Iraq

The Secretariat’s assessment is that Requirement 1.5 is mostly met, with significant improvements since the previous Validation, particularly given the consultative process in developing the 2024-2025 work plan. The MSG’s ‘Outcomes and impact’ template and the MSG’s self-assessment considers the objective of Requirement 1.5 is fully met. However, the International Secretariat considers that the work plan could benefit from closer alignment with national priorities and include costing and resource allocation for many more work plan activities, given important funding constraints and the need to take decisions based on available funding. The consultative process for developing the latest EITI work plan involved broader constituencies through levering an ad hoc ‘supporting group’. This process represents a significant progress compared to the work planning processes assessed in the previous Validation. The MSG has consistently had a current EITI work plan in place throughout the period since the previous Validation, aside from in 2023. The MSG approved its 2024 work plan in December 2023, and an updated 2024-2025 work plan in April 2024 and again in October. The objectives of the 2024-2025 work plan are somewhat aligned with national priorities and the EITI principles. A total of five of the 11 work plan objectives are broadly linked to national priorities, while six objectives are more narrowly linked to meeting the EITI Requirements. Yet even under those objectives more narrowly linked to the EITI process, there are several activities that aim to expand the scope of EITI implementation to address national priority areas such as the environmental and social impacts of the extractive industries and artisanal and small-scale mining. For the first time since the last Validation, the MSG adopted a more consultative approach in developing the 2024-2025 work plan. Previous work plans covering the period 2021, 2022 and 2024 had been initially drafted by the Iraq EITI Secretariat with subsequent review by the MSG, without canvassing their broader constituencies. Following feedback from the International Secretariat on the 2024 work plan, the MSG established an ad hoc working group (the ‘Supporting Group’ – see Requirement 1.4) of both certain MSG members and members of the broader constituencies to update the work plan based on consultations with their broader constituencies. Coordinating through a WhatsApp group of around 30 members, the ‘Supporting Group’ worked from November 2023 to March 2024 to update the objectives and activities of the 2024-2025 work plan based on input from their broader constituencies. The 2024 and 2024-2025 work plans set out distinct activities under each objective, with some indication of the timeframe for each activity, but sets out costs, resource implications and funding sources for only very few activities. It is unclear how each activity is expected to build towards the stated objective, particularly for objectives linked to national priorities. Most work plan activities identify the MSG and national secretariat as the responsible parties for implementation, implying that EITI activities are not integrated in other government reform programmes. The work plan includes a column on ‘targeted entities’ but it is unclear whether this refers to the source of funding or the entity responsible for implementation. The work plan includes activities related to overcoming barriers to implementation, such as in contract transparency, and an entire objective is devoted to follow-up on EITI recommendations, albeit only with general activities. While many activities under the first seven objectives narrowly related to EITI implementation appear more procedural than strategic, some of the activities under the broader objectives 7-9 appear more strategically linked to curbing corruption, domestic resource mobilisation and navigating the energy transition. The work plan includes an entire objective on systematic disclosures and several relatively general activities related to advancing contract transparency. While most technical aspects of Requirement 1.5 have been met, the lack of clear responsibilities for each activity should be addressed and the link between each activity and progress towards the stated objective could be significantly strengthened. In monitoring and evaluating progress towards the work plan, the MSG could address the linkage between the expected outcomes of activities leading to the stated objectives. Requirement 1.5 of the 2023 Standard links work planning to monitoring and review, where this linkage is strengthened.

The Secretariat’s assessment is that Requirement 7.1 is partly met as in the previous Validation. The MSG’s ‘Outcomes and impact’ template considers the objective of enabling evidence-based public debate is fully met. However, the International Secretariat considers the objective as not yet being entirely fulfilled. Iraq EITI has undertaken some efforts to disseminate its reports and engage with key stakeholders, but challenges remain in ensuring meaningful public debate and outreach. Civil society stakeholders considered that outreach activities did not have impact on public debate. The government noted that the limited dissemination in the past three years was due to insufficient funding and the COVID-19 pandemic. During the period under review, Iraq EITI conducted outreach activities, including workshops and seminars targeting government officials, industry representatives, and civil society representatives. These included workshops held in various governorates in 2022 and a campaign to distribute the most recent EITI Report to universities. It was however observed by some stakeholders that these efforts could be more consistent and inclusive of journalists and broader civil society groups. The COVID-19 pandemic and lack of government in 2021-22 provide some context for the slow-down in dissemination in 2020-21. Iraq EITI and SOMO held an internal workshop for stakeholders including MSG members and secretariat staff in August 2024 to review export mechanisms, global market requirements, and key standards for pricing crude oil exports and petroleum product imports. Stakeholder consultations indicated that a launch event is planned involving the broader constituencies and partners for the 2022 EITI Report. Iraq EITI’s 2023 annual progress report briefly describes five workshops and seminars held in 2022 in Maysan City in Amara Governorate (24 September 2022), in Al-Nadiya in Thi Qar Governorate (18 June 2022), in Kirkuk in Kirkuk Governorate (25 May 2022), in Kut in Wasit Governorate (8 May 2022) and in Al-Mutayha city in Al-Baddah Governorate (22 April 2022). These workshops and seminars were targeted to central and local government officials, relevant NOCs and civil society and focused on the alignment of Iraq EITI with national priorities and environmental impact management in the oil and gas sector. Iraq EITI’s 2023 annual progress report also describes an MSG workshop held in March 2024 in Istanbul, Turkey, focusing on beneficial ownership transparency, although this appears more of an internal MSG working meeting rather than a form of outreach or dissemination. During consultations, civil society noted that the lack of funding for civil society outreach activities severely limited impact on public debate. Given the limited disclosures on subnational transfers (see assessment of Requirement 5.2) in the most recent report, outreach on topic of particular interest could not be continued (as previously done). Iraq EITI developed summaries of EITI Reports and brochures about the extractive industries. However, the summaries are not available on the EITI website and the breadth of their dissemination remains unclear. There are opportunities to engage a broader audience beyond the MSG. The EITI Reports are published on the Iraq EITI website, and advertised on social media.

The Secretariat’s assessment is that Requirement 7.2 is fully met. The MSG’s ‘Outcomes and impact’ template considers the objective of Requirement 7.2 is fully met. The International Secretariat’s view agrees with the MSG’s self-assessment in considering the objective fully fulfilled, given Iraq’s progress in formalising an open data policy and through the publication of open data sets alongside the EITI reports. Iraq EITI still maintains the same Open Data Policy agreed in December 2016 and reviewed in the previous Validations. The policy covers the terms for release, use and reuse of Iraq EITI data. Stakeholder consultations presented that existing discussion within the MSG regarding improved clarity on which entities are required to disclose data, noting agreement that the current open data policy needs certain improvements. The Iraq EITI website publishes the annexes to the 2021 EITI Report in open format on the same webpage, covering a large part of tables in the EITI Report. The MSG has prepared summary data files, which contain the key EITI financial disclosures in open format, for each year covered by its EITI Reports including 2018, 2019,2020 and 2021. Iraq EITI could reinforce its efforts to consistently publish the tables of all its EITI reports alongside the PDF report on its website. To strengthen implementation, the ongoing efforts on systematic disclosures could include guidance on publishing the requested information in an open format.

The Secretariat’s assessment is that Requirement 7.3 is partly met, which is a regression since the previous Validation. The MSG’s ‘Outcomes and impact’ template did not assess progress in meeting this objective, which is to ensure that EITI implementation is a continuous learning process that contributes to policy-making, based on the MSG regularly considering findings and recommendations from the EITI process and acting on those recommendations it deems are priorities. The International Secretariat considers the objective as far from being fulfilled, given the lack of a consistent mechanism for following up on recommendations from EITI reporting and Validation. The MSG’s mechanism for following up on EITI recommendations set up right before the previous Validation in 2019 does not seem to have been sustained, particularly with the transition of EITI Champions with the change in Minister of Oil in May 2020. The 2021 EITI Report provides a status update as of December 2023 on follow-up on recommendations from the last Validation and from the previous (2019-2020) EITI Report. A total of 11 of the 12 recommendations from the 2019-2020 EITI Report are marked as ‘no progress’, with one marked as ‘partially implemented’. The 2023 annual progress report provides a status update as of March 2024 on the status of follow-up on recommendations of past EITI Reports, which appear to be those from the 2021 EITI Report, with all of the recommendations seemingly still in progress. No other documentation of the MSG’s follow-up on EITI recommendations was made available for review in this Validation. While most MSG meetings are focused on technical compliance and operational challenges, the MSG briefly mentions follow-up on recommendations from the previous Validation in the April 2024 MSG meeting, acknowledging that failing to address these issues could result in suspension. Further, the MSG discussed follow up on recommendations in the MSG meeting in November 2023.

The Secretariat’s assessment is that Requirement 7.4 is mostly met, as in the previous Validation. The MSG’s ‘Outcomes and impact’ template considers the objective of Requirement 7.4 is fully met. The objective of the Requirement is ensuring regular public monitoring and evaluation of implementation, including evaluation of whether the EITI is delivering on its objectives, with a view to ensuring the EITI’s own public accountability. However, the International Secretariat considers the objective as not yet fulfilled, given the long interruption in the MSG’s review of outcomes and impact of the EITI process. The International Secretariat recognises the recent publication of the 2023 progress report as good progress in reestablishing the practice of regular review on outcomes and impact. Iraq does not appear to have published an annual review of outcomes and impact between the 2018 annual progress report published in January 2019 and the 2023 annual progress report published in March 2024, both times several months ahead of an upcoming Validation (available on the Arabic webpage for progress reports of the Iraq EITI website). There does not appear to be proper archiving in place in the Iraq EITI website management, given that progress reports are available on the Arabic version of the site for 2018 and 2023, while older progress reports covering 2010, 2014 and 2016 are available on the English version of the Iraq EITI website. The 2023 progress report provides an overview of the level of implementation of work plan activities, progress towards meeting the different EITI Requirements, an update on the status of follow-up on past EITI recommendations, brief descriptions of the substance of MSG meetings and brief overviews of seminars and workshops organised by Iraq EITI. The annual progress report for 2023 notes progress in increasing transparency, especially with the introduction of workshops and consultations that brought together MSG members, civil society, and extractive companies. Outcomes include improvements in data disclosure, though challenges persist, particularly with delays in reporting by companies and government entities. The 2023 APR provides a description of the EITI process's outcomes, primarily focusing on activities like beneficial ownership reforms and stakeholder consultations but lacks substantial evidence of broader impact beyond anecdotal examples. While consultations with various constituencies were conducted, challenges with data availability and inconsistent participation from key stakeholders limited the ability to document concrete outcomes. The report highlights the need for improved mechanisms to measure the impact of EITI activities and ensure more comprehensive data disclosure. The Iraq EITI Secretariat led preparations of the annual progress reports, preparing a draft that was then approved by the MSG, without consultations with the broader constituencies. MSG meeting minute review finds no discussion about the outcomes and impact of the EITI process, as these remain rather operational, procedural and compliance related. Stakeholders across constituencies expressed that the overall impact of the Iraq EITI is limited by various challenges, including inconsistent government engagement and a lack of robust follow-up on the initiative's findings and recommendations. While there have been improvements in transparency related to the oil and gas sectors, the broader goals of enhancing governance and reducing corruption have not been fully realised. Civil society stakeholders have called for better coordination, increased capacity-building efforts, and more proactive use of EITI data to drive policy changes and public accountability.

