry, not later than two years before
    the planned termination of Production;
    H- Compensate the Injured parties for any losses or damages resulting from the
    conduct of the Petroleum Operations as provided by law;
    I- When the national Interest so requires, give preference to the Ministry in the
    acquisition of Petroleum produced in the Contract Area, and access to pipeline
    transportation, in accordance with terms and conditions to be agreed upon with the
    Ministry;
    J- Provide the greatest possible support for required research and development
    activities in connection with Petroleum Operations and endeavour to carry out as
    much of these activities by Iraqi institutions;
    K- Collect, organise and maintain in good condition usable data from all phases and
    on all aspects of Petroleum Operations in accordance with this Law and with
    Petroleum regulations, and
    L- At no cost, supply the Ministry and affiliated companies, with, all data collected
    and assembled from Petroleum Operations, in accordance with ARTICLE 19 of this
    Law.
    ARTICLE 15
    COMP****CE BUILDING AND LOCAL CONTENT
    A- The Republic of Iraq aims at the development of a comp****t and effective Iraqi
    private sector capable of substantial participation in Petroleum Operations including
    the acquisition, alone or together with international companies, of Exploration and
    Production rights. Such development shall however adhere to the objectives of
    professional comp****ce in accordance with this law. Towards this end holders of
    Exploration rights are encouraged to pursue cooperation and association with serious
    and qualified Iraqi private Initiatives.
    B- INOC and other holders of Exploration and Production rights shall give preference
    to the purchase of Iraqi products and services whenever they are competitive in terms
    of price, comparable in terms of quality and available on a timely basis in the quantity
    required.
    C- INOC and other holders of Exploration and Production rights shall to the
    maximum reasonable extent undertake to employ Iraqi citizens having appropriate
    qualifications and shall undertake to train and prepare potential candidates towards
    this objective.
    D- INOC and other holders of Exploration and Production rights shall maximise to
    the greatest reasonable extent, training and technology transfer opportunities for Iraqi
    nationals, at all levels of Petroleum Operations including management.
    E- INOC and other holders of Exploration and Production rights are required to
    diligently seek and develop associations, affiliations, joint ventures and other forms of
    partnership and or co-operation in order to promote the rapid growth of an Iraqi
    private sector capable of assisting and enhancing Petroleum Operations to the mutual
    benefit of the said holders and the nation.
    ARTICLE 11
    UNITISATION
    A- A Petroleum Discovery which is located partly in one Contract Area and partly in
    another Contract Area shall be developed and operated jointly pursuant to a
    unitization agreement which shall be submitted for approval by the Federal Oil and
    Gas Council to be approved. Should the right-holders fail to reach agreement on the
    modalities of unitisation, the Federal Oil and Gas Council has the right to decide on
    the terms six months after serving notice to the parties to this effect.
    B- A Petroleum Discovery which extends from areas authorized for Production into
    areas not authorized for Production shall be developed only after consultation with the
    Federal Oil and Gas Council about the measures necessary to protect the interests of
    the Republic of Iraq.
    C- The Council of Ministers shall adopt the necessary measures to protect the
    interests of the Republic of Iraq in Petroleum Discoveries extending beyond the
    borders of the Republic. In such cases efforts shall be made to seek joint solutions
    with the said neighbouring countries.
    ARTICLE 17
    CONSERVATION
    A- The extraction of Petroleum resources shall aim at the avoidance of waste,
    including preventing leakages from Pipelines, and the optimal maintenance of energy
    in the Reservoir in accordance with Good Oilfield Practices and Good Pipeline
    Practices.
    B- INOC and other holders of an Exploration and Production right shall diligently
    apply the latest technologies and oilfield practices that lead to optimum recovery from
    the individual Reservoir or a group of Reservoirs that are targeted under the Field
    Development Plan(s).
    C- The Field Development Plan shall be based on thorough investigations of
    alternative extraction strategies in order to select a solution that combines the highest
    level of Petroleum recovery with acceptably high levels of Production and as low cost
    as possible.
