Contents List of Abbreviations ......................................................................................................................6 Executive Summary........................................................................................................................8 1. EITI in Iraq .............................................................................................................................. 14 1.1. About the Extractive Industries Transparency Initiative (EITI) ................................... 14 1.2. EITI Implementation in Iraq .................................................................................................. 14 1.3. EITI Governance and leadership in Iraq (Requirement 1.1 – 1.3) ................................ 16 1.4. MSG Governance (Requirement 1.4) .................................................................................. 17 1.5. MSG Workplan (Requirement 1.5) ....................................................................................... 18 2. Legal Framework and Fiscal Regime for the Extractive Industries (Requirement 2.1) . 20 2.1. National Governance Structures ......................................................................................... 20 2.2. Overview of the regulations applicable to extractive industries ................................. 21 2.2.1. Extractive sector regulations in federal Iraq ........................................................................ 21 2.2.2. Overview of the corporate income tax and withholding tax regimes applicable to the oil and gas sector in federal Iraq .............................................................................................. 27 2.2.3. Extractive sector regulations in the Kurdistan Region ............................................................ 29 2.3. State participation in the extractive industries (Requirement 2.6) ............................ 30 2.3.1. MSG definition of State-Owned Enterprises (SOEs) ................................................... 30 2.3.2. The prevailing rules and practices in relation to the financial relationship between the Government and its owned companies .................................................................. 42 2.4. Fiscal Framework .................................................................................................................... 43 2.5. Reforming of the Regulatory and Fiscal Regime in 2016 .............................................. 45 2.6. Procedures for granting licenses (Requirement 2.2) .................................................................. 47 2.7. Registry of Licenses (Requirement 2.3)............................................................................ 55 2.8. Contracts in the extractive industries (Requirement 2.4) ............................................ 60 2.9. Beneficial ownership of material extractive companies (Requirement 2.5) ............. 66 3. Extractive Industries Exploration, Production and Export Activities (Requirement 3) 67 3.1. Oil and Gas Sector in Federal Iraq ....................................................................................... 67 3.1.1. Oil and gas fields in Iraq .................................................................................................... 67 3.1.2. Oil and Gas reserves in Iraq .............................................................................................. 70 3.1.3. Drilling and well workovers carried out by the Iraqi Drilling Company ................... 72 2 3.1.4. Significant exploration work carried out by the Oil Exploration Company (Requirement 3.1) .............................................................................................................................. 73 3.1.5. Crude oil production for year 2016 ................................................................................ 74 3.1.6. Flow of crude oil for national oil companies during the year 2016 ......................... 76 3.1.7. Gas production during 2016 ............................................................................................. 79 3.1.8. Production and supply of petroleum products during 2016 ..................................... 81 3.1.8.1. LPG, Condensate and Dry Gas production by Basra Gas Company during 2016 81 3.1.8.2. Petroleum products supplied by refineries during 2016 ....................................... 81 3.2. Mining and Minerals Sector in fedral Iraq .......................................................................... 85 3.2.1. Mining deposits in Iraq ....................................................................................................... 85 3.2.2. Exploration activities in 2016 .......................................................................................... 88 3.2.3. Minerals Production during the year 2016 ................................................................... 88 3.2.4. Targeted production capacities ....................................................................................... 89 3.3. KRG Oil, Gas and Mineral Production ................................................................................. 90 3.3.1. KRG crude oil production for year 2016 ....................................................................... 90 3.3.2. KRG natural gas production for year 2016 ................................................................... 92 3.3.3. KRG Mineral production for year 2016 .......................................................................... 92 3.4. Extractive Industries Export data (Requirement 3.3) .................................................... 93 3.4.1. Crude oil exports process ................................................................................................. 93 3.4.2. Extracted quantities of crude oil for export by SOMO ............................................... 96 3.4.3. Crude oil exports during 2016 ......................................................................................... 99 3.4.4. Exported crude oil quantities per region ..................................................................... 101 3.4.5. Exported petroleum products - Naptha ....................................................................... 102 3.4.6. Exported petroleum products - LPG and Condensate .............................................. 103 3.4.7. Mining and Minerals Sector in federal Iraq .......................................................................... 104 3.5. KRG Exports ........................................................................................................................... 105 4. Revenue Collection ............................................................................................................. 106 4.1. Materiality (Requirement 4.1) ........................................................................................... 106 4.2. Revenue streams .................................................................................................................. 106 4.3. Materiality of revenue streams ......................................................................................... 108 4.4. Reporting Companies ........................................................................................................... 110 4.4.1. International Oil Companies ........................................................................................... 110 4.4.2. Government entities ......................................................................................................... 111 3 4.4.3. State-owned entities ........................................................................................................ 111 4.5. Detailed Reconciliations ...................................................................................................... 112 4.5.1. Crude oil export revenue for year 2016 ...................................................................... 113 4.5.1.1. Cost recovery reconciliation ...................................................................................... 121 4.5.1.2. Remuneration fees reconciliation ............................................................................. 123 4.5.2. Corporate Income Tax (CIT) ........................................................................................... 125 4.5.3. Treasury share of SOE net profits ................................................................................ 127 4.5.4. State partner shares in field remuneration fees ....................................................... 129 4.5.5. Internal Service payments (Requirement 4.5) ........................................................... 130 4.6. Subnational direct payments (Requirement 4.6) .......................................................... 131 4.6.1. KRG Revenue ..................................................................................................................... 131 4.7. In-Kind Revenues, barter agreements, and transportation revenues (Requirements 4.2 -4.4) .............................................................................................................................................. 133 4.8. Data Quality and Assurance (Requirement 4.9) ............................................................ 134 4.8.1. Audit and assurance procedures in state-owned entities working in the extractive sector: ............................................................................................................................. 134 4.8.2. Audit