The Secretariat’s assessment is that Requirement 1.1 is mostly met, which is a regression since the previous Validation. The MSG’s ‘Stakeholder engagement’ template considers the objective is fully met, citing the Minister of Oil’s leadership and full engagement of government in the MSG and implementation, as well as its support to other constituencies. Stakeholders from civil society and government consulted considered that the objective was mostly met, given that the government fell short of financially supporting EITI implementation, shortcomings in reporting, dissemination and outreach. The International Secretariat considers the objective as mostly fulfilled, gven the weaknesses in senior government leadership of the process and gaps in the operational engagement of government entities relevant to the EITI process. However, these weaknesses were weighed against continued government engagement in the EITI process despite challenging political and security conditions, the. There has been a regression in senior government leadership of the EITI process since the previous Validation due mainly to broader political context. The year-long period until October 2022 when Iraq had no government in place following the October 2021 elections posed particular challenges for the EITI process, both in terms of the senior government lead on the EITI and broader issues such as the lack of a federal government budget for a year. There were no documented examples of senior government officials’ public statements of support for the EITI process from October 2019 to 2023, although Deputy Prime Minister and Minister of Oil Hayan Abdul-Ghani Al-Swad reiterated the government’s commitment to the EITI when he chaired his first MSG meeting in November 2023 and in May 2024. Deputy Prime Minister and Minister of Oil had previously reiterated the government’s commitment to the EITI in a (unpublished) letter to Executive Director Mark Robinson in June 2023. The ‘Stakeholder engagement’ template highlighted the Minister’s letter to IOCs to request their EITI reporting as evidence for government commitment. Consistency in the government official leading the EITI process has been affected by broader political turbulence, with no government and thus no EITI champion between October 2021 and October 2022. The EITI champion during the previous Validation, Deputy Prime Minister and Minister of Oil Thamir Al-Ghadhban, was replaced in June 2020 by Minister of Oil Ihsan Abdul-Jabbar Ismail, who served until the October 2021 elections. Deputy Prime Minister and Minister of Oil Hayan Abdul-Ghani Al-Swad was appointed in October 2022 and continues to serve as de jure EITI champion. National Coordinator Alaa Mohie El-Deen’s access to the EITI Champion appears to have slightly improved since the previous Ministers of Oil, although no EITI Champion has been actively engaged in EITI implementation since 2019. At the operational level, relevant Federal Government ministries and agencies remain appointed on the Iraq EITI MSG. It is noteworthy that the MSG defines NOCs and other midstream SOEs as part of industry, although SOEs are considered part of government in this assessment given the integration of the NOCs with the Ministry of Oil. It was not possible for the International Secretariat to assess government’s attendance and engagement to MSG meetings given that the national secretariat did not provide the attendance records for any meetings. Stakeholder consultations indicated that weaknesses in record-keeping were due to the national secretariat’s under-staffing until late 2023. It was noted however that the Champion only once briefly chaired the MSG, and otherwise delegated chairing of MSG meetings to the National Coordinator. Key federal government entities have continued to provide data required for the EITI process, albeit with gaps in the comprehensiveness and timeliness of reporting. The 2021 EITI Report is transparent about the delays and challenges in the submission of reporting templates by government entities. There are gaps in reporting for some ministries and material including Basra Oil Company, a significant concern given the materiality of the SOE’s oil and gas production. There is no documented evidence of government follow-up with these non-reporting entities. These weaknesses were also reflected in the varying degrees of government engagement in the consultations for this Validation. While some stakeholders noted that there was very little awareness on EITI reporting in government which rendered data collection a strenuous task, government consultations noted that this was partly due to staff turnover and the generally high level of data confidentiality within government, rather than a lack of engagement. The review of follow-up on past EITI recommendations in Iraq’s EITI Reports indicates few examples where the government has taken action to help overcome legal or regulatory barriers to EITI implementation. For instance in September 2023, Deputy Prime Minister and Minister of Oil Hayan Abdul Ghani wrote to NOCs under the Ministry of Oil and the IOC Forum to direct NOCs and IOCs to adhere to the government’s policy on contract transparency and to publish the financial statements of all oil and gas SOEs, although these directives have only partly been implemented with the publication of SOEs’ financial statements. While the EITI Champion appears to have taken steps to overcome barriers to EITI implementation, these have not yet been sufficiently implemented in practice. There is little evidence of government use of EITI data or active contribution to EITI dissemination and outreach since the previous Validation. Dissemination activities have been limited (Requirement 7.1). The ‘Stakeholder engagement’ template indicates that SOMO has been very active in explaining its trading activities to civil society, such as in seminars held in November 2022 and February 2024. With regards to the provision of technical and financial resources for EITI implementation, the government has continued to fund publication of the EITI Report, staff salaries (through the NOCs’ secondment of staff) and in-kind office costs since the previous Validation. However, Iraq EITI’s 2023 annual progress report highlights the financial constraints facing Iraq EITI. Government officials consulted noted that the state was the sole source of EITI funding, yet the stakeholder engagement template confirmed the government’s last financial contribution in 2019. Consultations indicated that a new directive had come into force banning SOEs from funding independent bodies like the EITI, which effectively halted previous SOE financial contributions to the EITI, including the 2021 EITI Report. Government explained that Iraq’s EITI had been renamed to ‘Natural Resources Transparency Commission’ and awaited integration into the Ministry of Oil as an independent department to allow for government funding to be allocated to the EITI (the national EITI website still displays the former name and logo of the EITI). Iraq EITI’s 2023 annual progress report is transparent about the national secretariat’s capacity constraints however, noting that its 10 secretariat staff in 2023 represented only 65% of the estimated 20 staff required for the national secretariat to fulfil its functions. During consultation, government noted that all staff, which were mainly recruited at the end of 2023, were seconded from state-owned companies. Prior to November 2023 the staff consisted of the National Coordinator and two administrative staff. Outreach of the Iraqi Central Government to the Kurdistan Region (KRG) have been limited in the period under review. The assessment of Iraq’s efforts on outreach are noted in Requirement 4.6.

The Secretariat’s assessment is that Requirement 1.2 is mostly met, as in the previous Validation. The MSG’s ‘Stakeholder engagement’ template did not provide a self-assessment to the fulfilment of the objective that extractive companies are fully, actively and effectively engaged in the EITI, both in terms of disclosures and participation in the work of the multi-stakeholder group, and that the government ensures an enabling environment for this. Government stakeholders consulted considered that the objective was mostly met, given that only one of two industry MSG members engaged in the process. Supporting companies considered the requirement fully met, given the consultation mechanism with the wider constituency through the IOC forum. They noted that language constraints, MSG meetings and documents being held in Arabic, were a barrier for company representatives from IOCs to effectively participate. The International Secretariat’s considers that the objective is mostly met, given that the unequal participation from one of the two industry MSG members and weaknesses in material company reporting should be weighed against the high number of companies (including oil buyers) included in the scope of EITI reporting every year, and given that all major companies report as there is no materiality threshold. Other constituencies have noted that the existing engagement of the company representative is sufficiently strong. The period since the previous Validation has witnessed several evolutions in the structure of Iraq’s oil and gas industry, with the exit of large historical investors in the oil and gas sector (e.g. Shell and ExxonMobil) and the award of new oil and gas blocks to new Chinese investors. Since joining the Belt and Road Initiative in 2019, Iraq has had an oil-backed loan with Sinosure, with oil lifted by Shenhua and Sinochem. Meanwhile in 2021, TotalEnergies, an EITI supporting company, concluded a USD 27bn agreement with the government covering oil and gas and renewable energy projects. Against this backdrop of changes in the industry’s structure, industry engagement in Iraq’s EITI implementation continues to be driven by one main representative on the MSG, an IOC representative from the IOC forum . Although NOCs consider themselves to represent the industry constituency alongside IOCs, in practice the NOCs’ interests are directly related to those of the Ministry of Oil and are considered under the assessment of government engagement (see Requirement 1.1). As in the periods reviewed in previous EITI Validations, industry representation on the MSG has been uneven, with representation for IOCs operating under service contracts in Iraq. Companies that purchase crude oil from SOMO are required to report to the EITI in line with standard provisions of the SOMO crude oil sales contract. The restructuring of the MSG did not have an immediate effect on the company constituency, given that the same main member continued to be represented. As a follow up on the previous Validation, the constituency appointed a second member (from TotalEnergies) in February 2024. There is no documentation of industry attendance at MSG meetings. Stakeholders from government and companies noted however that the recently appointed company representative had not yet participated in MSG meetings. There is also no evidence of any constituency outreach to companies operating in the Kurdistan region of Iraq (see Requirement 4.6) due to broader challenges engaging in the region. Iraq EITI has continued to include all IOCs operating under service contracts and all crude oil buyers in the scope of EITI reporting, de facto setting a materiality threshold of zero. 17 of the 24 (71%) material IOCs and 34 of 56 (61%) material crude oil buyers submitted EITI reporting templates for 2021. During consultations, the company constituency noted that the scope of reporting requirements had increased with the 2021 report, the reporting template to be significantly more elaborate and time consuming to fill in, which was the main reason for the participation rate. In practice, the industry constituency continued to be coordinated by the IOC Forum. The company representative confirmed that EITI implementation was endorsed and discussed in direct high-level meetings with IOCs and the Minister of Oil. The constituency’s preoccupations about the EITI were transmitted through the IOC representative on the MSG. Industry stakeholders consulted called for the government to formalise the data disclosure requirements of companies, to provide clarity for companies seeking to comply with government rules. There is little evidence of extractive companies’ use of EITI data or active contribution to EITI dissemination and outreach since the previous Validation. In the documentation submitted to the International Secretariat there is no information of companies undertaking dissemination efforts or participating in dissemination efforts. Documentation of presence of EITI supporting companies in Iraq (not considered in the assessment) This assessment includes a stock take of EITI supporting companies’ progress towards the expectations for information, which is not taken into account in the assessment for Validation. The EITI supporting companies operating in Iraq, either as participants in service contracts with Iraqi NOCs or as buyers of crude oil exports are BP (BP Iraq NV, operator of Rumaila), ENI (ENI Iraq B.V., operator of Zubair and ENI Trading & Shipping Spa – Italy, buyer), ExxonMobil (ExxonMobil Iraq Limited, which exited its participation in West Qrna 1 but continues to operate production sharing contracts in the Kurdistan region of Iraq and ExxxonMobil Sales and Supply Corporation which is a buyer), Pertamina (PT Pertamina Irak holds a 20% stake in West Qrna), Repsol (Repsol Trading S.A is a buyer), Shell (buyer) TotalEnergies (Total E & P Iraq participates in the Halfaya and Arttawi service contracts and Totsa Total Oil Trading Sa is a buyer), and QatarEnergy, which since 2023 participates in the Artawi service contract with Total. Of these, BP is a long-standing MSG member and actively participates in MSG meetings and reporting, and coordinates the broader constituency’s engagement in Iraq’s EITI process. The other MSG member is TotalEnergies (since February 2024), who has yet to participate in a MSG meeting. An industry stakeholder consulted explained that there had been constraints on the company’s capacity to engage on the MSG despite its strong support for the EITI, given the increase of reporting obligations that had left the company’s reporting team stretched. Expectation 1: In terms of expression of public support to the EITI, all companies have a statement of support with the exception of QatarEnergy, where the reference to the EITI seems to have been removed from its statement for transparency. Expectation 2: With regards to making comprehensive disclosures in accordance with the EITI Standard, all supporting companies that hold service contracts submitted their data. QatarEnergy does not yet make any payments. On submitting data on oil purchases from SOMO, the buying entities from ENI and ExxonMobil did not submit the data on time for reporting. Expectation 7: With regards on existence of anti-corruption policy and due diligence and use of beneficial ownership data in screening business partners, both BP and Pertamina have a public anti-corruption policy but does not state if uses beneficial ownership data in de-risking its business partnerships. ENI publishes a "Management System Guideline: Anti-Corruption". ExxonMobil publishes an anti-corruption policy. ExxonMobil's anti-corruption framework sets out how the company manages corruption risk through the identification and use of beneficial ownership data. On the buyers, Shell considers its code of conduct which refers to "know your business partner" according to the ABC and AML manual. Pertamina undertakes due diligence of commercial relations. While beneficial owner screening is not mentioned in specific terms, "reasonable" screening is done.

The Secretariat’s assessment is that Requirement 1.3 is mostly met, which is a regression since the previous Validation, where the requirement was fully met. The objective of the requirement is to ensure that civil society is fully, actively and effectively engaged in the EITI process, and that there is an enabling environment for this. The active participation of civil society in the EITI process is key to ensuring that the transparency created by the EITI can lead to greater accountability and improved governance of oil, gas and mineral resources. The provisions related to civil society engagement seek to establish the conditions that permit this to occur over time. The civil society’s submission through the ‘Stakeholder engagement’ template and its two shadow reports submitted for this Validation considers the objective of civil society engagement as partly met, citing the lack of funds allocated to civil society to allow them to conduct activities and workshops and the changes in assigned MSG seats for civil society (see Annexe A). Civil society did not indicate that there was a breach of freedom of expression and considers that their freedom to engage in all aspects of the EITI process was not limited. Civil society stakeholders noted that the freedom of operation was not limited by legal or administrative obstacles but considered the lack of outreach activities organised by the National Secretariat as a hindrance to their freedom to operate and engage with the broader constituency. Government and company stakeholders consulted considered that civil society faced no restrictions in freedom of expression and operation. However, the International Secretariat considers the objective to be mostly met, given that civil society has produced some substantial contributions in 2019-2022 in terms of campaigning on governance issues and providing analysis despite gaps in funding since 2023. There was also evidence of capacity building activities, contribution to EITI Reports and work planning, as well as expansion of membership and gender balance to the broader constituency. Despite a deteriorating broader civic space environment, there are no indications of a pattern of government constraints on civil society engaged in the EITI process, either those directly represented on the MSG or the 62 members of the broader constituency through the PWYP coalition. The review of the trends in broader civic space, including Iraq’s deteriorating score in the international civic space assessments, is provided in Annexe A. There are more civil society actors loosely organised through the anticorruption platform Al-Nahrain Foundation for Transparency and Integrity (NFTI). Civil society engagement strengthened considerably in 2020-2022 with support from a PWYP International grant from the Norwegian Development Agency (NORAD) although support needs to be more sustainable. Through the programme PWYP coalition members organised four workshops in the period of 2020-2022 in Erbil, Sulaymaniyah, Baghdad, and Basra. Coalition members built capacity to analyse the national budget, indicate deviations from the government’s national development plan, and suggest recommendations for more effective methods to develop future national budgets. The Secretariat’s assessment is that there have been no breaches of the EITI protocol: Participation of civil society in the period under review. Yet weaknesses in the broader civil society constituency’s engagement in the EITI process and weaknesses in overall implementation of the EITI in Iraq due to funding constraints have hindered civil society from leveraging the EITI process more effectively to support progress towards their objectives. The full details of the assessment can be found in Annexe A.

