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Public Disclosure Authorized
Executive Brief of Iraq EITI Concept Note
72809
Government of Iraq
Concept Note for Proposed Approach to EITI Implementation in Iraq (IEITI)
EXECUTIVE SUMMARY

EITI is priority for Government of Iraq at the highest level - and will benefit Iraq’s intent
to manage Iraq’s resources and revenues transparently for the benefit for all Iraqis

The EITI Criteria will need to be tailored for Iraq’s circumstances. This is because Iraq’s
sector structure is such that the Government is the sole operator (where, with minor
exceptions of certain service contracts, there are no operating companies as such - and
hence no “tax/other payments and revenues” to reconcile as elsewhere).

In particular the EITI matching of payments and revenues will be undertaken at the level of
the export revenues itself, i.e payments to Iraq by international buyers for Iraqi oil exports.

These exports payments have, since 2004, been deposited externally into the Development
Fund for Iraq (DFI) and audited by an international audit firm under the oversight of an
International Advisory Monitoring Board (IAMB) comprising representatives of the UN,
IMF, World Bank and Iraqi experts.

The EITI will build on this existing DFI (IAMB) audits over export revenues. See Annex.

Such a tailored approach for EITI, building on DFI audit process, would involve :
1. achieving full cooperation from all Iraq government agencies involved in oil sector
revenues including Min. of Oil, Min. of Finance/DFI Central Bank etc.
2. creating an EITI multi-stakeholder structure (Iraqi Stakeholder Council) includes a
wide range of stakeholders such as civil society broadly defined - and international oil
buyers as well as IOCs as and when they enter Iraqi oil sector in the future.
3. decisions on how to treat regional dimensions in the multi-stakeholder process.

This tailored approach will be shared ahead of time with the International EITI
Secretariat to ensure that that the approach conforms to EITI Criteria and Principles.

Broad next steps for EITI will include:
1. Sign-up phase – establishing the Iraq EITI Secretariat in IG office in Ministry of Oil,
preparing EITI work plan and seeking EITI “candidate” status.
2. Preparation - ensuring needed decrees for EITI; creating EITI multi-stakeholder
group and designing scope of EITI Report – building on DFI audit (see Annex)
3. Disclosure and Dissemination - publishing the EITI Report widely
4. Undergo validation – external validation of EITI for “EITI compliant” status
Executive Brief
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Executive Brief of Iraq EITI Concept Note

Implementation costs could be US$2.5 million to US$2.5 million over two years (other
than the cost of Ministry of Oil staff and their EITI-related operating costs).

Funding sources to support Iraqi EITI process from national and international sources, will
include World Bank Multi-Donor Trust Fund (MDTF) and other donors (including,
potentially international civil society for civil society support). WB grant procedures will
involve Iraq EITI Secretariat getting familiar with managing WB grant funds, including
procurement and financial management in line with WB policies and guidelines.

Finally, in the future scope of EITI, to consider an expanded scope of EITI for areas such
as reconciling to production volumes, incorporating domestic use of oil, barter transaction,
early bonus payments from IOCs for service contracts etc.
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Executive Brief of Iraq EITI Concept Note
Annex
(page 1 of 2)
Matrix comparing existing DFI audit process in Iraq with EITI Criteria
EITI Criteria
#1 - Regular publication of payments
by companies and revenue by
government to a wide audience
Extent met by DFI Audit Report
DFI audits of export revenues are
published on IAMB website BUT:
- export proceeds (payments by oil
buyers) are included in DFI audit
report - but as a single
consolidated amount for exports
-- the export revenues proceeds
data audited in DFI is backed by
metering of export volumes and
shipment volumes verification by
an external agenda (SGS) at Basra
terminal
#2. – Payments and revenues be
subject to credible audits
#3 - Payments and revenues
reconciled by an independent
Administrator
#4 –Include all companies in EITI
including NOCs
#5 – Civil Society is actively
engaged
#6 - A costed EITI work plan and
timetable to be done with public/
stakeholder inputs – and publicized
Executive Brief
- The DFI data is not widely
publicized (but is available on
IAMB web site)
Fully - all DFI export revenues are
fully audited (cash basis) by an
international audit firm (under
IAMB oversight)
Steps to add for EITI purposes
- Government is exclusive
operator in oil/gas, end-to-end
- Thus building EITI onto the
DFI audit would cover almost all
oil revenues - i.e .exports
- In addition matching principle
of EITI would be handled at the
level of gross export proceeds
from oil exports buyers (a higher
standard than just tax and other
payments)
- But if future EITI also covered
domestic oil use, then EITI
coverage would be even higher
- Building on DFI audit,separate
EITI Report TO BE done
- EITI buyer payments to be
reconciled / audited in the EITI
process (DFI may have done this
or not)
NA – none in DFI
(As #2 above)
- Export proceeds audited via DFI
audits – i.e. all international buyers
(As #2 above)
- Iraqi NOC are strictly oil
extraction companies and all
marketing is the responsibility of
Iraq Oil Marketing Comp any –
SOMO. But CBPC has production
service contract and other IOCs
may have role soon on same basis
N/A
CSO participation to be added
N/A
Work Plan in process
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Executive Brief of Iraq EITI Concept Note
Annex
(page 2 of 2)
The base EITI option would be to cover cash export revenues as covered by the DFI audits, but to show this in a
widely publicized EITI Report (together with any other financial and operational disclosures about oil and gas
production that the Iraqi Stakeholder Council may wish to add, for greater transparency).
Looking ahead, an option in the future for Government and Iraqi Stakeholder Council to consider to achieve
strengthened transparency is to consider an expanded scope of EITI, which would bring in additional disclosures in
the EITI Report (over and above the export revenues), for example disclosing reconciled information on one or more
of the following (subject to usual cost-benefit analyses and the possibility of delay to the EITI process from such
expansion):
1.
2.
3.
domestic use of oil and gas – i.e. petroleum products sale and oil and gas delivered to industry, refineries and
the power plants.
value of non-cash or barter export transactions of oil and gas products.
Any payments (e.g. fees and bonuses) made by international oil companies under the emerging opening of Iraq
oil sector to international operators for service contracts.
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