Iraq Upstream Fiscal and Regulatory Report - Sector Challenged by Regulatory Uncertainty and Tough Fiscal Terms
Summary
In April 2018, Iraq held its fifth licensing round on the basis of a new model version of service contracts introduced in the previous weeks. However, with these new service contracts, the levels of state take are among the highest in the world and this explains why the bid round obtained mixed results with only 6 blocks assigned out of 11 on offer and no major international oil companies among the winners. In March 2018, Parliament passed legislation, still to be implemented by the government, whose goal is to reform completely the management of Iraq’s petroleum sector, but the regulatory outlook remains uncertain. The most important element of the legislation would be to re-establish the Iraq National Oil Company, which would be put in charge of Iraq’s petroleum contracts and would be the holding company controlling Iraq’s regional oil companies.
“Iraq Upstream Fiscal and Regulatory Report - Sector Challenged by Regulatory Uncertainty and Tough Fiscal Terms”, presents the essential information relating to the terms which govern investment into Iraq’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Iraq’s upstream oil and gas investment climate.
Scope
Reasons to buy
Summary
In April 2018, Iraq held its fifth licensing round on the basis of a new model version of service contracts introduced in the previous weeks. However, with these new service contracts, the levels of state take are among the highest in the world and this explains why the bid round obtained mixed results with only 6 blocks assigned out of 11 on offer and no major international oil companies among the winners. In March 2018, Parliament passed legislation, still to be implemented by the government, whose goal is to reform completely the management of Iraq’s petroleum sector, but the regulatory outlook remains uncertain. The most important element of the legislation would be to re-establish the Iraq National Oil Company, which would be put in charge of Iraq’s petroleum contracts and would be the holding company controlling Iraq’s regional oil companies.
“Iraq Upstream Fiscal and Regulatory Report - Sector Challenged by Regulatory Uncertainty and Tough Fiscal Terms”, presents the essential information relating to the terms which govern investment into Iraq’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Iraq’s upstream oil and gas investment climate.
Scope
- Overview of current fiscal terms governing upstream oil and gas operations in Iraq
- Assessment of the current fiscal regime’s state take and attractiveness to investors
- Charts illustrating the regime structure, and legal and institutional frameworks
- Detail on legal framework and governing bodies administering the industry
- Levels of upfront payments and taxation applicable to oil and gas production
- Information on application of fiscal and regulatory terms to specific licenses
- Outlook on future of fiscal and regulatory terms in Iraq.
Reasons to buy
- Understand the complex regulations and contractual requirements applicable to Iraq’s upstream oil and gas sector
- Evaluate factors determining profit levels in the industry
- Identify potential regulatory issues facing investors in the country’s upstream sector
- Utilize considered insight on future trends to inform decision-making.
Table of Contents
1.1. List of Tables1.2. List of Figures
2. Regime Overview
3. State Take Assessment
4. Key Fiscal Terms- Service Contract
4.1. Bonuses and Fees
4.1.1. Signature Bonus
4.1.2. Commerciality Bonus -Round 5 Contracts
4.1.3. Employment, Training, and Technology Transfer Fund
4.1.4. Infrastructure Fund -Round 5 Contracts
4.2. Royalty-Round 5 Contracts
4.3. Cost Recovery - Round 5 Contracts
4.3.1. Cost Recovery Limit
4.3.2. Recoverable Costs
4.4. Remuneration - Round 5 Contracts
4.5. Service Fees - Round 1-4 Contracts
4.5.1. Recoverable Costs
4.5.2. Remuneration Fees
4.6. Supplementary Fees - Rounds 1-4