The Secretariat’s assessment is that Requirement 1.4 is partly met, which is a regression since the previous Validation. The MSG’s ‘Stakeholder engagement’ template considers the objective of balanced multi-stakeholder oversight of the EITI process to be fully met, citing the progress made in reconstituting the MSG in 2023, giving each constituency the adequate representation. Stakeholders consulted considered that the objective was mostly met, attributing deficiencies to the representation of civil society on the newly formed MSG and the company constituency only partly participating. However, the International Secretariat considers the objective as still far from being fulfilled, given delays in renewals of MSG membership and challenges in the MSG’s internal governance that have weakened multi-stakeholder decision-making and trust between the constituencies represented on Iraq EITI. Iraq EITI devoted a significant amount of time deliberating on the issue of stakeholder representation on the MSG in the period since the previous Validation, which caused significant tensions between civil society and the government on the MSG. Seeking to address corrective actions from the last Validation, Minister of Oil Ihsan Abdul Jabbar Ismail issued Diwani Order no.6 in December 2020 , without prior consultation with the MSG, to restructure the Iraq EITI MSG into an Extractive Industry Transparency Authority (EITA), supported by a permanent Natural Resource Transparency Commission (NRTC). The reform restructured the MSG and reduced all constituencies’ seats to three each, which civil society interpreted as only one self-appointed CSO alongside a trade union and an expert. The PWYP Iraq coalition submitted a complaint to the international EITI Board in early 2021 alleging that this constituted a breach of the EITI protocol: Participation of civil society. The Iraqi Transparency Alliance for. Extractive Industries (ITAEI) organised a campaign to advocate for the repeal of Diwani Order no.6 targeting senior government officials. Following mediation by the EITI International Secretariat, Minister of Oil Ismail issued Ministry of Oil letter no.43 on 20 January 2021 confirming the government’s willingness to postpone civil society elections to the MSG under Diwani Order no.6. In 2023, the Minister of Oil issued a new Diwani Order (no. 23516, published on the Iraq EITI website) that superseded previous Diwani Orders on the EITI and established a 15-member structure for the MSG, including five members from each constituency, including two of civil society’s 5 members from the professional associations of accountant, lawyers and journalists. The composition of the MSG in practice does not appear to be in line with either the 2018 MSG Rules of Procedure, the 2020 Diwani Order 6 or the 2023 Diwani Order 23516. Although the MSG’s 2018 Rules of Procedure set limits of two years renewable once, there has been no renewal of MSG membership either in 2021 or in 2023. Iraq EITI’s 2023 annual progress report lists a total of 15 MSG members, including nine from government, two from IOCs and four from civil society. Updated information on the current composition of the MSG is not publicly available beyond the snapshot of MSG membership at the end of the 2023 annual progress report, as MSG membership information on the Iraq EITI website has not been updated since at least 2018. The government constituency appears to represent the appropriate entities , although with several changes in MSG representation in the 2020-2024 period without any documentation on the timing of changes. The industry constituency is represented by two MSG members, from BP Iraq and TotalEnergies Iraq, both members of the IOC Forum, although only one representative (BP Iraq) appears to attend MSG meetings in practice and did not change since the previous Validation (see Requirement 1.2). There is no publicly available documentation on the procedure for appointing industry members to the MSG or of the way in which the MSG representative from TotalEnergies was appointed in practice. Consultations with the industry constituency noted that the nomination was discussed with members of the IOC forum and that candidates were limited to individuals who spoke Arabic, given that all MSG documents and meetings were held in Arabic. Consultations confirmed constituency support for both MSG members. The civil society constituency is represented by four MSG members. While some of these MSG members appear to have been replaced within their own organisations since the previous Validation, there is no clarity on when these replacements took place. However, there has not been a renewal of civil society representation on the MSG based on clear procedures since the 2018 renewal of MSG members, which was codified in the Diwani Order of March 2019 confirming the MSG’s membership. Consultations with civil society and the stakeholder engagement template explain that there were two reasons to delay the re-election of members: first, the national secretariat had not been able to fulfil its pledge to fund the meeting of the wider constituency to elect its members; and second that they would not want to change the members just before the Validation. With regards to the MSG’s internal governance, the MSG’s 2018 Rules of procedure continue to govern the MSG’s internal governance and procedures, given that subsequent Diwani Orders impacted the structure and representation of constituencies on the MSG rather than how the MSG operates. The MSG’s Rules of procedure have not been updated to reflect new provisions of the 2019 EITI Standard, such as those related to gender and the EITI code of conduct. There appear to have been some deviations from the MSG’s governance rules in practice in the 2020-2024 period, particularly in the frequency and chairing of MSG meetings. While the MSG’s Rules of procedure refer to the MSG holding “periodic” meetings, the frequency of MSG meetings was inconsistent in the period, with three meetings in 2020, one meeting in 2021, one in 2022, five in 2023 and three in the first half of 2024. While MSG meetings are to be chaired by the MSG chair, or the Vice-chair in his absence, review of MSG meeting minutes indicates that Deputy Prime Minister and Minister of Oil Hayan Abdul-Ghani Al-Swad chaired only one MSG meeting in this period, in November 2023, while other meetings were chaired by the Iraq EITI National Coordinator. The updates in Diwani Order 23516 formalised the practice of the Iraq EITI National Coordinator chairing MSG meetings in the absence of the MSG chair. Despite the lack of provisions in the MSG’s Rules of procedure for convening meetings and advance circulation of documents, most stakeholders consulted noted that meetings were convened and relevant documents circulated at least one week ahead of the meeting. Civil society noted however that key documents, such as the draft EITI Report, were not circulated sufficiently in advance to provide substantive feedback. They noted that they received the draft EITI Report only three days prior to the meeting and thus were not able to engage in substantive discussions. The MSG created a permanent Professional Task Force (PTF) in 2022 , including representatives from outside the MSG, to develop recommendations to the MSG on the work plan, strengthening systematic disclosures and beneficial ownership transparency, according to the 2021 EITI Report. The PTF’s Terms of Reference, records of its deliberations and input to the MSG’s work are not available. Rather, the 2021 EITI Report notes the understaffing of the Iraq EITI Secretariat and recommends the establishment of four MSG working groups to strengthen the MSG’s oversight of the EITI. In November 2023, the MSG established a ‘Supporting Group’ to develop the 2024-2025 work plan. While an informal group without a clear ToR, the ‘Supporting Group’ appears to have continued to meet even after the 2024-2025 work plan was approved in April 2024. While the groups were established to strengthen the MSG’s oversight of EITI implementation, the lack of clarity on both the PTF and the ‘Supporting Group’s mandates, composition and activities creates a risk that they could supplant certain MSG responsibilities without clear accountability to the MSG beyond the overlap in some of their membership. The MSG’s working language continued to be Arabic, as has been the case since 2017, and Arabic-language documents have been made available in a timelier manner than English-language documents. The rules for quorum, namely a majority of MSG members present including one member from each constituency, appear to have been adhered to in the period under review. The rules for MSG decision making are set in the Rules of procedure as being by consensus, and where this is not possible, by decision of the MSG chair “in consultation with MSG members”. During consultations, there was consensus that this this had been followed in practice. The MSG meeting minutes have been published on the Iraq EITI website prior to Validation. While draft minutes of the MSG’s meetings have reportedly been prepared during this period, secretariat staff explained that it had not been possible to publish them on the Iraq EITI website given secretariat staff challenges in updating the website. There have been public criticisms from some civil society members about the lack of timely disclosures of Iraq EITI documents and minutes. While the MSG had agreed a policy of per diems for attending MSG meetings of IDQ 500,000 per member per meeting in October 2018, there is no public documentation of whether this was followed in practice in the 2020-2024 period. The publication of yearly expenditure reports, including any per diems paid, is a requirement under the 2023 Standard and will be assessed at the next Validation. With regards to MSG members’ capacities to carry out their duties, there appear to be varying levels of expertise on the extractive industries and the EITI Standard across different MSG members. Successive Iraq EITI work plans have included activities related to capacity building for MSG members. However, the substance of MSG discussions appears more focused on the logistics of procuring an IA and the mechanics of EITI reporting, rather than broader extractive industry governance issues. For instance, there is no evidence that the MSG has discussed any corruption affairs in the oil and gas sector in the period since the last Validation, such as the convictions in 2020 of Unaoil traders for bribery of South Oil Company and Ministry of Oil officials in Iraq following investigation by the UK’s Serious Fraud Office. The industry constituency noted that there was overall less substantive engagement because the EITI process was more focused on procurement and funding issues, but that the national secretariat was not set up with the right competencies to handle procurement. The Iraq EITI Secretariat provides some support to the MSG, although successive EITI Reports and annual progress reports have highlighted technical and financial capacity constraints within the secretariat. The Iraq EITI Secretariat is headed by the National Coordinator and includes ten staff members seconded from the Ministry of Oil and NOCs. There is no publicly accessible organigramme or job descriptions for secretariat staff on the Iraq EITI website. In early 2024, the MSG agreed to commission an audit of Iraq EITI over the period 2019-2023.

The Secretariat’s assessment is that Requirement 3.1 is fully met, as in the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring public access to an overview of the extractive sector in the country and its potential is fully met. Stakeholders consulted considered that the objective was fully met. The International Secretariat’s view agrees with the MSG’s self-assessment in considering the objective as fulfilled, given Iraq’s use of EITI reporting to provide an overview of the mining and petroleum sectors, including an overview of significant exploration activities. Iraq’s 2021 EITI Report provides an overview of the mining and petroleum sectors, including an overview of major projects and significant exploration activities by both SOEs and extractive companies. This includes a list of geological studies in oil and gas completed in 2021. There are however opportunities to further strengthen Iraq’s EITI disclosures on exploration activities. For instance, secondary sources such as a 2022 US Energy Information Administration country analysis update on Iraq highlights the government’s negotiations with Chevron to develop more oil and gas fields in the Dhi Qar province with the aim of tripling oil production from around 220,000 bpd at the end of 2021 to 600,000 bpd. Minister Hayan Abdel Ghani announced in May 2024 plans to increase Iraq’s proven oil reserves to 160bn barrels, up from 145bn currently (equivalent to 96 years of production at current rates) according to international press reports. Annual updates on such negotiations could strengthen the EITI’s role in tracking progress in exploration activities.

The Secretariat's assessment is that Requirement 6.3 is mostly met, a regression since the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring a public understanding of the extractive industries’ contribution to the national economy is fully met. Stakeholders didn’t voice any particular views on the meeting of the objective. The International Secretariat considers the objective fulfilled, but notes that EITI reporting should reference estimates of lost government income due to oil smuggling activities and subsidies to the oil price to provide a fuller picture of the oil sector’s contribution to the economy. Iraq’s 2021 EITI Report discloses the extractive industries’ contribution to gross domestic product (GDP), government revenues and exports, in absolute and relative terms. The report provides information on the extractive industries’ contribution to employment in absolute and relative terms, albeit only disaggregated between SOEs and IOCs, not further broken down by occupation or gender, which is encouraged. An overview of the location of extractive activities is provided in Iraq’s 2021 EITI Report, including maps of mining and petroleum occurrences and activities in Iraq and Iraqi Kurdistan. The 2021 EITI Report does not reference any credible third-party estimates of informal extractive activities, but includes a recommendation to strengthen disclosures related to artisanal and small-scale mining. There are secondary reports indicating extensive informal activities in the oil and gas sector. Those observations are covered under Requirement 3.3.

The Secretariat’s assessment is that Requirement 2.1 is mostly met, a regression since the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring public understanding of all aspects of the regulatory framework for the extractive industries is fully met. Stakeholders consulted considered that the objective was fully met. However, the International Secretariat considers the objective mostly met, given Iraq’s very limited use of EITI disclosures to provide public updates on ongoing and planned reforms. The EITI could do more to provide public access to the fiscal terms in each oil and gas service contract, particularly important in the absence of a national oil and gas law. Iraq’s 2021 EITI Report provides an overview of legal framework, including roles of relevant government entities, even if the lack of an oil and gas law at the federal level and the absence of published service contracts mean that the report’s description is not as specific as if contracts were published. The EITI Report describes the fiscal regime for mining, oil and gas, even if the updated fiscal terms in each contract have not been disclosed to date. The Iraq EITI website has published a list of some fiscal terms for all oil and gas blocks under service contracts, which includes the remuneration fee and production plateaux agreed in the original service contracts, but not the adjustments in subsequent contract amendments. Nonetheless, Requirement 2.1 only covers a ‘summary’ of the fiscal terms, which is publicly accessible for the oil and gas sector in Iraq. Iraq has used its EITI reporting to describe the level of fiscal devolution both through petrodollar transfers and the KRG’s management of the oil and gas sector in Iraqi Kurdistan. Iraq has not yet used its EITI reporting as an annual diagnostic of reforms in the mining, oil and gas sectors, providing only a perfunctory overview of a few reforms from media sources in its 2021 EITI Report. In particular, the 2021 EITI Report describes the 2018 Law establishing a new Iraq National Oil Company (INOC), which was in 2022 considered unconstitutional, based on media sources rather than updates from the government. There are opportunities for Iraq to use its EITI reporting as a public annual update on reforms, drawing from government and parliamentarian sources.

