The 2007 Draft Oil and Gas Law outlines the foundational principles for establishing a Federal Council to govern Iraq's energy sector and distribute management powers between central and regional authorities. However, the comprehensive framework has never been formally enacted due to a 19-year political deadlock over revenue-sharing and the legislative control of lucrative oil fields.

The draft prepared by the Council of Ministers' Oil and Energy Committee on February 15, 2007, never became law due to nearly two decades of disagreements between the Kurdistan Regional Government and the federal government.

Draft Oil Law Enshrines Iraq’s Constitutional Energy Rights 

The draft explicitly incorporates Article 111 of the 2005 Constitution, affirming that "Oil and gas are owned by all the people of Iraq in all the regions and governorates." 

Furthermore, the draft accurately references Articles 110, 112, 114, and 115 to outline the legal distribution of authority and residual powers between federal and regional governments regarding resource management. 

Proposed Federal Council to Dictate Iraq’s Energy Policy 

The Federal Council is mandated with approving general energy policies and hydrocarbon strategies developed by the Ministry of Oil in coordination with producing regions.

The Council issues regulatory directives for exploration and production contracts, oversees the development of domestic oil fields and transit pipelines, and retains veto authority over any substantive modifications to these plans.

Additionally, the regulatory body is empowered to review active licensing contracts, endorse standardized development and production templates, select specific field models, and establish pre-qualification criteria for foreign energy firms, provided that any contractual revisions preserve Iraq's national equity share.

Council Authorized to Oversee Oil Exploration and Development

The Council is tasked with guaranteeing the exploration and development of oil resources in the best possible way for the public interest and in accordance with international standards. To facilitate its work, it is authorized to resort to the services of an office of independent consultants and local and international experts.

It can also establish a new internal department and regulations to organize its work, and its members have the right to propose oil-related legislative and policy projects.

Creation of Independent National Oil Company 

To shift the state's energy role from active operation to high-level policy and regulation, the 2007 framework mandates a massive structural reorganization of the country's energy infrastructure. It orders the transfer of all technical and commercial oil activities away from the exclusive control of the Ministry of Oil to specialized entities. 

Most notably, the draft dictates the creation of an independent Iraq National Oil Company (INOC) to spearhead operational duties while granting distinct management authorities to regional governments and producing governorates.

Draft Oil and Gas Law Grants Kurdistan Region Authority

According to the draft, the Kurdistan Region has several authorities, the most important of which is proposing an energy investment plan to the federal authorities.

Kurdistan has the right to license the development of new energy fields and must have representation in the federal council. It is also the region's duty to cooperate and coordinate with the federal authority in implementing the general plans of the energy sector.