The power of constitution for enacting energy law and managing natural resources: The case of the Kurdistan Regional Government's oil contracts

Abstract

Depending on Iraqi constitution the Kurdistan Regional Government (KRG) has signed more than sixty oil and gas contracts with international oil companies (IOCs). These contracts have ignited significant disputes between the KRG and the federal government. The Iraqi government claims that KRG's contracts are illegal and the KRG has misused Iraqi natural resources. On the contrary, the KRG argues that Iraqi constitution has granted the KRG the right to manage its natural resources. The purpose of this paper is to examine the extent to which the Iraqi constitution grants KRG the power to sign oil contracts with IOCs. To investigate this issue, KRG's oil contracts are mainly analyzed under the light of (1) Iraqi constitution, (2) draft of oil and gas law in Iraq and (3) Kurdistan's oil and gas law. Further, primary data are collected by interviewing thirty Parliamentary members in Iraq. The paper found that the Iraqi constitution has granted the KRG's enactment of oil and gas law and the power to sign oil contracts with IOCs. However, the KRG has exceeded its power in its law and contracts by waiving of sovereign immunity for IOCs. Thus, major amendments of KRG's oil and gas law are recommended to be in line with Iraqi constitution. Transparency and decentralization of the KRG's petroleum policy are also recommended.