The Secretariat’s assessment is that Requirement 2.4 is partly met. The MSG’s ‘Transparency’ template considers the objective of ensuring the public accessibility of all licenses and contracts underpinning extractive activities is not met, but notes progress made with government instructing companies to comply with the EITI requirement on contract disclosures. Stakeholders consulted considered that the objective was not yet fulfilled. The International Secretariat’s view agrees with the MSG’s self-assessment in considering the objective as still far from being fulfilled, given the lack of clarity on whether the government’s policy on contract transparency is still current and the lack of formal publication of any extractive license or contract to date, even if some efforts were made. Iraq has used its EITI implementation to work on contract disclosure. Through follow-up from the EITI, Deputy Prime Minister and Minister of Oil Hayyan Abdul Ghani wrote to NOCs under the Ministry of Oil and the IOC Forum to direct NOCs and IOCs to adhere to the government’s policy on contract transparency, even if it remains unclear where this policy is publicly codified. Iraq operates a service contract regime in the oil and gas sector, while the Kurdistan Regional Government (KRG) operates a production-sharing contract (PSC) regime. Although service contracts only confer on private oil companies the rights to provide technical expertise and services rather than ownership of the petroleum reserves, the International Secretariat continues to consider service contracts as agreements that provide terms of exploitation of oil and gas resources and thus meet the definition of contracts in Requirement 2.4.d.i, consistent with the approach in Iraq’s previous EITI Validations. However, none of the service contracts in the oil and gas sector have been published to date, aside from the contract templates republished on the international EITI website (along with a list of amendments to service contracts) that are no longer published on Iraq EITI website. The original 2009 service contract for Rumaila is the only oil and gas service contract to have been published to date, albeit not from official sources. The Iraq EITI website has published a list of active mining contracts per governorate, without identifying any amendments or riders where relevant, nor indicating which contract is published. Iraq’s recent EITI Reports have not provided an overview of the legal and regulatory environment for contract disclosure, nor the legal, regulatory or contractual provisions that hinder transparency in this area. The 2021 EITI Report only describes the September 2023 letter and confirms the lack of disclosure of any contracts beyond the templates, but does not note any further efforts to operationalise the disclosure of contracts. The Iraq EITI website includes a webpage that provides the government’s policy to publish all service contracts, subject to agreement between both parties to the contract to deviate from the confidentiality clauses. However, it is unclear whether this publication under a previous government in 2019 remains current. Iraq EITI has not yet published a regularly updated inventory of all active licenses and contracts in the mining, oil and gas sectors, beyond a list of service contracts and their amendments up to the end of 2021. The 2021 EITI Report’s statement that the IA was “not made aware” of any new contract amendments is interpreted as covering any amendments in 2021, but not in subsequent years (2022-2024). Indeed, the International Secretariat is aware of press coverage of several service contract amendments since 2021, including Lukoil’s amendments to the West Qurna 2 contract in January 2023 and November 2023. In addition, the 2021 EITI Report describes two new upstream oil and gas contracts awarded in 2021 with EITI supporting company TotalEnergies and Sinopec separately, although none of these have yet been published. There has been a history of public debate about oil contracts and their amendments in Iraq , particularly given their importance in the absence of a federal law governing the oil and gas sector. The EITI civil society coalition has made contract transparency one of its priorities in recent years. For instance in 2022, the Iraqi Transparency Alliance for Extractive Industries (ITAEI), ran a campaign asking for the disclosure of the TotalEnergies USD 27bn contract, as documented on the PWYP website. The coalition has also launched tools to understand service contracts. In July 2023, with the support of Publish What You Pay (PWYP), the Iraqi Alliance for Transparency in Extractive Industries (IATEI) has developed an Arabic-language guidebook on Iraqi oil and gas contracts signed by Iraq with foreign companies over five licensing rounds since 2009. During consultations, the company constituency noted that they did not consider that there was sufficient clarity over the government’s policy on contract disclosure. They noted that sections of the contracts were covered by confidentiality clauses and didn’t allow for unilateral publication by the IOCs. To remove barriers to contract disclosure, the MSG should clearly map out the barriers to disclosure and map out the steps to overcome those and agree on a policy of disclosing service contracts. Documentation of EITI supporting companies’ progress to meet expectation 8 on support to contract disclosure and actual contract disclosures BP recognises in public statements the importance of disclosing contracts ‘where appropriate’ but to date has not published its service contract for Rumaila. Similary ENI publicly supports contract transparency but has not published its service contract for Zubair. ExxonMobil publicly supports contract disclosure if governments allow the disclosure, although it has exited its service contract. Pertamina, holding 20% of West Qurna, is supportive of contract transparency but at the time of the assessment the company website publishing contracts was not online, and thus it remains unclear if the service contract was published. TotalEnergies, which holds a stake in Halfaya and signed a contract in 2023 for operating the Artawi field publicly supports contract disclosures but has to date not published any agreements. QatarEnergy, which holds a stake in the Artawi field development, neither has a public statement supporting contract transparency nor has published the service contract of which TotalEnergies is the main operator.

The Secretariat's assessment is that Requirement 6.4 remains not assessed, given that several encouraged aspects of this requirement remain to be addressed by Iraq EITI. The MSG’s ‘Transparency’ template considers the objective of providing a basis for stakeholders to assess the adequacy of the regulatory framework and monitoring efforts to manage the environmental impact of extractive industries is mostly met. Stakeholders didn’t express any views on this objective. The International Secretariat’s view agrees with the MSG’s self-assessment in considering the objective as not yet fulfilled, even if the new focus of more recent EITI Reports on the government’s international commitments on environmental issues and efforts to reduce gas flaring are welcome and should be expanded. Iraq’s 2021 EITI Report expanded the conventional focus of EITI reporting to more environmental aspects of the oil and gas industry. It describes the government’s international commitments related to the environment, including the Paris Agreement in September 2020 and the Global Methane Pledge in November 2021, and provides an overview of the legal framework for environmental management. The report describes efforts to curb flaring of natural gas associated with oil production through the processing and marketing of this gas, including with support from the World Bank’s Global Gas Flaring Reduction Partnership. Iraq’s EITI reporting has also acknowledged civil society input, including by referencing recommendations related to the environment from civil society’s Fifth Economic Forum in 2021. Yet Iraq’s EITI reporting has not expanded to reviewing any contractual terms related to environmental management, nor to reviewing administrative procedures, sanctions and practices related to the environment. There are significant opportunities to expand Iraq EITI disclosures related to the rules and practices of environmental impact management in the oil and gas sector in particular, given significant public interest in this issue.

The Secretariat’s assessment is that Requirement 2.2 is partly met, a regression since the previous Validation. The MSG’s ‘Transparency’ template considers the objective of providing a public overview of awards and transfers of oil, gas and mining licenses, the statutory procedures for license awards and transfers and whether these procedures are followed in practice is fully met. Government stakeholders consulted considered that the objective was fully met, which companies and civil society didn’t express any particular views. However, the International Secretariat considers the objective as not yet fulfilled, in particular given that there were two licenses awarded in 2021. The International Secretariat is not aware of a public description of the statutory procedure for awarding oil and gas service contracts outside of licensing rounds and the MSG has not published an assessment of non-trivial deviations in the practice of awarding and transferring interests in service contracts. Iraq has used its EITI implementation to work on transparency in the management of extractive licenses and contracts, albeit more in oil and gas than in mining. In mining, Iraq’s 2021 EITI Report describes the general statutory procedures for awarding mining licenses, although not for transferring them. The Iraq EITI website has published a general overview of the process for awarding mining licenses, albeit without a detailed description of the way in which applicants’ technical and financial capacities are evaluated. Yet Iraq’s EITI reporting has not identified the specific mining rights awarded or transferred, nor published a diagnostic of any non-trivial deviations in the award and transfer of mining rights in 2021. In oil and gas, Iraq’s 2021 EITI Report confirms that two oil and gas service contracts were awarded in 2021 and that there were no transfers in this period. The two service contracts were awarded outside of licensing rounds given that no rounds were concluded in 2021. Iraq’s EITI reporting has clarified the process for awarding oil and gas service contracts through licensing round, but has only provided the criteria for the qualification of bidders (which it confirms also apply for the transfer of participating interests in oil and gas blocks) but not the specific technical and financial criteria assessed for the award and transfer of oil and gas service contracts. The Iraq EITI website has published a more detailed list of technical and financial criteria assessed for the award of oil and gas service contracts through licensing rounds, although without clarifying how the criteria are assessed nor any weighting applied, nor whether the same criteria apply for awards outside of licensing rounds. Iraq’s EITI reporting has not yet clarified the statutory procedure for awarding oil and gas service contracts through direct negotiations (as was the case for the two service contracts awarded in 2021), nor the process for transferring participating interests in oil and gas service contracts. There is no evidence in Iraq’s EITI reporting that the MSG has conducted a diagnostic of non-trivial deviations from statutory procedures in the award of the two oil and gas service contracts concluded in 2021. There have been press reports that the government has blocked applications for the transfer of participating interests in oil and gas service contracts in recent years, highlighting the need for further transparency in the practice of oil and gas service contract awards and transfers. For instance, a November 2022 report by the Emirates Policy Center highlights that the Federal Government did not grant approval to PetroChina’s proposal to form a joint venture with Lukoil to operate the West Qurna 2 field nor to PetroChina’s proposal to acquire ExxonMobil’s participating interest in the West Qurna 1 service contract in 2022 following ExxonMobil’s withdrawal.

The Secretariat’s assessment is that Requirement 2.3 is partly met, a regression since the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring the public accessibility of comprehensive information on extractive industry property rights is mostly met. Civil society stakeholders consulted had strong concerns about the lack of a reliable registers on current service contract operators. The International Secretariat considers the objective as still far from being fulfilled, given the lack of public disclosure of updated information on oil and gas blocks. Information on service contracts for fields that produce for export has not been updated in the past three years and there is no current comprehensive and reliable source for the current state of service contract holders. Further gaps relate to award dates and geographic coordinates of all blocks both under service contract with IOCs and under ‘national effort’ production by the NOCs themselves. In mining, Iraq’s 2021 EITI Report (Annexe 3) provides a list of 615 active mining licenses with limited information including the company name and license number, but not other information listed under Requirement 2.3.b including dates of application, award and expiry, commodity(ies) covered or geographical coordinates. The Iraq EITI website has published a list of active mining contracts per governorate, including information on license-holder company name, project name and award date, but not the application or expiry dates or geographical coordinates. During consultations, the Ministry of Mines stated that the mining register information disclosed in EITI reporting is up to date and comprehensive. In oil and gas, the Ministry of Oil’s PCLD maintains an online register of oil and gas rights and service contracts, although it is based on the data in Iraq’s 2019 EITI Report that does not appear to have been updated since June 2022. The information provided includes name of oil and gas block, identity of NOC holding the license, and names and participating interests of IOCs engaged in the service contract. Iraq’s 2021 EITI Report provides a list of oil and gas blocks under service contract (Table 39) and of oil and gas blocks operated by NOCs themselves under ‘national effort’ production (Table 49). The list of oil and gas blocks under service contracts includes the 18 contracts awarded through the four licensing rounds completed as of end 2021 as well as the two service contracts awarded outside of bid rounds (Ahdeb and East Baghdad), but not the two oil and gas service contracts awarded to TotalEnergies and Sinopec respectively in 2021. The information provided on the blocks under service contract includes names of companies holding interests in the service contract consortium (including levels of participating interests), contract name, deadline for submission of bids as a proxy for the application dates (albeit not for the two contracts awarded outside of licensing round), contract duration, and commodity(ies) covered. However, the information disclosed does not include dates of award or expiry or geographical coordinates for any of the oil and gas contracts. The service contract information provided is also outdated, still listing Shell as the Majnoon service contract operator and not reflecting the changes in Pertamina’s and ExxonMobil’s interests in the WestQurna 1 service contract. It is unclear whether the geographical coordinates of oil and gas blocks under service contracts published on the IEITI website is comprehensive as of 2021, given that it is the same annex as the one published for the 2018 EITI Report, with several sections of the document highlighted in yellow. The IEITI website has also published a list of geographic coordinates for oil and gas blocks under service contracts, which appears to be the same annex published for the 2018 EITI Report. The list of oil and gas blocks under ‘national effort’ production by the NOCs presents 12 fields currently producing and 18 fields marked as non-producing. The information disclosed includes the name of the NOC with rights to the field, the field name, the status of production and date of exploration where available, but not the other information mandated by Requirement 2.3.b including award dates for the fields or geographical coordinates, as the Secretariat understands that there was no application nor expiry date for any of the blocks under ‘national effort’ production. Consulted stakeholders expressed a general lack of involvement in following up on issues like licensing rounds and contract awards. They mentioned the delay in updating the oil and gas license register, which have not been updated for five years. They also discussed how service contracts and direct negotiations with companies like Sinopec and Total were not fully covered in EITI reporting. During CSO consultations, participants raised concerns about contract transparency, mentioning that discussion of certain contract details was considered sensitive in public. CSOs also expressed frustration over the lack of updates to the license register and limited access to information on service contracts. Iraq’s EITI Reports have not described any plans to develop a comprehensive and regularly updated list of active oil and gas rights. There is no evidence that the MSG has discussed public reports alleging that non-state armed groups (such as the popular mobilisation forces) control certain oil fields. There are opportunities for Iraq to use its EITI implementation to support the establishment of a modern, publicly accessible, cadastral management system for its oil and gas sector.

