KRG Ministry of Natural Resources

5 April 2013

Statement by KRG on Iraq and the manipulation of the EITI process

Erbil, Kurdistan Region, Iraq (KRG.org) - In 2008, the then federal Deputy Prime Minister, Barham Salih, committed Iraq to achieving compliance with the Extractive Industries Transparency Initiative (EITI), which aims to help citizens in oil producing countries across the world to follow the flows of oil and money.   

The EITI is an important globally developed standard that promotes the transparency of oil and mining revenues at the local level. It is a coalition of governments, companies, civil society groups, investors and international organisations. Its rules establish the methodology countries need to follow to become fully compliant with the EITI.

Commitment to the goals and principles of EITI is enshrined in the Kurdistan Region’s Oil & Gas Law of 2007.

The first annual EITI report on Iraq was produced in 2011, covering revenues for 2009. However it disregarded production and export revenues generated in the Kurdistan Region, including oil exported via the state-owned oil marketing outfit, Somo.

The KRG then initiated dialogue with the World Bank and requested to be part of the Iraq-EITI reporting process. 

Thus, under the auspices of the World Bank and the international EITI secretariat, the KRG agreed to work with the Iraq-EITI  branch to produce a report covering revenues for 2010 that reflected the legal, fiscal and structural realities of the oil, gas and mining sectors in Iraq.

It was agreed with EITI by all parties (including representatives of the federal Ministry of Oil and  Somo) that a separate chapter on the KRG would be included in the main Iraq report.

The reporting team led by the Ministry of Natural Resources and the KRG Office for Government Integrity became fully engaged, and despite the lack of EITI guidance or training - and working under severe time constraints - it produced a comprehensive chapter covering the activities of the Kurdistan oil and gas sector in 2010. It was the first time such a report had been produced. 

The KRG’s contribution to this transparency process was vital to the EITI Board’s designation of Iraq as EITI Compliant on 12 December 2012.

Eddie Rich, EITI’s deputy head and regional director of Southern and Eastern Africa and Middle East, wrote to the KRG praising its contribution to the 2010 report. “The commitment of the KRG to publish and participate was very important in this decision.  You too are to be congratulated. I hope the 2010 report will give the fuller picture.”  

In its decision, the EITI Board, comprising members from governments, companies and civil society, reminded Iraq-EITI that:  “In accordance with the EITI Rules, Iraq is required to include all material revenue payments in their EITI reporting… To this end, the Board requires the inclusion of oil and gas production in the Kurdistan Region and sales revenue to the Kurdish Regional Government to be addressed in the 2010 EITI report.”

In addition, the KRG made a strong but unsuccessful recommendation for the report to include details of Iraq’s domestic refining and fuel consumption.

However, at the launch of the report in Baghdad yesterday, to which neither the KRG nor the senior supervising World Bank official was invited, the Iraq-EITI council presented a document from which the chapter on the Kurdistan Region had been unilaterally removed. The report was launched in the presence of EITI Chair Clare Short, the former UK Minister for International Development.

The KRG believes this underhand tactic has set back the cause of transparency for the Iraqi people. It has also damaged the reputation of EITI for not ensuring impartiality in the revenue reporting process.

Regrettably, it appears that a process supposed to promote transparency has been lost in the fog of political manipulation by some officials in Baghdad.

The KRG remains committed to the goals and principles of EITI and, in the cause of full transparency, has decided to publish the deleted chapter on its website.

The KRG believes the issues surrounding transparency in Iraq’s petroleum and mining sector are too important to be left in the hands of politically motivated individuals.

Therefore, to ensure no such repetition of this unfortunate incident occurs, to cover the year 2011, the KRG will seek to engage a reputable third-party organisation to engage with stakeholders in Kurdistan Region and oversee the production of a full and uncensored KRG oil and gas transparency report that will bear scrutiny under the guiding principles of EITI. 

To read the chapter Iraq-EITI did not want you to see click here. Chapter 7 deals with the KRG.