4.7. Taxation
4.7.1. Corporate Income Tax
4.7.2. Customs Duties
4.7.3. Transfer Tax -Fifth Licensing Round
4.8. State Participation
4.9. Abandonment and Site Restoration
5. Key Fiscal Terms - Production Sharing Agreement
5.1. Bonuses
5.1.1. Signature and Capacity Building Bonus
5.1.2. Production Bonus
5.1.3. Additional Project Funding Support
5.2. Surface Rentals
5.3. Fees and Contributions
5.3.1. Personnel Fees
5.3.2. Training Fees
5.3.3. Environment Fund Contributions
5.3.4. Technological and Logistical Assistance Contributions
5.4. Royalty
5.5. Cost Recovery
5.5.1. Cost Recovery Limit
5.5.2. Recoverable Costs
5.6. Profit Sharing
5.7. Capacity Building Payments
5.8. Direct Taxation
5.8.1. Corporate Income Tax
5.8.2. Deductions and Depreciation
5.9. Customs Duties
5.10. State Participation
6. Regulation and Licensing
6.1. Legal Framework
6.1.1. Governing Laws
6.1.2. Contract Type
6.1.3. Title to Hydrocarbons
6.2. Institutional Framework
6.2.1. Licensing Authority
6.2.2. Regulatory Agency
6.2.3. National Oil Company
6.2.4. Joint Management of Petroleum Operations
6.3. Licensing Process
6.3.1. Federal Licensing Rounds
6.3.2. Bidding in Federal Rounds
6.4. License Terms
6.4.1. Duration
6.4.2. Work Obligations
6.4.3. Gas and Natural Gas Liquids Obligations
6.4.4. Relinquishment
6.5. Local Content
7. Outlook
8. Appendix
8.1. References
8.2. Contact Us
8.3. Disclaimer
1.1 List of Tables
Table 1: Iraq Regime Overview
Table 2: Iraq, Signature Bonuses for First Four Licensing Rounds
Table 3: Iraq, Winning Remuneration Percentage Bids, Fifth Licensing Round (2018)
Table 4: Iraq -Service Contracts, Production Targets and Plateau Periods, First Four Licensing Rounds
Table 5: Iraq - Service Contract, Remuneration Fee, First Four Licensing Rounds
Table 6: Iraq, Service Contract, Remuneration Fee Adjustment Factors - Rounds 1-3
Table 7: Iraq, Service Contract, Remuneration Fee Adjustment Factors - Round 4
Table 8: Iraq, PSA, Signature and Capacity Building Bonuses (US$) - Selected PSAs, 2006-2011
Table 9: Iraq, PSA, Capacity Building Bonuses, Additional Payments, 2007 and 2008
Table 10: Iraq, PSA, Production Bonuses (US$), Standard Rates and Other Variations
Table 11: Iraq, PSA, Production Bonuses (US$), Arbat and Baranan PSAs
Table 12: Iraqi Kurdistan, Production Bonuses (US$), Acquired Government Interest Stakes, Harir, Safen and Garmian PSAs
Table 13: Iraqi, Production Bonuses By Cumulative Production Levels (US$), Wasit Province PSA
Table 14: Iraqi Kurdistan, Training Fees By Project Phase, Selected PSAs
Table 15: Iraqi Kurdistan, Environment Fund Contributions By Project Phase (US$), Selected PSAs
Table 16: Iraqi Kurdistan, Technological and Logistical Assistance Contributions (US$), Selected PSAs
Table 17: Iraq, PSA, Cost Recovery Limits (%), Selected PSAs
Table 18: Iraq, PSA, Contractor’s Share of Profit Oil (%), 2007 Atrush PSA
Table 19: Iraq - PSA, Contractor’s Share of Profit Oil (%) for PSAs Issued from 2006 to 2011
Table 20: Iraq - PSA, Contractor’s Share of Profit Oil (%), 2011 Salah ad Din PSA
Table 21: Iraq - PSA, Contractor’s Share of Profit Oil (%), 2011 Wasit PSA
Table 22: Iraq - PSA, Profit Oil Capacity Building Payments, Selected PSAs
Table 23: Iraq - PSA, Capacity Building Payments, Selected PSAs
Table 24: Iraq - PSA, Capacity Building Payments, Atrush and Sarsang PSAs, 2007
Table 25: Iraq - PSA, Capacity Building Payments, Hawler PSA, 2007
Table 26: Iraq - PSA, Capacity Building Payments, Kurdamir PSA
Table 27: Iraq - PSA, Capacity Building Payments, Safen and Harir PSAs, 2010
Table 28: Iraq - PSA, Capacity Building Payments, Qala Dze, Piramagrun and Taza PSAs, 2011
Table 29: Iraq - PSA, Kurdistan Depreciation Rates (%)
Table 30: References
1.2 List of Figures
Figure 1: Iraq Regime Flow Chart - Service Contract (Fifth Round)
Figure 2: Iraq Regime Flow Chart - Production Sharing Contract
Figure 3: Indicative NPV10/boe, IRR and State Take Comparison, Regional Comparison - 2018
Figure 4: Iraq, Legal Framework
Figure 5: Iraq, Institutional Framework