The Secretariat’s assessment is that Requirement 2.5 is partly met. The MSG’s ‘Transparency’ template considers the objective of enabling the public to know who ultimately owns and controls the companies operating in the country’s extractive industries is not met. Stakeholders consulted highlighted the success in the 2017 EITI Report identifying tax compliance irregularities and considered that beneficial ownership disclosure was a priority for the Iraq EITI, recognising that progress was slow. The International Secretariat’s view agrees with the MSG’s self-assessment in considering the objective as still far from being fulfilled, given the lack of an enabling legal framework for the public disclosure of beneficial ownership information and non-existing beneficial and legal ownership disclosures in the past three EITI Reports, even if the stock exchange filings on changes of significant control of many IOCs operating in Iraq are publicly accessible in their home countries. Iraq has used its EITI implementation to start work on beneficial ownership disclosure in the oil and gas sector, although an enabling legal and regulatory framework for the collection and public disclosure of beneficial ownership data has not yet been established in the extractive industries. There are no laws or regulations in place requiring companies holding or applying for extractive licenses and contracts to disclose their beneficial ownership information to government. Iraq’s 2021 EITI Report provides definitions and reporting thresholds for beneficial owner and politically exposed persons (PEPs), confirming that PEPs holding any shares in extractive companies should be required to disclose their beneficial ownership. Although the EITI Report notes that the MSG maintained its definition of beneficial ownership for EITI reporting on 2021, there is no evidence that the MSG collected any beneficial or legal ownership information on any extractive companies in the scope of reporting for 2021. The report notes that EITI Iraq requested information including nationality, country of residence, identification of politically exposed persons, the level of ownership and details about how ownership or control is exerted from material companies, but this information has not been disclosed to date. Nonetheless, the EITI Report describes the MSG’s approach to quality assurances requested of companies for their beneficial ownership reporting, even if it is unclear whether any company complied. The report further notes that a beneficial ownership study was undertaken between 2022 and 2023 and that the final report has not yet been published. There is no evidence that the MSG has undertaken a broader review of comprehensiveness and reliability of beneficial ownership data collection and disclosures to date. Iraq’s EITI Reports do not indicate which extractive companies are wholly owned subsidiaries of publicly listed companies, nor provide any guidance on accessing stock exchange filings of such listed companies. Likewise, legal ownership information on companies holding or applying for extractive licenses does not appear to be publicly accessible to date, nor through the EITI Report. No links to the stock exchange filings have been provided in the EITI Report or through the summary data submission. The legal owner is recognisable for some subsidiaries operating in Iraq. The 2024-2025 work plan lists several activities in a dedicated section on beneficial ownership disclosure, however it is not clear if any of the activities that were listed to be completed by June 2024 have been completed given the lack of publications on the Iraq EITI website. Documentation of progress of supporting companies on expectation 6 on public support on beneficial ownership transparency and disclosures BP, ENI, Shell and QatarEnergy have not yet published a statement of support on beneficial ownership transparency. All those companies with the exception of QatarEnergy, which is 100% state-owned, have filed their shareholder information on the respective stock exchange where they are listed. ExxonMobil, Pertamina, Repsol and TotalEnergies have published statement of support on beneficial ownership transparency. ExxonMobil, Repsol and TotalEnergies are listed companies and Pertamina is 100% state-owned. For the use of beneficial ownership information as part of the due diligence and anti-corruption efforts, please view the documentation of progress under Requirement 1.2.

The Secretariat's assessment is that Requirement 2.6 is mostly met, same as the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring an effective mechanism for transparency and accountability for well-governed SOEs and state participation more broadly is exceeded. Stakeholders consulted did not express particular views on the objective of this requirement, although the International Secretariat considers that the objective is mostly met, given weaknesses in the MSG’s review of the practices of SOEs’ financial relations with the state beyond the SOEs’ publications of their own financial statements. Iraq’s publications of oil and gas SOEs’ financial statements are unique for the region and provide a robust basis for the MSG to conduct a diagnostic of the rules and practices of their financial relations with the government. Given the importance of state participation in the oil and gas sector, SOEs’ disclosures are crucial to understanding the flow of product and revenues in the extractive industries. The 2021 EITI Report confirms that state participation in the oil and gas sector gives rise to material revenues. Iraq’s EITI Reports have not described the MSG’s materiality decisions with regards to the selection of oil and gas SOEs considered material for EITI reporting, and list 17 oil and gas SOEs that the MSG considers material. The International Secretariat considers all SOEs that are parties to service contracts as falling in the scope of EITI reporting, as well as SOMO, the state oil marketing company. The disclosures on other SOEs active in the oil and gas industry regardless of their materiality are nonetheless welcome . The 2021 EITI Report’s description of the statutory financial relations between oil and gas SOEs and the state is scattered across several sections. The EITI Report describes provisions of the 1997 amended Public Companies Law containing the clause for distribution of 45% of profits (termed ‘distributable income’) based on the SOEs’ audited financial statements. The EITI Report does not explain the basis of SOEs’ income however, which the International Secretariat understands is derived from internal service payments received by SOEs from the government to cover their costs of oil and gas production from their own ‘national effort production’ fields. However, given that NOCs’ financial statements have not been audited since 2016, the 2021 government budget law (Law 23 of 2021) required that NOCs transfer 60% (instead of 45%) of their ‘distributable income’ to the Treasury pending completion of the audit of their financial statements, although this is not explained in the EITI Report. The 1997 public company law includes provisions on transfers of funds to the state, retained earnings, reinvestment, and third-party financing and those are sufficiently described in the EITI Report. In addition, the 2021 EITI Report describes the 2018 Law establishing a new Iraq National Oil Company (INOC), which was then considered unconstitutional, hence is not covered here (see also Requirement 2.1). Iraq’s EITI reporting does not explain the impact of the 2018 law’s revocation on the NOCs’ financial relations with the state. Financial statements of NOCs indicate other financial relations that are not described in the EITI Report. A cursory review of BOC’s and SOMO’s financial statements reveal the existence of large debts (accounts receivables) of the two SOEs to the Ministry of Finances and to the Ministry of Oil related to distributions of net profit. EITI reporting does not shed light on those account receivables, either on the legal basis for such transactions or a review of the actual practice. Furthermore, the BOC financial statements also reveal the existence of large account receivables of BOC from South Gas company, the pipeline company, South Refinery company and SOMO, related to BOC’s oil sale to those SOEs. The BOC financial statements also list BOC debts to the state-owned oil exploration company, Midland Oil company and Thi Qar Oil company. In addition, the 2021 EITI Report does not describe ‘internal service payments’ from the Ministry of Finance (through SOMO) to NOCs, which were disclosed in previous EITI Reports. Internal service payments are transfers to NOCs to cover their production costs on ‘national effort’ production oilfields operated by the NOCs themselves (see Requirement 4.5). Iraq’s 2021 EITI Report only describes the financial relations in practice between oil and gas SOEs and the state insofar as it provides the value of each NOC’s ‘distributable income’, the value of 60% transfers to the Treasury, and the effective share of ‘distributable income’ actually transferred to Treasury. The value of the Treasury’s share of NOCs’ distributable income’ is material, which indicates that several NOCs did not transfer the full required 60% for 2021. The EITI Report does not provide the value of retained earnings, reinvestments and third-party financing of those SOEs. The 2021 and 2022 signed financial statements of oil and gas SOEs were published on the EITI website after the start of this Validation, although SOMO regularly publishes its unaudited financial statements on its website. The financial statements of SOEs were signed by the internal audit department of the Ministry of Oil and provide information related to the practices of transfers of funds between the SOE(s) and the state for ‘National Interest Production’. However, there is no evidence that the MSG has yet reviewed the SOEs’ financial statements. With regards to the terms of state participation in oil and gas companies and projects, Iraq’s EITI reporting lists the state’s ownership of the different oil and gas SOEs, but without describing the terms attached to its interests in these NOCs, which is required. The 2021 EITI Report lists the NOCs’ respective participating interests in the different service contracts as well as the oilfields operated under ‘national effort’ production. The EITI Report describes the general terms attached to IOCs’ activities under service contracts, including provisions for government payments to IOCs, but does not describe the terms attached with each NOC’s participating interests in the difference service contracts. The EITI Report’s list of oilfields operated by NOCs under ‘national effort’ production only lists the relevant NOC operating the field and whether the field is currently in production, but notes that these oilfields are “fully managed” by the NOCs, which implies that each NOC is responsible for covering all expenses. It is worth noting that both financial statements of BOC and SOMO, on which the International Secretariat did a cursory review, did not reveal any SOE participations in other companies. Iraq’s latest EITI reporting highlights two changes in state participation in the period under review. The awards of new service contracts to Sinopec and TotalEnergies in 2021 included provisions for Basra Oil Company and Midland Oil Company to be granted 30% and 51% participating interests in the respective service contracts. The report does not explicitly comment on the terms of these two changes in state participation in 2021. With regards to loans and guarantees, Iraq’s 2021 EITI Report refers to only one loan guarantee from the state to an upstream oil and gas project, but it is unclear whether this is comprehensive of all loan guarantees. The report describes the requirement for the state to provision 15% of the value of each loan contracted under the China-Iraq Cooperation Framework, linked to the delivery of 100,000bpd of crude oil. However, the EITI Report’s review of progress on past Validation recommendations on loans and guarantees notes a lack of progress to date. Iraq’s 2021 EITI Report notes that none of the material SOEs (with the exception of SOMO) have published their financial statements for 2021, although EITI Iraq published a range of SOEs’ unaudited financial statements after the start of this Validation. Regarding the encouraged aspects of Requirement 2.6.c, BOC and SOMO financial statements and 1997 laws provided detailed related to rules related to operating and capital expenditures and corporate governance.

The Secretariat's assessment is that Requirement 4.2 is mostly met. The MSG’s ‘Transparency’ template considers the objective of transparency in the sale of in-kind revenues of minerals, oil and gas is mostly met. Stakeholders consulted did not express particular views related to the objective of this requirement, but noted the availability of disclosures of SOMO’s sales proceeds. The International Secretariat’s view agrees with the MSG’s self-assessment in considering the objective as mostly met, given the lack of disclosures on the domestic sales of the state’s in-kind oil revenues by individual receiving state-owned refinery, the lack of information on domestic sales of natural gas. Nonetheless, Iraq has sustained its leadership in granular cargo-level disclosures of crude oil sales, which is unique among countries in the region, and has made efforts to go beyond the minimum aspects of the requirement by including exports of refined petroleum products in its 2021 EITI reporting. Iraq’s EITI reporting has consistently confirmed the materiality of in-kind revenues in the oil and gas sector through its description of the ownership of all oil and gas produced in Iraq, including under service contract, as being the state’s property. The SOMO website has continued to publish aggregate annual data on crude oil exports, albeit only disaggregated by point of export (Basra and Ceyhan), not by individual buyer or cargo. With regards to volumes of in-kind revenues collected by the state, the 2021 EITI Report provides the volumes of total crude oil production disaggregated by NOC in 2021, which averaged a total of 3.8m bpd. This data is also provided disaggregated by oil block for both service contracts and NOCs’ own ‘national effort’ production. The EITI Report also provides the volumes of natural gas production disaggregated between producing SOE and type of gas output (associated gas, feed gas, dry gas and liquefied gas). Data disclosed on collections of in-kind revenues are de facto disaggregated by revenue stream, given that all oil and gas production is legally the state’s property. With regards to volumes of in-kind oil sold by the state, Annex 7 to the 2021 EITI Report provides the volumes of crude oil sold by SOMO to export buyers, disaggregated by buyer and each of the 891 cargoes, albeit without the date of oil lifting for any of the exported cargos. Annex 9 provides the volumes of crude oil lifted by IOCs operating under service contracts, as in-kind payments to the service contractors’ remuneration fee and cost recovery claims, disaggregated by individual buyer and cargo, albeit without the dates of any of the oil liftings. The data on crude oil exports to both buyers and IOCs operating under service contracts is reconciled between SOMO and the oil buyers. The EITI Report also provides this information on refined petroleum products. With regards to domestic sales of crude oil and natural gas, while the 2021 EITI Report only unilaterally discloses the aggregate volumes of crude oil supplied to the electricity generation companies in aggregate (as crude oil supplies to the Ministry of Electricity), EITI Iraq published in on its website the breakdown of quantity of barrels received by electricity generators and refineries for three NOCs, but did not provide more detail on who recipients are or the value of the volume transferred. With regards to the proceeds of the sales of the state’s in-kind revenues, the report clearly states that it was not possible to reconcile the sales revenue disclosures published by SOMO with the actual receipts of the oil proceeds by the Iraq Central bank through its account at the Federal Reserve Bank of New York (FRBNY ) (IRAQ 2), to which payments for all export crude oil sales are deposited. The IA had not been provided with the Central Bank’s bank statement. The report also confirms that the audit report on the Central Bank account for 2021 on the FRBNY was not available to the IA in preparing the EITI Report. In the absence of such financial reports, the EITI Report cites aggregate figures for the account as provided by the Central Bank and compares it with the SOMO figures, highlighting a discrepancy of USD 9.59bn (13.8% of total oil sales proceeds). The EITI Report stipulates that this is due to demurrage costs and differences in accounting for the oil sales. Given the importance of the difference, the MSG is encouraged to seek to explain the difference. Documentation of progress towards meeting company expectations The following supporting companies have subsidiaries that buy SOMO’s in-kind oil, according to the 2021 EITI Report: Eni (ENI TRADING & SHIPPING SPA - ITALY), Exxon (EXXONMOBIL SALES AND SUPPLY CORPORATION GALLOWS), Shell, TotalEnergies (TOTSA Total oil trading). The International Secretariat did not find any oil purchasing disclosures with Iraq (SOMO) (expectation 4) from either Exxon nor Shell. ENI only publishes an aggregate volume figure of crude purchases for ‘Middle East’ in its annual reports. TotalEnergies publishes annual volumes and values of crude oil purchase from SOMO in its 2022 reporting on payments to government (p. 588).