    D- Subsequent to the approval of a Field Development Plan, INOC and other holders
    of Exploration and Production right shall continue to improve Reservoir
    understanding through optimal data collection and Reservoir monitoring and shall
    accordingly seek to identify and implement actions that would Improve Petroleum
    recovery.
    ARTICLE 13
    ACCESS TO MAIN PIPELINES AND FIELD PIPELINES
    A- The Main Pipelines are the property of the federal government.
    B- INOC as the Transporter with respect to Main Pipelines and the holder of
    Exploration and Production right under ARTICLE 17/A with respect to Field
    Pipelines have the obligation to transport, without any discrimination and on
    reasonable commercial terms, the Petroleum of third parties, provided in general that:
    1- Capacity is available in the Field Pipeline;
    2- There are no insurmountable technical problems that prevent such utilisation of the
    Field Pipeline.
    C- Details shall be provided for the modalities of the system of access by third parties
    to Field Pipelines in regulations to be made by the Ministry in coordination with the
    regions and producing provinces.
    D- Whenever there is a dispute concerning the commercially reasonable terms for the
    transport of Petroleum in a Main Pipeline or a Field Pipeline for Oil or for Natural
    Gas, the availability of uncommitted capacity in the pipeline in question or a proposed
    increase of its capacity, the dispute shall be first referred to the Ministry for resolution,
    the ministry must work in coordination with regions and producing provinces.
    Thereafter, resolution shall be sought according to the procedures set out in
    ARTICLE 30 of this Law.
    ARTICLE 19
    OWNERSHIP OF DATA
    A- All data obtained pursuant to any Contract provided for under this Law is the
    property of the Iraqi Government, and shall not be published, reproduced or exported
    without the prior approval of the Ministry.
    B- The terms and conditions for the exercise of rights in respect of primary,
    differentiated, processes, interpreted and analysed data related to oil and gas in Iraq
    including but not limited to geological and geophysical reports, engineering data,
    samples, logs and well surveys, shall be established in data supply obligations in the
    relevant contract and by regulations.
    C- The Ministry submits copies of the current available petroleum data to the INOC
    and to the regions, and the INOC and regions must take the responsibility of
    supplying the Ministry with new data and updates resulted from the petroleum
    operations implemented by them in a continues and periodic fashion.
    D- Anyone who has the information in his possession or sells, buys, transfers,
    receives, deals with any of the information or data mentioned in this article shall be
    considered in violation, unless the contract terms states otherwise, and shall be
    prosecuted under the Iraqi criminal and civil law. No one has the right to own such
    data and information.
    E- Without prejudice to section D of this article, it is allowed for someone to have a
    permission from the specialized entities to own, buy, sell, transfer, or receive data and
    information indicated in section F of this article under the condition of supplying the
    specialized entities with copies of the data, and his permission should not be revoked
    without logical reasons.
    F- Old Data, for the purposes of this law, mean all primary, differentiated, processes,
    interpreted and analysed data and information related to oil and gas in the republic of
    Iraq indicated in section B of this article.
    ARTICLE 20
    RESTRICTIONS ON PRODUCTION LEVELS
    In the event that, for national policy considerations, there is a need to introduce
    limitations on the national level of Petroleum Production, such limitations shall be
    applied in a fair and equitable manner and on a pro-rata basis for each Contract Area
    on the basis of approved Field Development Plans.
    CHAPTER IV
    TRANSPORTATION
    ARTICLE 21
    MAIN PIPELINES
    A- INOC, or the specialized company created by the Ministry, shall own all Main
    Pipelines. Such Pipelines shall be constructed and operated by the INOC subsidiary
    representing Transporter for the purpose of transporting Oil or Natural Gas to
    specified Delivery Points for Oil and Natural Gas respectively. The Ministry in coordination
    with INOC and in consultation with Operators shall ensure that the Main
    Pipeline network is optimally designed, operated and maintained so as to serve the
    overall requirement for Petroleum transportation in the Republic of Iraq.
