Sharing Iraq's Oil: Analyzing Production-Sharing Contracts Under the Final Draft Petroleum Law

17 Pages Posted: 15 Apr 2007

See all articles by Daniel Behn

Daniel Behn

PluriCourts, University of Oslo; University of Liverpool

Date Written: September 17, 2007


For more than a year Iraq's Central Government (ICG) has been attempting to pass its first post-invasion national petroleum law (Oil Law). If passed by the Iraqi Council of Representatives, the Oil Law will provide the legal framework for the future exploitation of Iraq's vast oil wealth. First approved by the Council of Ministers in February 2007, the final draft Oil Law was submitted to the Council of Representatives for an expected vote in May 2007. With no vote in May, a slightly modified version was resubmitted to the Council of Representatives in July 2007, where it has been fiercely debated. A deal on the Oil Law had apparently been reached, but imploded when the Kurdistan Regional Government (KRG) passed their own regional oil law in August 2007, and the Sunni coalition in the Council of Representatives pulled out of the deal. There is little hope that the law will be passed, or even voted on, in the near future. Although the political reconciliation needed to pass the Oil Law is failing, the law is an important piece of legislation that will eventually play a crucial role in the reconstruction of the oil industry in Iraq. The proposed law authorizes oil sector privatization in the form of production-sharing contracts, or PSCs. Under the new Oil Law, PSCs permit foreign oil companies (FOCs) to sign contracts directly with the ICG to develop specific areas of Iraq's petroleum sector in exchange for a share of the oil profits. Iraq's oil sector has been greatly damaged by decades of conflict, and is now in need of massive redevelopment, foreign investment, and expansion. Through minor modifications to the Oil Law, moderated FOC involvement will be greatly beneficial to Iraq, while at the same time giving an equitable share of the oil profits to the FOCs for their contribution.

Keywords: Iraq, Kurdistan, War, U.S. Occupation, Saddam Hussein, al-Shahristani, Iraq Central Government, Privitization, Investment, Foreign Oil Companies, Oil, Law, al-Maliki, Production-sharing, PSC, PSA, Revenue-sharing, Petroleum, Energy, Concessions, Oil Law, Ministry of Oil, Bechtel, KRG, Contracts

JEL Classification: Q3, Q4, N5, N55, L71, L72, K12, K32, K33, F23, F21

Suggested Citation

Behn, Daniel, Sharing Iraq's Oil: Analyzing Production-Sharing Contracts Under the Final Draft Petroleum Law (September 17, 2007). Available at SSRN: or

Daniel Behn (Contact Author)

PluriCourts, University of Oslo ( email )

P.O. Box 6706, St. Olavs Plass 5
Oslo, 0130

University of Liverpool ( email )

Brownlow Hill
Liverpool, L69 3BX
United Kingdom

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