The Secretariat's assessment is that Requirement 4.5 is mostly met, as of the previous Validation. The MSG’s ‘Transparency’ template considers the objective of traceability of payments and transfers involving SOEs is fully met. Stakeholders consulted did not express particular views on the objective of this requirement. However, the International Secretariat considers the objective as mostly met, given that EITI reporting does not cover internal service payments from the government to NOCs. Iraq’s EITI reporting has relied primarily on the unaudited financial statements of NOCs in recent years, rather than on more proactive reporting to the EITI. The EITI Report did not reveal the existence of company payments to SOEs in Iraq, but rather government in-kind payments (of remuneration fee and cost recovery) to oil and gas companies operating under service contracts (see Requirement 4.1), although the review of BOC financial statements reveal the existence of account receivables from ENI and AWLC oil services amounting to IQD 876 bn (USD 604 m). With regards to SOE transfers to government, the 2021 EITI Report explains that the 2021 Federal Government budget law introduced a 60% levy on SOEs’ ‘distributable income’ (interpreted as ‘profit’) (see Requirement 2.6). The EITI report discloses the value of each NOC’s ‘distributable income’, the value of 60% transfers to the Treasury, and the effective share of ‘distributable income’ actually transferred to Treasury, sourced from SOEs’ unaudited financial statements. The 2021 EITI Report also discloses SOEs’ transfers of 1% of their ‘distributable income’ to the Social Care Fund, in line with provisions of the 2021 Federal Government budget law. These figures are also sourced from SOEs’ unaudited financial statements. With regards to the domestic upstream oil and gas value chain, the 2021 EITI Report discloses aggregate volumes of crude oil (‘National effort production’) supplied by the NOCs to the national electricity generation directorates, albeit not disaggregated by individual NOC and refineries company. In a note published after commencement of Validation EITI Iraq lists the quantities transferred by North Oil, Middle Oil and Basra to ‘refineries’ and the electricity company, without specifically naming the recipient(s). With regards to government transfers to SOEs, the 2021 EITI Report does not disclose any such transfers. The 2021 EITI Report does not discuss ‘internal service payments’. Internal service payments relate to government transfers to NOCs to cover their production costs on ‘national effort’ production oilfields operated by the NOCs themselves. They are paid by the Ministry of Oil through SOMO to the NOCs.The International Secretariat’s understanding is that these represent forms of government transfers to SOEs that have been considered material in previous years. The 2021 financial statements of SOMO provided that the total amount due to the NOCs for their reimbursement of the cost of production amounts to IQD 10,497bn (USD 7bn), but there are no disclosures of what was actually paid. The disclosure and reconciliation of internal service payments, previously undertaken through EITI reporting, is an outstanding gap in the disclosures related to Requirement 4.5. In addition to this, the other transfers from government are remuneration fees and production costs paid to companies (IOCs) that produce for export, and those are covered in Requirement 4.1.

The Secretariat's assessment is that Requirement 6.2 is mostly met. While the previous Validation considered this EITI Requirement not applicable, new disclosures clearly demonstrate the applicability of this requirement. The MSG’s ‘Transparency’ template considers the objective of transparency in extractive-funded expenditures on behalf of the government that are not reflected in the national budget is fully met. Stakeholders consulted did not express particular opinions about the objective of this requirement. However, the International Secretariat considers the objective as not yet being fulfilled, given comprehensiveness in terms of coverage and categorisation concerns even if the new recent disclosures are a significant step towards transparency in NOCs’ quasi-fiscal expenditures. While Iraq’s pioneering of disclosures of quasi-fiscal expenditures could be considered as implying that the objective is in the process of being fulfilled, the lack of clarity on the MSG’s views about which expenditures should be considered quasi-fiscal means that it is not possible for the public to understand the full scope of types of quasi-fiscal expenditures conducted by oil and gas SOEs. Iraq’s 2021 EITI Report discloses quasi-fiscal expenditures in Iraq for the first time, a reflection of the IA’s methodologically robust approach. Annex 6 of the EITI Report presents a long list of different types of payments by oil and gas SOE to different beneficiaries including government and other SOEs, which are categorised as quasi-fiscal expenditures. However, the categorisation of this diverse set of transactions as quasi-fiscal is questionable. The Secretariat concedes that payments to the police, the military, the Civil Defence Directorate, Basra Security Directorate, Popular Mobilization Forces (PMF), Commission on Integrity, car repairs for Ministers and office repairs at the Prime Minister’s office appear to be genuine quasi-fiscal expenditures. However, SOE expenditures on associations, healthcare, small-scale rural infrastructure, schools, relief organisations and donations appear more akin to voluntary social expenditures. The MSG has not triaged this list of SOE expenditures to distinguish between quasi-fiscal expenditures on the one hand, and social expenditures and payments to government on the other. There are other disclosures in the EITI Report that the MSG should include in its consideration of quasi fiscal expenditures. Table 79 list the cumulative debt owed from the Ministry of Electricity to the Ministry of Oil over a period of ten years for the quantity of oil that was supplied to electricity generators, but not paid for. The cumulative outstanding debt amounts to USD 15.85 bn. The MSG should review the extent to which at least the interest on the debt could constitute a QFE, or, or the amount of debt that is written of, should that be the case. There are opportunities to strengthen disclosures of SOEs’ quasi-fiscal expenditures to ensure a more comprehensive set of disclosures, beyond those in the SOEs’ unaudited financial statements.

The Secretariat’s assessment is that Requirement 3.2 is mostly met, which is a regression since the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring public understanding of extractive commodity production levels and the valuation of extractive commodity output is fully met. Stakeholders consulted did not express particular views about this requirement. However, the International Secretariat considers the objective as mostly met, given the lack of information on the valuation of production, particularly in the oil and gas sector, and the lack of clarity around informal oil and gas production amidst press reports of informal petroleum production and sales. Iraq’s 2021 EITI Report provides production volumes for all mineral commodities produced in Iraq in the year under review. This includes oil and gas production volumes disaggregated by individual NOC and project, as well as by governorate. Civil society has long called for disaggregation of oil production per company in addition to by project, for instance in the ITAEI’s March 2020 submission to the U.S. Securities and Exchange Commission. For mining, production volumes are disclosed for four construction materials that are quarried in Iraq, although this appears to exclude certain mineral commodities produced according to the latest (2019) US Geological Survey Minerals Yearbook on Iraq. However, given the lack of material payments to government from the mining sector, the Secretariat does not consider weaknesses in mining production data disclosures to constitute a material gap. However, the 2021 EITI Report does not disclose production values for any of the extractive commodities produced in 2021, particularly for crude oil and natural gas. These weaknesses constrain progress towards the objective of transparency in extractive commodity output valuation. Stakeholders consulted explained this gap as resulting from a reorganisation of responsibilities of ministries for providing data. While the Ministry of Oil will continue to publish data on production volumes and local sales, it is expected that disclosure of data on values will be assigned to the Ministry of Finance; this division in responsibilities will be formalised in the Transparency Policy currently in draft form. Stakeholders expected the availability of data to improve once the policy has been adopted. The International Secretariat has not been able to confirm public sources of production values while preparing this draft report.

The Secretariat’s assessment is that Requirement 3.3 is mostly met, which is a regression compared to the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring public understanding of extractive commodity export levels and the valuation of extractive commodity exports to be fully met. Stakeholders consulted did not express particular views about this requirement. The International Secretariat’s recognises the granular Iraq EITI disclosures on crude oil exports disaggregated by cargo and reconciled with disclosures by oil buyers. However, there are numerous reports of alleged important levels of informal oil exports (over 3.5m bpd) which limits the fulfilment of the objective. The SOMO website has continued to publish aggregate data on crude oil exports, albeit only disaggregated by point of export (Basra and Ceyhan), not by individual buyer or cargo. Iraq’s EITI Reports have continued to disclose export volumes and values of crude oil exports, disaggregated by individual cargo (see Requirement 4.2). The report also provides a breakdown of exports by country of destination, as well as data on export volumes and values of refined petroleum products. There are no exports of unprocessed natural gas or mineral commodities, consistent with secondary sources such as the latest (2019) US Geological Survey Minerals Yearbook on Iraq. Stakeholders consulted described an interactive dashboard developed by the Ministry of Oil containing sales and export figures which is used as a monthly monitoring tool by the Ministry. This data is already shared with Iraq EITI on an annual basis and stakeholders agreed that it could also be made publicly available on the Ministry’s website in its original form, as an interactive Excel table. The dashboard had not been published at the time of finalising the draft report. Analyst reports on Iraq, such as from Gan Integrity, describe extensive informal trade of oil and petroleum products, implicating criminal networks and allegedly government officials. The Global Initiative against Transnational Global Crime references a figure of 7m barrels per day are smuggled out of Iraq. In order to present a more accurate understanding of the value of oil exported, Iraq EITI should use its EITI reporting to provide the MSG’s views on the credibility of different third-party estimates of informal extractive activities in the oil and gas sector.

The Secretariat's assessment is that Requirement 4.1 is partly met, which is a regression from the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring comprehensive disclosures of company payments and government revenues from oil, gas and mining is fully met. Stakeholders consulted considered that the objective was fully met, but acknowledged that there were gaps in the comprehensiveness of reporting from both the government and companies. However, the International Secretariat considers the objective as still far from being fulfilled, given the latest Iraq EITI Report’s own admission that the financial data disclosed is not comprehensive of all material payments and revenues, as well as the omission of demurrage costs. Iraq has traditionally covered both government oil and gas revenues from the sale of those commodities as well as government payments to companies (e.g. cost recovery and remuneration fees) in the scope of its EITI reporting, given the service contract regime applied in the country. Iraq’s 2021 EITI Report is transparent about the weaknesses in the approach to scoping the materiality of government revenues and payments for 2021, noting that the IA was not able to complete a full scoping study in preparation of the 2021 EITI Report. As a result, the 2021 EITI Report implies that all revenue streams and companies (both crude oil buyers and IOCs operating under service contracts) were included in the scope of EITI reporting with a de facto materiality threshold of zero. As in previous EITI Reports, the EITI Report covers both payments to government as well as government payments to IOCs operating under service contracts (in-kind payments for remuneration fee and cost recovery). However, the scope of the 2021 EITI Report omits demurrage costs, paid by the state to crude oil buyers and IOCs facing delays in ship loading at the port, which contributed to fees paid for breach of oil sales contract. From EITI reporting it is unclear what the total amount of demurrage costs are for 2021, it is stipulated that it can be between USD 9.59bn, which is the total difference of the declaration of the Iraqi Central Bank on proceeds from oil sales and the publication of SOMO’s proceeds of oil sales, and the USD 8.5 m provided in the financial statement of SOMO for penalty fees. (see Requirement 4.2). During consultations, the government noted that those costs were contingent on SOMO’s ability to deliver the oil at the contractually agreed time and place. Given that it is a form of ‘penalty fee’ the government is of the view that demurrage costs should not be considered a payment stream. The International Secretariat is of the view that the MSG should have considered this issue and its importance in Iraq given the potential high figure. The Secretariat considers these fees as material to understand the government’s total take from the oil sector for the year under review. There are significant gaps on the comprehensiveness of disclosures. A significant share of these material companies did not submit EITI reporting templates for 2021. The 2021 EITI Report is transparent about the gaps in disclosures (particularly Tables 16 and 17), highlighting that only 17 of the 24 (71%) material IOCs and 34 of 56 (61%) material crude oil buyers submitted EITI reporting templates for 2021. This leads the IA to conclude in the EITI Report that the 2021 revenue data is not comprehensive. Likewise, only eight of the 17 material SOEs submitted EITI reporting templates for 2021, even if seven of the nine (78%) material government entities duly reported (the Ministry of Finance and Ministry of Environment did not report). The 2021 EITI Report also marks the Ministry of Oil as ‘partly compliant’ with its EITI reporting obligations. The EITI Report provides the government’s full unilateral disclosure of all revenues from the oil and gas sector, although not consistently disaggregated by individual revenue stream (Requirement 4.7). The crude oil liftings, which cover both renumeration fees and cost recovery, are reconciled only for the reporting companies. Twenty-seven percent of crude oil lifting are not reconciled and the ones that have been reconciled, are not disaggregated by renumeration fees and cost recovery. These payments have previously been reconciled by revenue stream. In light of the Ministry of Finance’s omission of reporting, the 2021 EITI Report compiles disclosures from reporting companies of their tax payments to the Ministry of Finance, although the lack of reporting by 7 of the 24 material IOCs imply that this does not cover all oil and gas tax income in 2021. The lack of reporting by the Ministry of Environment also raises concerns over the comprehensiveness of environment-related disclosures (see Requirement 6.1). Iraq has not yet used its EITI reporting to facilitate public access to company and government financial reports, nor to work with relevant government agencies to strengthen their systematic disclosures of information required by the EITI Standard. Thus, the Secretariat’s assessment is that significant technical aspects of Requirement 4.1 remain outstanding, as Iraq’s latest EITI Report itself recognises. The Secretariat welcomes the critical self-assessment of the MSG.