    B- The construction and operation of Main Pipeline or any major modification thereof
    shall be subject to approval by the Ministry on the basis of a Main Pipeline
    Development Plan outlining the proposed work. If the proposed work is undertaken
    by the specialized company representing Transporter in association with Iraqi or
    Foreign Persons, the agreement between' the parties shall accompany the Main
    Pipeline Development Plan. Such agreement shall outline the terms of financing,
    implementation, and the modalities of utilisation and operation of the new or modified
    Main Pipeline.
    C- INOC and other holders of Exploration and Production right shall deliver Oil and
    Natural Gas to the Main Pipeline at appropriate Transfer Point(s) In accordance with
    ARTICLE 13/A. The transportation of Crude Oil or Natural Gas beyond the Transfer
    Point shall be carried out by the specialized company representing Transporter on the
    basis of a contract.
    D- All the above activities shall be carried out in accordance with Good Pipeline
    Practices.
    E- The co-ordination of tasks related to the transport of Crude Oil through new
    Pipelines outside the Iraqi territories is the responsibility of the Ministry. The Follow
    up of operations subsequent to the approval of the necessary bilateral agreements shall
    be the responsibility of INOC in accordance with the said bilateral agreements and
    any specific instructions from the Ministry.
    ARTICLE 22
    RIGHTS AND OBLIGATIONS REGARDING PIPELINES
    A- The Exploration and Production Contract shall provide a non-exclusive right to
    access Main Pipelines on reasonable commercial terms. It shall also confer the right to
    construct and operate Field Pipelines to deliver Oil or Natural Gas from the Contract
    Area to the Transfer Point, for further transportation through the Main Pipeline to the
    Delivery Point.
    B- INOC and of her holders of Exploration and Production right shall Implement the
    Field Development Plan and construct Field Pipelines connected to the Main Pipeline
    or the modifications thereto following approval of such plans have been approved by
    the Ministry;
    C- INOC and other holders of Exploration and Production right shall prepare and
    submit a revised Field Pipeline Development Plan for any material amendment to the
    original Plan for approval by the Ministry;
    D- INOC and other holders of Exploration and Production right shall negotiate with
    INOC or the specialized company as the Transporter for the right to use the Main
    Pipeline. The Ministry Is to be kept informed on the progress of these negotiations;
    E- INOC and other holders of Exploration and Production right shall submit a
    Decommissioning Plan to the Ministry, not later than two years before the planned
    termination of Production;
    CHAPTER V
    NATURAL GAS
    ARTICLE 23
    GAS UTILISATION
    A- Natural Gas is a valuable Petroleum resource of increasing importance in the
    economic development of the Republic of Iraq and the Middle East. It shall be utilised
    to generate additional revenues through optimal utilisation partly through improving
    oil recoveries by gas injection into suitable Reservoirs; through utilisation for power
    generation, utilisation in petrochemical and chemical industries, utilisation for
    domestic purposes, utilisation in Industrial processes, utilisation for export and/or
    through the replacement of fluid fuels. The latter will have the additional benefit of
    reducing the impact on the environment while at the same time maximising revenue
    by freeing more crude and fuel oil for export.
    B- INOC and other holders of Exploration and Production rights shall diligently
    pursue all alternatives for optimal utilisation of surplus volumes of produced gases in
    accordance with the objectives of ARTICLE 23/B above. Should they fail to identify
    commercial utilisation, the volumes of surplus Natural Gas shall be offered after
    treatment to Government at no cost at the Field's outlet. The cost incurred by the
    holder of Exploration and Production rights shall be recoverable under the respective
    contract.
    ARTICLE 24
    ASSOCIATED GAS
    A- INOC and other holders of Exploration and Production right are entitled to use,
    free of charge, the quantity of Associated Natural Gas necessary for Petroleum
    Operations.
