Facebook logoTwitter logo

Iraq has 115 billion barrels of proven oil reserves, the fifth-largest in the world. The economy is highly dependent on oil production, which was estimated at 2.6 million barrels a day in 2011 and accounted for 97 percent of government revenues. The petroleum industry generated 70 percent of gross domestic product in 2010 and is the source of nearly all of Iraq's export income. In July 2012 the semiautonomous region of Kurdistan began exporting crude oil, despite the central government's claim to sole authority over crude exports. This has escalated the conflict between Kurdistan and Baghdad and likely will further delay the finalization of a new oil law drafted in 2007.

Iraq's Performance on the Resource Governance Index

Iraq earned a "weak" score of 47, ranking 29th out of 58 countries. While it performed relatively well on the Safeguards & Quality Controls component, its Enabling Environment score was particularly low.

(out of 58)
(out of 100)
29 Composite Score 47
35 Institutional & Legal Setting 57
Freedom of information law 0
Comprehensive sector legislation N/A
EITI participation 67
Independent licensing process 83
Environmental and social impact assessments required 50
Clarity in revenue collection 100
Comprehensive public sector balance 100
SOC financial reports required 0
Fund rules defined in law N/A
Subnational transfer rules defined in law N/A
24 Reporting Practices 52
Licensing process 83
Contracts 33
Environmental and social impact assessments 50
Exploration data 50
Production volumes 67
Production value 67
Primary sources of revenue 50
Secondary sources of revenue 0
Subsidies 0
Operating company names 100
Comprehensive SOC reports 67
SOC production data 67
SOC revenue data 40
SOC quasi fiscal activities 0
SOC board of directors 0
Fund rules N/A
Comprehensive fund reports N/A
Subnational transfer rules 100
Comprehensive subnational transfer reports 67
Subnational reporting of transfers 100
22 Safeguards & Quality Controls 63
Checks on licensing process 50
Checks on budgetary process 67
Quality of government reports 71
Government disclosure of conflicts of interest 100
Quality of SOC reports 83
SOC reports audited 50
SOC use of international accounting standards 0
SOC disclosure of conflicts of interest 100
Quality of fund reports N/A
Fund reports audited N/A
Government follows fund rules N/A
Checks on fund spending N/A
Fund disclosure of conflicts of interest N/A
Quality of subnational transfer reports 50
Government follows subnational transfer rules N/A
51 Enabling Environment 9
Corruption (TI Corruption Perceptions Index & WGI control of corruption) 5
Open Budget (IBP Index) 5
Accountability & democracy (EIU Democracy Index & WGI voice and accountability) 26
Government effectiveness (WGI) 9
Rule of law (WGI) 2
Satisfactory Weak
Partial Failing
To explore all data and compare
scores, use the RGI Data Tool.

Institutional & Legal Setting (Rank: 35th/58, Score: 57/100) learn more

Iraq's "partial" score of 57 reflects clear revenue collection mechanisms but a lack of effective disclosure requirements.

The Oil Ministry regulates the sector and grants contracts following open bidding rounds. In many cases, however, contract terms are modified through direct negotiations in which the ministry has substantial discretion.

The fiscal regime varies by region. Outside Kurdistan, companies sign service contracts in which they agree to pay the central government a fee per barrel produced. The State Oil Marketing Organization sells the oil and deposits revenues in the national treasury. In Kurdistan, however, production sharing contracts are used and the resulting revenues are not necessarily remitted to the central government.

Iraq requires environmental impact assessments prior to project implementation, which are published by the Environment Ministry. There is no freedom of information act. Iraq has been an Extractive Industries Transparency Initiative (EITI) compliant country since December 2012.

Reporting Practices (Rank: 24th/58, Score: 52/100) learn more

Iraq received a "partial" score of 52, the result of incomplete disclosure on most revenue indicators.

The Oil Ministry publishes some contract information, including the amount of money per barrel that an operating company receives, but does not provide details on how contracts may have changed in post-bidding negotiations. Kurdistan authorities disclose little information about their licensing process; they generally publish the resulting production sharing agreements, but these do not always include signature bonuses and other key provisions.

The Oil Ministry publishes information on reserves, production volumes, prices, exports, companies operating in the country, and production stream values. The Finance Ministry publishes information on prices and monthly reports on the value of oil exports, as does the central bank. Iraq's first EITI report covers 2009 and includes company-by-company production data as well as information included in the Oil Ministry's reports.

Safeguards & Quality Controls (Rank: 22nd/58, Score: 63/100) learn more

Iraq earned a "partial" score of 63, highlighting uneven checks on the licensing process and inadequate audit requirements for state-owned companies.

Parliament receives copies of oil contracts and is responsible for monitoring the activities of the Oil Ministry, but does not appear to play a significant oversight role. There is a similar lack of legislative oversight of Kurdistan's oil industry.

The national audit office and an external independent auditor review oil revenues. Audit reports go to the parliament but are not published. Government officials with a role in the oil sector must disclose potential conflicts of interest.

Enabling Environment (Rank: 51st/58, Score: 9/100) learn more

Iraq's "failing" score of 9 is its lowest on any component, reflecting an especially low ranking for the rule of law.

State-Owned Companies (Rank: 24th/45, Score: 45/100) learn more

North Oil, South Oil, Midland Oil, and Missan Oil function as operational units of the Oil Ministry. They publish information on reserves, production volumes and values, as well as monthly data on exports and prices. Audited financial reports are not available.

Subnational Transfers (Rank: 9th/30, Score: 79/100) learn more

Most revenue transfers from the central government to the provinces are calculated based on population rather than regional oil production, although there is a plan to expand the "petro-dollar" program currently implemented in Kirkuk, under which oil-producing provinces would receive $1 per barrel. The central government publishes some information on transfers in annual budget documents, as do provincial councils and the regional government of Kurdistan.

View full questionnaire for IraqDownload questionnaire for Iraq