The Secretariat's assessment is that Requirement 4.3 is mostly met. Although the previous Validation deemed this EITI Requirement not applicable, recent disclosures indicate that the requirement has become applicable in the period since the last Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring public understanding of infrastructure provisions and barter-type arrangements is fully met. Stakeholders consulted did not express particular opinion about the objective of this requirement. However, the International Secretariat considers the objective as mostly met, given the limited disclosures related to an oil-backed loan provided by People’s Republic of China (PRC) under the ‘Belt and Road Initiative’ (BRI). During consultations a supplementary note was published with some information on the agreement, and the budget law provides information on the nature of the infrastructure investments. However, there are still gaps on the tenure of the loan granted and the status of infrastructure projects pledged as counterparties to the oil deliveries. Iraq’s 2021 EITI Report pioneered disclosures on resource-backed loans for the first time in the context of the oil-for-infrastructure agreement originally agreed in 2018. This is particularly significant given that Iraq was the largest recipient of funding under the PRC’s BRI in 2021, according to a January 2022 report by Shanghai Fudan University’s Green Finance and Development Center. The 2021 EITI Report explains that none of the reporting entities disclosed any information on barter-type agreements as part of their 2021 EITI reporting. However, the EITI Report nonetheless describes a resource-back loan framework agreement between Iraq and the PRC involving the delivery of 100,000bpd to Sinosure in payment for infrastructure projects. The report describes the repayment modalities for the loan, including requirements for the government to deposit funds in a repayment account under the government-to-government Cooperation Agreement, but does not comprehensively describe the terms of the agreement. For instance, the report does not disclose the total value of the agreement, nor key terms of the loan such as interest rate and loan tenor. The EITI Report provides the aggregate value of oil-backed repayments in 2021, but does not provide any further information on the value of infrastructure pledged or constructed that year. Thus, several technical aspects of Requirement 4.3 have not yet been addressed during the period under review with regards to an agreement that accounted for around 2.65% of crude oil exports in 2021. During consultations, EITI Iraq published a note providing additional clarifications to the agreement, which explains the oil-backed loan’s value, tenor, repayment modalities and other related information , but does not clarify the interest rate (and any other relevant fees) applied in the agreement. However, the note does not explain which infrastructure projects are being financed under the agreement. The 2023-2025 budget law provides information on the nature of investments funded under this agreement , although it did not clarify the progress made in those projects to date. While the information provided provides more context, Iraq’s EITI reporting has not yet taken stock of the status of infrastructure developed under the agreement, nor tracked the value of disbursements of loans on an annual basis or compared this agreement to conventional cash-based extractive industry agreements. There are opportunities to use the EITI to improve public understanding on this agreement, building on financial reports on oil revenues collected by the DFI account.

The Secretariat's assessment is that Requirement 4.4 remains not applicable, as in the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring transparency in government and SOE revenues from the transit of oil, gas and minerals is not applicable. The International Secretariat’s view agrees with the MSG’s self-assessment in considering the objective as not applicable, given that all oil and gas in Iraq is state-owned, thereby rending it impossible for the state or any SOE to collect any revenues from third-party use of oil and gas transport infrastructure. Iraq’s 2021 EITI Report briefly describes the operations of the Oil Pipelines Company, but without addressing whether Requirement 4.4 is applicable in Iraq. The International Secretariat’s understanding is that it is not, as in the previous Validation.

The Secretariat's assessment is that Requirement 4.7 is partly met, which is a regression since the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring disaggregation in public disclosures of company payments and government revenues from oil, gas and mining is fully met. Stakeholders did not express views on the level of disaggregation. However, the International Secretariat considers the objective as still far from being fulfilled, given the lack of consistent disaggregation of data on government payments to companies by revenue stream and by project. In addition, the MSG has not yet formed a view on what constitutes a project. Iraq’s 2021 EITI Report presents the reconciled financial data by government entity, by company and by project for both oil exports (by cargo) and government payments to companies (in-kind liftings by IOCs operating under service contracts). However, the data on government payments to companies is not disaggregated by revenue stream, i.e. distinguishing between cost recovery and remuneration fee per company and per project. This is summarised as ‘crude oil lifting’ by IOCs, disaggregated by company, but not by type of payment stream. In addition, other data in the 2021 EITI Report on the domestic supplies of crude oil and natural gas are not disaggregated by receiving SOE. The value of ‘demurrage costs’ fees paid by the state to oil buyers and IOCs for delays in crude oil exports, which was excluded from the scope of EITI reporting, is provided as a lump sum figure, not disaggregated by receiving company (see Requirement 4.1 and 4.2). Other payments that were previously in scope of Iraq EITI reporting, such as ‘internal service payments’ to cover for the cost of production for the domestic effort production, paid from the Ministry of Finance through SOMO to individual NOCs, have not been disclosed (see Requirements 4.1 and 4.5). The MSG has not yet formed a view on what constitutes a project. While in practice, disclosures by project in EITI reporting are made on the level of the field covered by the service contract, the ITAEI civil society coalition has argued in the past (for instance in its March 2020 submission to the U.S. Securities and Exchange Commission) that disaggregation by service contract does not amount to project-level disclosures (citing the example of 270 production wells on the Rumaila oilfield). For the purpose of this assessment, International Secretariat considers that each oilfield, regardless of size, is governed by a single service contract, with payments levied on the basis of the oilfield under service contract rather than by individual well. Documentation of progress – EITI supporting company expectation 3 EITI supporting companies that hold service contracts for oil fields in operation (BP, ENI, ExxonMobil, Pertamina and TotalEnergies) have published their data according to the oil field it holds the service contract for (value of lifted oil) by project. Those companies also publish payments to government reports which publish more aggregated revenue streams by project in Iraq, most recently ExxonMobil which has for the first time filed more comprehensive disclosures through the US SEC, now including Iraq, which is progress towards the reporting previously done through the EU on ExxonMobil Luxembourg et Cie, which did not cover activities in Iraq.

The Secretariat's assessment is that Requirement 4.8 is fully met, as in the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring that public disclosures of company payments and government revenues from oil, gas and mining are sufficiently timely to be relevant to inform public debate and policymaking is fully met. Stakeholders consulted considered that the objective was fully met. The International Secretariat’s view agrees with national stakeholders in considering the objective as fulfilled, even if the timeliness of Iraq’s EITI reporting could be further improved to strengthen the EITI data’s relevance to public debate and policymaking. Iraq has consistently published EITI Reports within the Board-approved extended timelines for disclosures given broader non-technical considerations. Iraq published its 2018 EITI Report with some delay in March 2021, although this was within the Board-approved extension to the timelines for publication. Likewise, Iraq published its 2019-2020 EITI Report with some delay in June 2022, although this again was within the Board-approved extension to the timelines for publication. The 2021 EITI Report was published in December 2023. The EITI Reports are transparent about the MSG’s approval of decisions such as the reporting period, always on a cash accounting basis.

The Secretariat's assessment is that Requirement 4.9 is partly met, which is a regression since the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring that appropriate measures have been taken to ensure the reliability of disclosures of company payments and government revenues from oil, gas and mining is mostly met. Stakeholders consulted considered that the objective was mostly met. However, the International Secretariat considers the objective as still far from being fulfilled, given the EITI Report’s own admission about the significant shortcoming in the financial data’s comprehensiveness and reliability. While the IA attempted to follow a robust methodology for undertaking reconciliation of government and company payments and revenues, severe weaknesses in government and company reporting and audit practices constrained progress towards the objective. Iraq’s 2021 EITI Report confirms the MSG’s procurement of BDO UK as the Independent Administrator and its approval of reporting templates. However, the EITI Report is transparent about the IA’s inability to produce a comprehensive scoping study in preparation of the 2021 EITI Report, given significant weaknesses in government reporting (see Requirement 4.1). The EITI Report provides a cursory overview of statutory audit and assurance procedures of government entities, SOEs and extractive companies, but without providing a diagnostic of national audit procedures compared to international audit standards, which would allow readers to understand the level of robustness of audit and assurance procedures. The EITI Report provides an overview of the level of audit of SOEs’ 2021 financial statements, confirming that only unaudited (and until recently unpublished) versions of SOEs’ 2021 financial statements were made available to the IA, but does not comment on audit and assurance practices in 2021 among government entities nor extractive companies. This is a missed opportunity given the lack of public explanation for the significant delays in the Federal Board of Supreme Audit’s (FBSA) controls of government revenue-collecting entities and SOEs. Of equal concern, the EITI Report notes that the financial statements and audit report on the Oil and Gas Revenues Account at the Federal Reserve Bank of New York (FRBNY) were not made available to Iraq EITI, despite the importance of this account as the recipient of all proceeds of crude oil exports. The 2021 EITI Report sets out a clear methodology for additional quality assurances to be provided by material government entities, SOEs, IOCs and oil buyers, which include management attestation and copies of audited financial statements. Yet the EITI Report is transparent about the significant weaknesses in reporting entities’ adherence to the agreed procedures, and includes a clear statement from the IA that the reconciled data is neither comprehensive nor reliable. There is sufficient information in the EITI Report to assess the materiality of payments and revenues from reporting entities that did not adhere to the agreed procedures, and a final reconciliation coverage. Iraq has used its EITI Report to track follow-up on past EITI recommendations and formulate new recommendations, including related to data reliability. Yet there is an opportunity to broaden Iraq EITI’s focus to prevailing audit and assurance practices in the oil and gas sector, with a view to strengthening the relevance of EITI recommendations to policy reform.

The Secretariat's assessment is that Requirement 5.1 is partly met, which marks a regression since the previous Validation. The MSG’s ‘Transparency’ template considers the objective of ensuring the traceability of extractive revenues to the national budget and the same level of transparency and accountability for extractive revenues that are not recorded in the national budget is not applicable. Stakeholders consulted did not express particular views about this requirement. However, the International Secretariat considers the objective as still far from being fulfilled, given the lack of clarity in Iraq’s EITI reporting on which extractive revenues are recorded in the national budget and the lack of public disclosure of key documents that were previously published, such as the audited financial statements of the Oil and Gas Revenues Account (OGRA) at the FRB NY. Iraq’s recent EITI Reports have not clarified the flow of government extractive revenues to the Treasury, nor clarified what specific extractive revenue streams are not fully recorded in the national budget. The 2021 EITI Report (Figure 56) briefly schematises the flow of revenue from crude oil export proceeds through the offshore OGRA account to the Development Fund for Iraq (DFI) (net of the 3% deductions transferred to the Kuwait Compensation Fund until 2021) to the Ministry of Finance’s onshore account at the Central Bank of Iraq, although it does not clarify whether only those funds transferred to the Ministry of Finance’s onshore account are those recorded in the national budget. It is thus unclear from Iraq’s EITI reporting which specific extractive revenues are recorded in the national budget. The International Secretariat’s understanding is that only those oil and gas revenues transferred to the Ministry of Finance’s onshore account at the Central Bank of Iraq are recorded in the national budget. It remains unclear whether any retained earnings by oil and gas SOEs (net of their transfers of 60% of “distributable income” to the Treasury) are recorded in the national budget, and potentially used to fund more extensive quasi-fiscal expenditures than those disclosed in Iraq’s EITI Reports. Likewise, it is unclear whether fees paid for breaches of oil sales contracts (linked to ‘demurrage costs’) paid by the government to oil buyers are recorded in the federal government budget. The International Secretariat understands that, following Shell’s divestment from the Majnoon oilfield in 2018, special arrangements were made for the payment of some fees directly Basra Oil Company (which took over operations of the block), without being recorded in the national budget. Finally, it is not clear how the ‘internal service payments’ from the Ministry of Finance via SOMO to NOCs is covered (see Requirements 2.6 and 4.5). The MSG is invited to comment on the International Secretariat’s understanding of what revenues are recorded in the national budget, on the criteria for agreeing such special arrangements, and the oversight measures in place. The MSG did not submit any comments to this requirement during the commenting period. With regards to public understanding of the management of off-budget extractive revenues, Iraq’s EITI reporting only provides cursory descriptions of the budget cycle, the statutory operations of the OGRA and DFI accounts as well as the Kuwait Compensation Fund (KCF). The 2021 EITI Report notes that financial reports for the DFI account and the KCF were not made available to the IA, but does not comment on the public accessibility of financial reports for other extractive revenues not recorded in the national budget. This represents a regression in transparency related to Iraq’s offshore oil and gas revenue accounts, given previous practices of publishing audited financial statements for the DFI account. While these financial reports are no longer systematically disclosed only, the global EITI website had republished the financial reports for the period 2004-2018 when they had been available at the time.