    B- INOC and other holders of Exploration and Production right shall in the Field
    Development Plan propose optimal plans for the utilization or disposal of Associated
    Natural Gas.
    C- All Associated Natural Gas produced from a Reservoir which is neither used in
    Petroleum Operations, utilised or re-injected in the Field, shall be offered for delivery
    free of charge to the Ministry in accordance with ARTICLE 23/B above.
    ARTICLE 25
    FLARING OF NATURAL GAS
    A- Flaring of Natural Gas is only permitted for the purposes of commissioning,
    testing of installations, safety precautions or while awaiting the completion of
    transportation facilities provided the flared volumes are strictly kept to a minimum
    and the Ministry is promptly notified.
    B- The flaring of Associated Natural Gas shall be kept to a minimum. It shall not be
    permitted beyond a maximum period of one year during which measures shall be
    completed to utilise the gas or deliver it to a nominated government entity in
    accordance with ARTICLE 23/B above
    ARTICLE 26
    NON-ASSOCIATED GAS
    A- The Development and Production of Natural Gas or liquid components thereof
    from a Non-associated Natural Gas Discovery shall be subject to the approval of the
    Ministry of a Field Development Plan supported by signed agreement(s) for the sale
    of Natural Gas from the Discovery and approved by the Council of Ministers. In the
    event that only liquid Petroleum is to be produced, a scheme for the re-injection of
    Natural Gas or other acceptable schemes for its disposal shall be presented in the
    Field Development Plan.
    B- The flaring of Non-associated Natural Gas may only be permitted in accordance
    with ARTICLE 25/B.
    CHAPTER VI
    REGULATORY MATTERS
    ARTICLE 27
    REGULATIONS FOR PETROLEUM OPERATIONS
    The Ministry, in coordination and collaboration with the INOC, regions, and
    producing provinces, shall approve regulations for Petroleum Operations and submit
    it to the Federal Oil and Gas Council to be approved.
    ARTICLE 28
    USE AND BENEFIT OF LAND AND RIGHTS OF WAY
    A- Land use and benefit for the purpose of conducting Petroleum Operations is
    regulated by the legislation on land use and benefit, without prejudice to the following
    provisions.
    B- For the purpose of conducting Petroleum Operations, the duration of the right of
    use and benefit of the land shall be the same as the duration of the Contract.
    C- The land where installations are located, and a strip of land, to be defined by
    regulation, surrounding those Installations, are considered to be a zone of partial
    protection in accordance with the legislation on land use and benefit.
    D- INOC and other holders of a right to conduct Petroleum Operations who, by virtue
    of the exercise of Petroleum Operation rights in the Contract Area, causes damage to
    crops, soils, building and improvements or requires the relocation of the legal users or
    occupants of the land within the respective Contract Area, has the obligation to
    compensate the holders of title to the assets and the persons relocated.
    E- Subject to the payment of the compensation that are due, the holder of the right to
    conduct Petroleum Operations may require the right of way in accordance with the
    legislation in force, in order to have access to the locations where Petroleum
    Operations are conducted.
    F- In cases where lands and rights of way are owned by an Iraqi Person, the land shall
    be either rented or bought by the relevant state owned company, according to the
    applicable laws and regulations.
    ARTICLE 29
    ACCESS TO ZONES SUBJECT TO MARITIME JURISDICTION
    The access to Petroleum Operations sites located in interior waters, the territorial
    waters, and other zones subject to maritime jurisdiction is regulated by law, and any
    relevant international agreements.
    ARTICLE 30
    INSPECTION
    A- The Specialized Entity, or its authorized representatives, has the right to inspect
    sites, including buildings and installations, where Petroleum Operations are being
    conducted, as well as all assets, records and data kept by INOC and other holders of
    Exploration and Production right relating to Petroleum Operations.
