The Kurdish regional government (KRG) issued on 8 August

a draft hydrocarbons law to increase control within the autonomous Kurdish areas and the province of Kirkuk.

The move came amid plans by the central government to pass a nationwide petroleum investment law by the end of the year. A final draft version of the Kurdistan law will be submitted to the regional parliament in September for approval.

The draft is divided into

two acts. The first aims to establish a petroleum act for the Kurdistan region. It tackles constitutional and federal affairs and outlines a framework for a national

petroleum law. The second aims

to create a model production sharing contract for the region.

The KRG’s draft proposal raises more questions than answers. It reiterates the KRG’s right to control oil activity in the region and production in fields in operation prior to 22 August 2005. Significantly, it also claims the disputed territory of Kirkuk. In addition, the new law will see the creation of four Kurdish entities: an exploration and production authority; a downstream infrastructure authority; a marketing authority; and a revenue authority.

The KRG’s Natural Resources Ministry has also submitted a separate draft petroleum law for the country to the central government, which is attempting to assert its authority over the entire oil and gas sector.

With relative security in the Kurdish areas, the KRG has been keen to press ahead with the development of the hydrocarbons sector. It is hoping to push through its national petroleum law proposals, particularly as the central government is now expected to delay its hydrocarbons law until 2007.

Over the last year, the KRG has signed a number of exploration and production sharing agreements with international firms without gaining approval from the central government, taking advantage of vague areas in the December 2005 constitution.