The Secretariat's assessment is that Requirement 5.3 remains not assessed, given that several encouraged aspects of this requirement remain to be addressed by Iraq EITI. The MSG’s ‘Transparency’ template considers the objective of strengthening public oversight of the management of extractive revenues is not applicable. Stakeholders consulted did not express particular views about this requirement. The International Secretariat’s view is that the objective is still far from being fulfilled, given the limited disclosures on the budget and audit cycles and the lack of reporting on projected production, commodity prices or revenue forecasts. Iraq’s 2021 EITI Report describes a form of earmarked oil and gas revenues that are withheld from the Oil and Gas Revenue Account (OGRA), in the form of the transfer of 3% of crude oil export proceeds to the Kuwait Compensation Fund (KCF). However, the report only describes the general statutory provisions for these transfers, the value of monthly transfers to the KCF but notes that the fund’s financial report was not available for 2021. Iraq has continued to use its EITI reporting to provide a cursory description of the country’s budget and audit cycles, but without addressing important contemporaneous issues such as delays in budget approval and disbursements since 2020 as well as in audits of key government entities and SOEs. In the absence of publicly accessible audited financial statements for SOEs since at least 2016, there are significant opportunities for Iraq’s EITI disclosures to provide more relevant information on the Federal Government’s public financial management. To date, Iraq’s EITI Reports have not yet disclosed any information that could further public understanding and debate around issues of revenue sustainability and resource dependence, such as the assumptions underpinning forthcoming years in the budget cycle and relating to projected production, commodity prices and revenue forecasts arising from the extractive industries and the proportion of future fiscal revenues expected to come from the extractive sector. This is particularly significant given that ‘fiscal break-even’ oil price in the Federal Government of Iraq’s successive budgets has risen sharply from USD 54 per barrel in 2021 to an expected USD 94 in 2024 according to the IMF.

The Secretariat's assessment is that Requirement 4.6 is mostly met, which is a regression since the previous Validation. The only form of direct subnational payments by oil and gas companies continues to be in the Kurdistan Regional Government (KRG). The MSG’s ‘Transparency’ template considers the objective of enabling stakeholders to gain an understanding of benefits that accrue to local governments is not applicable, as it considers the payments from companies to the Kurdistan region to be outside of the scope of EITI implementation, given the adapted implementation decision. Stakeholders consulted did not express particular views about this requirement. The International Secretariat’s recognises the efforts to reference publicly available information on production and exports in EITI reporting, not notes that the objective has not yet been fully met. EITI reporting should reference public company disclosures to the KRG and more systematically map where public disclosures are not yet available. The government’s outreach efforts to KRG to encourage them to disclose have been limited in the period under review. At the same time, the EITI recognises ongoing disputes between the Central Iraqi Government and the Kurdistan region over oil exports, which may be a hinderance on constructive engagement. Assessment of EITI Iraq’s adherence to the adapted implementation decision As noted in the executive summary, this Validation report reviews how Iraq acted the Board’s expectations as set out in the original decision from 2019. In it, the Board welcomed the commitment of the government and the MSG to continue engaging with companies and government agencies in the region. The decision noted the expectation of referencing publicly available information on the payments received by the KRG and to continue to fully (unilaterally) disclose any revenues received by the government from companies operating in the KRG. Furthermore, the Board expected that EITI Reports should include an assessment of the comprehensiveness of this information, highlighting any gaps. This assessment finds that Iraq has included in its EITI reporting aggregate figures from the KRG’s systematic disclosures on production-sharing contracts, production and exports which are published through Deloitte’s non-audited reports. It also finds that EITI Iraq did not review any disclosures by IOCs operating in Kurdistan, which publish this information through payments to government reports or other systematic disclosures .,Systematic disclosures on the websites of the KRG Government, Ministry of Finance and the Statistics Office provide some information on the oil and gas contribution to the regional economy. For instance, the KRG Ministry of Natural Resources website publishes the some, but not all, relevant laws and regulations in oil and gas, while a total of 84 oil and gas production sharing contracts and related documents in Iraqi Kurdistan are listed on the KRG’s Ministry of Natural Resources website and published on the ResourceContracts.com portal. The Iraq EITI MSG has not undertaken a comprehensive review of systematic disclosures related to Iraqi Kurdistan to date. There are significant opportunities for Iraq EITI to strengthen its coverage of the oil and gas industry in Iraqi Kurdistan, if only through more comprehensive reviews of publicly available information both on revenue flows from the oil and gas sector. Moreover, there is evidence in the international media of the widespread use of oil-backed loans by the KRG, including the restructuring of an oil-backed loan from Glencore in 2020. International media such as Reuters have estimated the value of the KRG’s outstanding oil-backed debt at around USD 6bn as recently as 2023. There are no official disclosures about these oil-based debt servicing to date. Significant gaps remain in the KRG’s systematic disclosures of data required by the EITI Standard, including on licensing, ownership, disaggregation and reliability of government revenue data, and social and environmental contributions. During consultations with stakeholders, it was noted that efforts over several years by Iraq EITI to engage with the Kurdistan Regional Government had not succeeded in securing the participation of the region in EITI implementation and it was further noted that reporting templates had been sent to the KRG with no response. Stakeholders acknowledged that efforts at engagement have declined in recent years as a result, and all disclosures in EITI reporting related to KRG were sourced from publicly-available Oil and Gas reviews. Consultations revealed divergent views on future prospects for productive engagement with the region, with some government stakeholders expressing the opinion that progress is unlikely to be made without legislative reform on oil and gas production, whereas stakeholders in the company constituency were more optimistic that the ongoing conversations between the KRG and Ministry of Oil on these matters may lead to better engagement on EITI.

The Secretariat's assessment is that Requirement 5.2 is not met, which marks a regression since the previous Validation. The MSG’s ‘Transparency’ template considers the objective of enabling stakeholders at the local level to assess whether the transfer and management of subnational transfers of extractive revenues are in line with statutory entitlements is mostly met. Civil society stakeholders noted in consultations that subnational transfers were of particular interest and considered that more could be done in the dissemination of information to improve public understanding. The International Secretariat’s considers the objective as far from being fulfilled, given the very limited coverage of subnational transfers through petrodollar allocations in Iraq’s recent EITI Reports and the persistent lack of clarity on the applicable distribution formula. Iraq’s 2021 EITI Report describes two types of transfers between the Federal Government and (subnational) Governorates but only categorises one type as subnational transfers according to Requirement 5.2, i.e. subnational transfers of extractive revenues. The EITI Report explains that ‘Petrodollar Allocations’ consist of a share of oil and gas revenues collected at the federal level and transferred to relevant Governorates and confirms that data was requested for these types of transfers. The second type of transfers briefly described in the EITI Report are ‘Regions and Governorates’ Development Allocations and Transfers’, which appear to be general budget transfers to Governorates that are not specifically linked to extractive revenues. While previous EITI Validations of Iraq had categorised statutory Federal Government transfers to the KRG as subnational transfers in accordance with Requirement 5.2 given that they were linked to oil and gas production in Iraqi Kurdistan being made available to SOMO for marketing and export, the 2021 EITI Report confirms that there have been no transfers from the Federal Government to KRG Governorates since 2016. Given that the agreement between Baghdad and Erbil was not effective in the period under review, the International Secretariat concurs that the Federal Government transfers to the KRG were not effective in the period under review. The International Secretariat agrees with the categorisation of ‘Petrodollar Allocations’ as the only forms of subnational transfers of extractive revenues in Iraq in 2021. The 2021 EITI Report discloses the general revenue-sharing formula for ‘Petrodollar Allocations’, described as a share (5%) of oil and gas revenues related to production and refining in the specific Governorate. This formula is different from the revenue-sharing formula for ‘Petrodollar Allocations’ disclosed in previous EITI Reports and in the period reviewed by the previous Validation, when the formula was described as a fixed USD 5 per barrel of crude oil and per 150 cubic metres of natural gas produced or refined in the Governorate. There is no explanation for these differences in the 2021 EITI Report, nor whether any reforms of ‘Petrodollar Allocations’ had been implemented since the previous Validation. Stakeholders consulted stated that the formula for calculating Petrodollar Allocations is subject to annual revision by the Cabinet of Ministers but were unable to provide further insight on the reasons for the most recent revision. However, all stakeholders consulted confirmed that petrodollar allocations were effective in practice, although there was no clarity on whether sums transferred were of the correct value. All stakeholders also confirmed that the revenue-sharing formula disclosed in the 2021 EITI Report was not the correct one used in 2021. At the time of finalising the draft report, the International Secretariat was not aware of any sources of publicly available information describing the formula or the rationale for its revision by the Cabinet. The 2021 EITI Report does not disclose any actual information on either the expected or actual subnational transfers of ‘Petrodollar Allocations’. It explains that the IA requested information on the values of budgeted and actual ‘Petrodollar Allocations’ in 2021 from the Ministry of Planning and the Ministry of Finance respectively, but that this information was not provided in preparation of the 2021 EITI Report. Thus, there are no actual disclosures of subnational transfers of extractive revenues in Iraq’s 2021 EITI Report, nor of any additional information on the management and use of these subnational transfers by the Governorates.

The Secretariat's assessment is that Requirement 6.1 is mostly met, as in the previous Validation. The MSG’s ‘Transparency’ template considers the objective of enabling public understanding of extractive companies’ social and environmental contributions is fully met. Stakeholders consulted did not express particular views about this requirement. However, the International Secretariat considers the objective as mostly met, given gaps in material company reporting of mandatory social expenditures and the ad hoc disclosure of environmental payments to government. Where environmental payments to government are disclosed, they are mixed together with environmental expenditures to third parties and do not appear comprehensive of all material companies’ payments related to the environment. With regards to social expenditures, Iraq’s 2021 EITI Report describes three types of mandatory social expenditures that are required by the terms of the operating contract or by law, and provides the specific legal and contractual provisions underpinning these requirements. The International Secretariat agrees with this scoping of mandatory social expenditures, which is consistent with the findings of the previous Validation. Given the EITI Report’s references to the lack of audit of SOEs’ financial statements for 2021 (see above footnote, category (3)), this implies that the third type of statutory mandatory social expenditures (by SOEs) were not effective in 2021, even if this is not explicitly clarified in Iraq’s EITI reporting. Thus, the International Secretariat’s understanding is that there were only two types of mandatory social expenditures effective in 2021, related to IOCs’ contractual obligations to develop social and infrastructure projects. In terms of actual disclosures, the 2021 EITI Report confirms that IOCs were requested to disclose details of their mandatory social expenditures. However, the EITI Report is transparent about the gaps in company reporting, with Annex 5 highlighting that only nine of the 11 IOCs that submitted EITI reporting templates disclosed any mandatory social expenditures for 2021. These disclosures include the detail of the social expenditures, disaggregated between mandatory and voluntary, with name of company and oilfield, whether cash or in-kind, description, legal or contractual basis for mandatory social expenditures, amount paid or value of in-kind expenditure, as well as the name and location of beneficiary(ies), even if the beneficiary names are quite general (e.g. funding women’s education in Basra generally). The 2021 EITI Report does not explain the reasons for two of the 11 reporting IOCs not disclosing any mandatory social expenditures, implying that IOC disclosures of mandatory social expenditures were not comprehensive. With regards to environmental payments, Iraq’s 2021 EITI Report does not describe any types of extractive company payments to government that are related to the environment. While the EITI Report confirms that the Ministry of Environment was included in the scope of EITI reporting in 2021, it is transparent that the Ministry did not submit its EITI reporting template as requested. Requests for disclosure of environmental payments to government were included in the EITI reporting templates for extractive companies, but the 2021 EITI Report confirms that only three of the 11 reporting IOCs disclosed any information on ‘environmental payments’. The detail of these three IOCs’ reporting of ‘environmental payments’ in Annex 5 of the 2021 EITI Report reveals that only one IOC (ENI) reported transactions that were actually environmental payments to government (in the form of an environmental fine related to the Al-Hammar gas Station paid to BOC, which was then expected to be transferred to the Basra Environmental Directorate of the Department of Improving and Protecting Environment in South Area). The other two IOCs’ disclosures are of expenditures to third parties rather than payments to government, including PetroChina’s in-kind expenditure on electricity services to the Electrical State Company in Al Kahla in Missan Governorate (related to the Halfaya Oilfield) and Gazprom’s purchasing and distributing food baskets to support the Badra, Jasan and Zurbatiyah communities (totalling 1,000 food baskets for local families). Consequently, the International Secretariat does not consider that EITI disclosures of environmental payments to government in 2021 are comprehensive. The 2021 EITI Report does not comment on any other voluntary environmental payments to government or voluntary or mandatory environmental expenditures to third parties, as encouraged by Requirement 6.1.d.