    B- The Specialized Entity may designate an independent entity or a commission
    created for this purpose, to any out the inspection.
    C- The terms and conditions pursuant to which the Inspection is carried out shall be
    established by regulations.
    D- In carrying out its inspections, the Specialized Entity shall not unreasonably
    interfere with the Petroleum Operations.
    ARTICLE 31
    ENVIRONMENTAL PROTECTION AND SAFETY
    In addition to carrying out their Operations in accordance with Good Oil Field
    Practices, INOC and other holders of Exploration and Production rights shall conduct
    Petroleum Operations in accordance with environmental and other applicable
    legislation of the Republic of Iraq to prevent pollution of air, lands and waters. They
    shall also conduct Petroleum Operations so as to comply with the environmental
    management standards of the ISO 14000 series, as amended. In general, they shall
    carry out Petroleum Operations in order to:
    1- Ensure that there is no ecological damage or destruction caused by Petroleum
    Operations, but where unavoidable, ensure that measures for protection of the
    environment are in accordance with internationally acceptable standards. For this
    purpose, INOC and other holders of a right shall prepare and submit to the relevant
    authorities for approval an environmental impact assessment, including environmental
    impact mitigation measures, for each major operation in the Contract Area;
    2- Notify the Ministry and other specified authorities immediately in the event of an
    emergency or accident affecting the environment;
    3- Control the flow and prevent the escape or loss of Petroleum discovered or
    produced within the Contract Area;
    4- Avoid damage to Petroleum Reservoirs;
    5- Avoid destruction to land, the water table, trees, crops, buildings or other
    Infrastructure and goods;
    6- Clean up the sites after the closure of Petroleum Operations and comply with the
    environmental resolution requirements;
    7- Ensure the health and safety of personnel in the planning and conduct of Petroleum
    Operations, and take preventive measures if their physical safety would be at risk;
    8- Report to the comp****t entity within the government on the amounts of
    operational and accidental discharge, leakage and waste resulting from Petroleum
    Operations, and
    9- Provide compensation for damages to State and private property in accordance with
    the applicable laws and regulations.
    B- INOC and other holders of a right under this Law shall act in a secure and effective
    manner when conducting Petroleum Operations In order to guarantee the disposal of
    polluted water and waste oil in accordance with approved methods, as well as the safe
    plugging of all boreholes and wells before these are abandoned.
    ARTICLE 32
    TRANSFER OF OWNERSHIP AND DECOMMISSIONING
    A- On completion of the Exploration and Production Contract or Main Pipeline
    Contract the ownership of all works and facilities shall be transferred to Specialized
    Entity. The properties shall be transferred to the relevant federal state enterprise or to
    the Ministry in actual operating condition and in a satisfactory state of work at the
    time of the transfer.
    B- All site relinquishment and related costs that become due at the time of transfer
    with regards to any works and facilities shall be payable by INOC and other holders
    of Exploration and Production right according to a Decommissioning Plan, submitted
    in accordance with ARTICLE 9/F [sic] of this Law.
    C- An outline Decommissioning Plan shall be included In the Field Development Plan
    submitted by the Contractor to the Council of Ministers.
    CHAPTER VII
    FISCAL REGIME
    ARTICLE 33
    GENERAL PRINCIPLES OF TAXATION
    A- INOC and its subsidiary companies as well as other Individual and collective
    persons who are holders of a right to conduct Petroleum Operations are, subject to the
    payment of the following fiscal impositions:
    1- Royalty;
    2- Property Contribution and the Property Transfer Tax (SISA) as established in
    accordance with the law;
    3- Municipal and local taxes due;
    4- The taxes provided for in the Income Tax Code;
    5- Customs.
    B- All oil companies working in Iraq shall be supervised by the Commission of
    Financial Audit in matters related to its operations in Iraq.
    C- A Foreign Person may repatriate its exports proceeds in accordance with the
    foreign exchange regulations in force at the time. It may freely transfer shares in
    accordance to article 5/c/seventh.
