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Towards a Policy Framework for Iraq's Petroleum Industry and An Towards a Policy Framework for Iraq’s Petroleum Industry and an Integrated Federal Energy Strategy Submitted by Luay Jawad al-Khatteeb To the University of Exeter As a thesis for the degree of Doctor of Philosophy in Middle East Politics In January 2017 The thesis is available for Library use on the understanding that it is copyright material and that no quotation from the thesis may be published without proper acknowledgment. I certify that all material in this thesis which is not my own work has been identified and that no material has previously been submitted and approved for the award of a degree by this or any other University. Signature ......................................................... i Abstract: The “Policy Framework for Iraq’s Petroleum Industry” is a logical structure that establishes the rules to guide decisions and manage processes to achieve economically efficient outcomes within the energy sector. It divides policy applications between regulatory and regulated practices, and defines the governance of the public sector across the petroleum industry and relevant energy portfolios. In many “Rentier States” where countries depend on a single source of income such as oil revenues, overlapping powers of authority within the public sector between policy makers and operators has led to significant conflicts of interest that have resulted in the mismanagement of resources and revenues, corruption, failed strategies and the ultimate failure of the system. Some countries have succeeded in identifying areas for progressive reform, whilst others failed due to various reasons discussed in this thesis. Iraq fits into the category of a country that has failed to implement reform and has become a classic case of a rentier state. The primary aim of this research is to produce a policy framework applicable to the local settings of Iraq’s petroleum industry, together with an implementation strategy that helps the country in its transition from legacy practices to sustainable policies compatible with the federal constitution of 2005. Such a framework would observe the legislative applications that appeared in the aftermath of establishing a federal regime. The framework will help to rationalise the decisions and processes that sustain the governance and business practices across the energy value chain of Iraq. The development of a policy framework exemplified by the final setting of the Federal Energy Council (FEC) proposed in this thesis has to take into account the existing legal framework, the legacy of previous policies and the governance arrangements of developing policy under a new federal regime. A review of federal models of major resource holders that may share similar attributes to Iraq is subsequently necessary to identify the appropriate fiscal regime which fits Iraq’s legal system. Conflicts of interest and how they have been reduced or eliminated in case study countries, must be identified to instruct the final proposed framework. This research also examines key factors that influence the petroleum sector of a federalized major resource holder. Furthermore, qualitative in-depth case studies have been conducted to investigate the research problem. This research is complemented by numerous interviews that took place with high profile executives, policy makers and senior officials, as well as a review of data relevant to Iraq from an array of historical literature. The findings of this thesis will comprise a proposed “policy framework for Iraq’s petroleum industry,” exemplified by the FEC that the federal government of Iraq needs to adopt to transition energy institutions from the legacy of centralised rule to a modern and efficient petroleum industry in a democratic setting. ii Contents: Chapter 1: Introduction and Methodology ..................................................................... 1 1.1 The Research Problem ...................................................................................... 13 1.2 Research Questions .......................................................................................... 19 1.3 Research Aims and Objectives .......................................................................... 22 1.4 Research Approach and Methodology ............................................................... 24 1.5 Limitations of the Study ..................................................................................... 26 1.6 Structure of Thesis ............................................................................................ 27 1.7 Research Design ............................................................................................... 28 1.8 Historical Research ........................................................................................... 29 1.9 Quantitative Approach ....................................................................................... 30 1.10 Qualitative Approach ....................................................................................... 32 1.11 Case Study Approach ...................................................................................... 33 1.12 Interviews ........................................................................................................ 36 1.13 Case Studies ................................................................................................... 37 1.14 Data Collection Method ................................................................................... 37 1.15 Methodology Structure .................................................................................... 38 1.16 The Conceptual Model .................................................................................... 40 Chapter 2: Definitions ................................................................................................. 42 2.1 Public Policy ...................................................................................................... 42 2.2 Federalism ........................................................................................................ 48 2.3 Policy Framework .............................................................................................. 54 2.4 Petroleum Policy ............................................................................................... 57 2.5 The Role of Regulators ...................................................................................... 58 2.6 Regulated Bodies .............................................................................................. 59 2.7 Petroleum Policy Making ................................................................................... 61 2.8 The Resource Curse ......................................................................................... 65 2.9 Petroleum Fiscal Regimes ................................................................................. 67 2.10 Production Sharing Agreements ...................................................................... 67 2.11 Production Service Contracts .......................................................................... 68 2.12 Joint Venture ................................................................................................... 69 2.13 Concession Agreements ................................................................................. 69 2.14 Government Take ............................................................................................ 70 2.15 Booking Barrels ............................................................................................... 71 2.16 Energy Value Chain......................................................................................... 72 Chapter 3: Literature Review on the Iraqi Petroleum Industry ..................................... 73 Chapter 4: International Case Studies and Influencing Factors ................................. 110 iii 4.1 Political Stability .............................................................................................. 115 4.1.1 Nigeria ...................................................................................................... 115 4.1.2 Russia ....................................................................................................... 125 4.1.3 Canada ..................................................................................................... 129 4.1.4 UAE .......................................................................................................... 136 4.1.5 Political stability: Implications for Iraq ........................................................ 138 4.2 Financial Stability ............................................................................................ 139 4.2.1 Russia ....................................................................................................... 140 4.2.2 Canada ..................................................................................................... 144 4.2.3 Nigeria ...................................................................................................... 147 4.2.4 UAE .......................................................................................................... 148 4.2.5 Financial stability: Implications for Iraq ...................................................... 148 4.3 Legal framework .............................................................................................. 149 4.3.1 Nigeria .....................................................................................................
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