Production sharing contracts and rentierism: Reforming transparency gaps in Kurdistan's oil and gas contracts

Abstract

Rentierism is a significant concern for most oil-producing countries, in particular, those in the developing world. Iraq is among those countries with a long history of rentierism. Kurdistan is the only federal region in Iraq that exports oil independently and uses Production Sharing Contracts (PSCs) without the federal government's authorisation. However, the influence of PSCs on rentierism has not been discussed in the literature, particularly in the context of the Middle East. This paper argues that while PSCs contributed significantly to increasing rentierism in the region, they are not the only factor. The paper draws on findings from interviews conducted with parliamentary members and oil experts in the region to support the arguments presented. Due to the complexity, lack of transparency and other aspects of these contracts, significant revenue accumulated in the hands of influential groups in the Kurdistan Regional Government (KRG). This revenue is used for personal and political goals rather than development. The paper concludes with several findings and policy implications, including contractual and institutional reforms.