    ARTICLE 34
    ROYALTY
    A- INOC and other holders of an Exploration and Production right shall pay a royalty
    on Petroleum produced from the Development and Production Area, at the rate of
    12.5% of Gross Production measured at the entry flange to the Main Pipeline.
    B- The collection of Royalty shall be in kind or in cash at the option of the Ministry.
    C- Where the royalty is paid in cash, it shall be calculated according to the prevailing
    Market Price in accordance with Petroleum Regulations.
    ARTICLE 35
    Maintaining Records
    A- Holders of Exploration and Production right can transfer any net profits from
    petroleum operations to outside Iraq after paying taxes and fees owed.
    B- INOC and other holders of Exploration and Production right shall maintain proper
    records and books in Arabic of accounts in accordance with the provisions of the
    Contract enabling the relevant calculations to be performed, and in compliance with
    the requirements of the laws relevant to the taxes referred to in ARTICLE 33. INOC
    and other holders shall prepare and submit to the specialised entity annually, or
    quarterly, a statement of accounts.
    CHAPTER VIII
    MISCELLANEOUS PROVISIONS
    ARTICLE 36
    Transparency
    A- All activities related to oil and gas, while occurring, have to be transparent and
    responsible. To ensure this transparency and give the Iraqi people the chance to hold
    governmental entities responsible for their activities and actions, different sorts of
    information must be published. This information includes but is not limited to the
    following:
    1- All the revenues, payments and receipts that are delivered to any governmental unit,
    or entity run by the government, from activities related to oil or gas. This includes but
    is not limited to the income of selling oil, gas and their products, signing and
    production rewards, royalties, revenue of selling assets, taxes, fees, customs and taxes,
    public services fees, share of profits from oil and gas cartels, commercial activates
    related to oil and gas (and their products) contracts, oil and gas revenue investment
    yield, and any other payments resulted from or related to commercial production of
    hydrocarbons.
    2- The revenues of oil and gas usage and distribution, including distribution among
    governmental entities.
    3- All of the financially significant contracts related to exploration, development,
    processing and marketing of oil and gas resources in Iraq
    4- All of the financially significant contracts related to importing or exporting services
    and goods for the oil and gas industry or by any governmental unit or entity controlled
    by the government
    5- The annual report of the Federal Oil and Gas Council
    6-The annual and quarterly reports of the INOC, the subsidiary companies, and the
    entities controlled by the government including the budgets audited according to
    international accounting standards
    7- All other information necessary for understanding the operations and activities
    carried out by any governmental unit or entities controlled by the government related
    to oil and gas
    8- Any information that must be declared in accordance to laws and regulations
    9- Any condition or secret agreement aimed at blocking or trying to block access to
    documents and information that must be made public in accordance to this article in
    considered in violation of the law and is considered void
    B- Publicizing the information stated in Section A of this article does not extend to
    and has no effect on the oil and gas industry royalties that must be kept secret in
    accordance to the national or international laws except for financial information
    C- Any person or governmental entity obligated to publish information mentioned in
    section A of this article shall publish it in publicly accessible media
    D- The Ministry shall issue the regulations needed for implementing the laws of this
    section including the legal basis covering what should be included and an exempted
    as mentioned in Section B of this article
    ARTICLE 37
    Implementing Anti-Corruption laws
    A- Any rights’ contract shall be considered void if it is in violation of any of the laws
    of the Republic of Iraq, particularly the Iraqi anti-corruption laws
    B- The authorized person’s violation of the Iraqi anti-corruption may lead to the
    cancellation of his rights contract, in whole or in part. Each rights contract shall
    include terms indicating these conditions
    C- Any person who violates the Iraqi Anti-corruption laws may be prosecuted under
    the criminal law active in Iraq
    ARTICLE 38
    Competitive Public Bidding
    A- All oil companies working in the Republic of Iraq shall submit public bids on a
    competitive basis in order to offer any goods or services, and this should occur in
    accordance to the general bidding laws and the Federal Oil and Gas Council shall
    determine the maximum amount that can be excluded from the bidding process
    B- Bidding by the holders of petroleum operations rights stated in this law shall be
    competitive and in accordance with the petroleum laws and with the special terms of
    the related contracts
    C- All public bidding must be allowed to the public within a reasonable timeframe,
    must declare thereafter the reasons for selecting the chosen bid, the complete results
    of the bidding call must also be published, and competitors must be given the
    opportunity for raising objections
    D- Any contract that is signed in violation of the regulations set by this article shall be
    considered void and inactive
    ARTICLE 39
    RESOLUTION OF DISPUTES
    A- Any disputes arising from the interpretation and application of this Law, the
    Regulations for Petroleum Operations and the terms and conditions of contracts shall
    in the first instance be attempted to be resolved in good faith by means of negotiation
    among the parties.
