Management of Oil and Gas Resources in Iraqi-Kurdistan

Abstract

Author conducts the qualitative interviewing analysis to provide an in-depth understanding of the challenges facing the newly emerging oil and gas sector in the Kurdistan Region. The results show that multiple issues confront the petroleum industry, including institutional, human resource and geopolitical challenges. Lack of accountability and transparency, ineffective checks and balances, a growing unemployment rate, and ineffective management of public expectation with respect to the new emerging petroleum industry are the major institutional and social challenges facing the Kurdistan Regional Government. The findings also show that high dependency of the Kurdistan region’s economy on the hydrocarbon revenues and more importantly ineffective and un-transparent petroleum revenues are the key economic challenges. In addition to the challenges the Kurdistan region’s oil and gas sector faces on institutional, human resource, and economic development, there are geopolitical issues, such as being a landlocked region dependent on neighbouring states for market access, the risk of Islamic State attack, and fluctuations in oil prices.

Appendix A

Interview questions

This interview research includes examining the details that surround the challenges and opportunities associated with development of the oil and gas sector within the Kurdistan Region. It is a semi-structured interview and the target groups who are involved in the oil and gas sector include:

• Ministry of Natural Resources: According to Kurdistan’s petroleum law, the Ministry shall oversee and regulate its Petroleum Operation. The responsibilities of the Ministry include the formulation, implementation, supervision, inspection, auditing and enforcement of all petroleum operations by all persons and all activities relating thereto. This includes the marketing of petroleum, and negotiating, agreeing and executing all authorisations, including petroleum contracts, entered into by the Regional Government as well as for amending the terms of any authorisation to ensure that the petroleum operations are carried out for the benefit of the people of the Region and Iraq.

• Kurdistan Parliament (Natural Resource Committee): The committee as the highest legal authority is responsible for overseeing and monitoring the Ministry of Natural Resource’s activities.

• The Foreign Oil and Gas Companies: The foreign investors involved in the Kurdistan’s petroleum industry.

• Domestic Suppliers: The indigenous investors involved in the Kurdistan’s petroleum industry.

• Media: The Kurdish journalists who work within Kurdistan’s media

• My research to date suggests that the economic, political, and socio-economic areas are of particularly importance in understanding the ability of a petroleum resource rich country or region to deal with a potential resources curse. Therefore the following are critical and generic questions related to the three areas contained in the interview research:

• How effective, accountable, and transparent are the institutions in the Kurdistan Region? What are the challenges and opportunities?

• How effective and capable are the domestic human resources within the Kurdistan Region? What are the existing obstacles and opportunities?

• What are the challenges currently facing the economic development as a whole within the Kurdistan Region?

• Interview Questions

• Ministry of Natural of Resources

  • How effective, accountable, and transparent are the institutions within the Kurdistan Region? What are the apparent challenges and opportunities?

  • How effective and transparent is the licensing process? (Announcement—application—negotiation; negotiation contract team)

  • How effective is the monitoring and supervision system currently in place? (Exploration, production activities, auditing, environment and safety issues). Is there adequate skill and sufficient technical knowledge in place?

  • How efficient is the data management solution and is an IT system in place?

• (This is based upon a consistent data model, a reference/administrative database for most important types of data, modern data storage media and well-maintained hardware, allowing efficient use of GIS and other petroleum management software systems).

  • What are your thoughts about the establishment of the Kurdistan National Oil Company? Is it necessary? If yes, what role will this national oil company play in the petroleum sector? Which operational mechanisms should be considered?

  • How effective is the Foreign Investment law within Kurdistan in terms of attracting the foreign investors? What are the current obstacles?

  • How is the petroleum sector affected due to increasing instability on Kurdistan’s borders?

  • To what extent has domestic employment been increasing within oil and gas sector? How effective is Kurdistan’s domestic training program? What are the prescient obstacles?

• The Natural Resource Committee of Parliament

  • How capable and independent are the policymaking and regulatory authorities within Kurdistan’s oil and gas sector? (Political and elite group interest as opposed to the national interest).

  • How effective and transparent is the licensing process? (Block announcement, application, and negotiation)

  • How effective is the supervision of the committee on the policy-making process and the implement of the petroleum polices? (Setting petroleum policy, auditing and environment issues)

  • What are the related obstacles? (Lack of cooperation, and committee’s technical capability)

  • What are your thoughts about the establishment of the Kurdistan National Company? Is it necessary? If so, what role will the national oil company play in the emerging petroleum sector? Which operational mechanisms should be considered?

  • How effective are the investment regulations law within Kurdistan to attract eager foreign investors to the petroleum and other industries?

  • To what extent has the domestic employment been increasing? How effective is Kurdish domestic training program? What are its present obstacles?

• International Oil Companies

  • How effective are the regulatory institutions in Kurdistan?

• (Less bureaucratic, competent public institutions, the tax institution)

  • How effective is the Foreign Investment Law within Kurdistan in attracting the interested foreign investors?

  • What are the obstacles that exist and the present opportunities available to foreign investors who are tending to enter in Kurdistan with greater frequency?

  • How has the petroleum sector been affected by the increasing instability on the Kurdistan’s borders? (A decline in investment or change of shareholders in PSCs contracts)

  • To what extent has domestic employment been increasing? How effective is Kurdistan’s domestic training program? What obstacles exist in its implementation?

• Domestic Suppliers (local content)

  • How transparent is the awarding of the subcontracts?

  • How supportive is the government in encouraging its indigenous industries?

• (Financial support)

  • How efficient is the related legislation?

  • How competitive are Kurdish companies when compared to the foreign companies working within Kurdistan?

  • What are the obstacles and opportunities?

• Media: Kurdish Journalists

  • How easy is for the media to access the relevant data associated with the oil and gas sector?

  • How greatly does the public trust that the petroleum wealth will bring increased welfare and blessing for them?

  • To what extent has the government been successful in developing Kurdish talent within the hydrocarbon industry and also within its domestic companies?

  • What are the obstacles that exist vis-a-vis domestic capacity building?

  • How has the petroleum sector been affected after a marked increase of instability along the borders of Kurdistan?