    B- If the dispute cannot be resolved by agreement, the matter shall be referred to the
    Minister to resolve through discussions with senior officers of the holders of rights
    concerned. Failing resolution through these discussions the matter of dispute may be
    submitted to arbitration or to the comp****t judicial authority.
    C- If the dispute relates to a technical, engineering, operational or accounting matter
    relative to Petroleum Operations and is of a kind that is readily subject to resolution
    by an expert in the relevant field, the parties may refer the dispute to an independent
    technical expert for a recommendation as to the resolution of the dispute. If a party
    does not accept the recommendation of the expert, it may initiate arbitration
    proceedings according to ARTICLE 41/D below.
    D- Arbitration between the State of Iraq and foreign investors shall be conducted in
    accordance with the following rules:
    1- Rules of Procedure for Arbitration Proceedings of Paris, Geneva, or Cairo Chamber
    of Commerce for the Settlement of Disputes between States and Nationals of other
    States or pursuant to the Convention on the Settlement of Disputes between States and
    Nationals of other States and based on the Iraqi Law.
    2- Laws and regulations of internationally recognized institutions, in accordance to
    what different contractors agree upon, but all parties must declare the conditions of
    implementation in the contract, including the method of assigning referees, and the
    time limits and deadlines for decision making.
    ARTICLE 40
    EXISTING CONTRACTS
    1- The Specialized Entity in Kurdistan Region Shall review all existing Exploration
    and Production contracts signed with any entity before the enactment of this law to
    ensure its harmony with the general goals and regulations of this law and to ensure the
    maximum financial benefit for the Iraqi people, taking in consideration the objective
    conditions of signing those contracts, in a period not exceeding three months from the
    time this law is enacted. The Bureau of Independent Experts shall evaluate contract
    mentioned in the article and its opinion shall be obligatory to determinate how to deal
    with such contracts.
    2- The Ministry must review all the existing Exploration and Production contracts
    signed with any entity before this law was in place to ensure harmony with the goals
    and general regulations of this law. This review must be submitted to the Federal Oil
    and Gas Council, to ensure the maximum financial benefit for the Iraqi people, in a
    period not exceeding three months from the time this law is enacted to ensure the
    maximum financial benefit for the Iraqi people, and so that the federal council may
    approve the review and confirm the contracts.
    ARTICLE 41
    Changes in Administrative boarders
    In the case of changes in borders of regions or producing provinces, or in the case of
    establishing new provinces, the new effected places shall be dealt with in accordance
    to this law regarding to granting rights and petroleum operations.
    ARTICLE 42
    RELATIONSHIP TO EXISTING LEGISLATION
    Any article in prejudice to this law shall cease to be effective on adoption of this Law.
    ARTICLE 43
    ENTRY IN FORCE
    This Law enters into force after publication in the Official Gazette.
    TONIGHT IS THE NIGHT....IF NOT....THEN TOMORROW NIGHT...OR MAYBE THE NIGHT AFTER

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