The oil law was one of the famous benchmarks for progress ages ago but there is still no federal law. Kurdistan went ahead with its own law and has a number of foreign contracts that have not been approved by the Iraqi federal government. As the article notes there was an auction of contracts for technical support but few oil giants bid since they are waiting for better terms and an ownership stake. No doubt after the elections whichever party is in power will try to sell out to the big oil powers. However, before they do that they will have to solve the standoff between the Kurds and the rest of Iraq as to who controls what and how revenues will be shared.
Iraq delays hydrocarbons law until after election: MP
BAGHDAD (AFP) – Iraq has delayed the discussion of a stalled hydrocarbons law, seen as key to the country ramping up its oil production, until after parliamentary elections in January, a senior MP said on Saturday.
The proposed law, which would regulate the oil sector and divide responsibility between the central government in Baghdad and Iraq's provinces, has been held up for three years due to disagreements between MPs from the country's majority Shia and minority Sunni, Kurd and other communities.
"There is no agreement on the contents of the oil law ... because this government wants the management of the oil sector to be centralised," said Ali Hussein Balo, a Kurd and chairman of the parliamentary oil and gas committee.
"Due to these conflicts, we have decided to delay the oil law enactment until after the election," he told AFP.
Iraq hopes to be able to pump six million barrels per day, up from current output of around 2.5 million, within the next four to five years as new projects come online, Oil Minister Hussein al-Shahristani has said.
The country has the world's third-largest proven reserves of oil, with more than 115 billion barrels, behind only Saudi Arabia and Iran.
But investment in Iraq's ageing energy infrastructure has been hampered by delays to the hydrocarbons law.
When the government auctioned eight major energy contracts in June, only energy giants BP and China's CNPC won a bid, agreeing to receive only two dollars a barrel to operate the giant Rumaila field, which has known reserves of 17.7 billion barrels.
It was the first big upstream deal between Iraq and foreign oil majors since nationalisation of the country's oil production about four decades ago.
The second round of bidding for Iraqi oil contracts is due in the first half of December, Shahristani said last month.
Copyright © 2009 Yahoo! Inc. All rights reserved.
Showing posts with label Iraq oil law. Show all posts
Showing posts with label Iraq oil law. Show all posts
Sunday, October 4, 2009
Sunday, May 31, 2009
Iraq's Kurdish oil: Kurdistan goes glug glug
This is from the economist.
Strange most mainstream media are saying nothing about this. Note that the famous Iraq oil law that was once an important benchmark has completely faded from mainstream radar even though the law is still languishing in the Baghdad parliament for about three years!
Kurdistan has made an end run around the central govt. having its own oil law and in effect sharing with the central govt. on its own terms. It remains to be seen if the central government is able to do anything about all this except for the sort of rhetorical rants cited in this article.
Given the new foreign investments in Kurdistan no doubt there will be western support for any attempts to limit Kurdistan autonomy. Even Turkey is on board it would seem!
Iraq's Kurdish oil
Kurdistan goes glug glug
May 28th 2009 ERBILFrom The Economist print edition
The federal government is letting Iraq’s Kurds export from their new oilfields
ON JUNE 1st a man in a hard hat in the blazing sun will ritually turn a switch to let oil flow through a pipeline. In oil-rich Iraq that should not warrant comment. But this operation, at the Tawke oilfield near Iraq’s northern frontier with Turkey, will be beamed live to a giant screen in a new conference centre in Erbil, capital of Iraq’s self-ruling Kurdistan region. Hundreds of leading Kurds will cheer as they watch pictures of oil being offloaded from tankers at an export facility at Khurmala, south-west of Erbil, from which it will be pumped to Baiji and into the same northbound pipeline (see map).
The reason for the excitement is that the crude is being extracted from the first newly developed oilfield to have come on stream since the Americans invaded Iraq in 2003—indeed, the first to have come on stream anywhere in Iraq for 30-odd years. It is also the first instance of exploration leading to extraction and export by private companies in Iraq since oil was nationalised in 1972. Iraq’s Kurds, who have signed a string of controversial production-sharing agreements (PSAs) with private companies, are proud that the oil is flowing anew from fields that they control.
The oil ready for export comes from two fields. One is at Tawke, developed by DNO International, a small Norwegian firm. The other is at Taq-Taq, where Addax Petroleum, listed in London and Toronto, runs a joint venture with Turkey’s Genel Enerji, which also has a stake in the Tawke show. Ashti Hawrami, the Iraqi Kurds’ natural-resources minister, praises the Turkish companies involved. Relations between Turkey’s government and the Iraqi Kurdish regional one are plainly improving.
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The Tawke field will start by pumping 60,000 barrels a day (b/d). A new pipeline will carry the crude from the wells east of Zakho to join the main northern pipeline on the Iraqi side of the Turkish border. Meanwhile 40,000 b/d will be trucked from the Taq-Taq site to Khurmala. The crude from both fields will flow through Turkey to the Mediterranean port of Ceyhan. Mr Hawrami says the new fields should produce 450,000 b/d by 2011 and 1m b/d by the end of 2012. That would represent 42% of Iraq’s production, if output from the rest of the country stays the same.
The operations at Taq-Taq and Tawke are run under PSAs whereby private companies get 10-20% of the profit. The rest goes to the federal government in Baghdad before being distributed across the rest of Iraq. But Iraq’s oil ministry and its trade unions dislike PSAs. A long row between the Kurds and the authorities in Baghdad over rules for the north has yet to be resolved. Baghdad wants to approve all oil deals. The Kurds say the federal constitution lets them run—and profit from—their own oil industry, though they accept that revenue should somehow be shared. The Kurds’ parliament passed a hydrocarbons law in 2007. But a new national oil law has been stalled in the federal parliament in Baghdad for at least three years.
The Kurds say they have shown up the decrepitude of Iraq’s oil establishment. Despite billions of dollars of investment since 2003, production is still just over 2m b/d, about what it was when Saddam Hussein was toppled. The federal oil minister, Hussein al-Shahristani, loathes the Kurds’ success and has tried to stop them running their own oil industry, declaring all deals (now at least 20) signed by them to be illegal. He has also threatened to blacklist any oil company that does business up north from applying for licences down south.
But the global recession may be helping the Kurds. The fall in the oil price has played havoc with the central budget. Iraq needs cash quickly. That, presumably, is why the federal government was forced to let the Kurds export oil off their own bat.
Strange most mainstream media are saying nothing about this. Note that the famous Iraq oil law that was once an important benchmark has completely faded from mainstream radar even though the law is still languishing in the Baghdad parliament for about three years!
Kurdistan has made an end run around the central govt. having its own oil law and in effect sharing with the central govt. on its own terms. It remains to be seen if the central government is able to do anything about all this except for the sort of rhetorical rants cited in this article.
Given the new foreign investments in Kurdistan no doubt there will be western support for any attempts to limit Kurdistan autonomy. Even Turkey is on board it would seem!
Iraq's Kurdish oil
Kurdistan goes glug glug
May 28th 2009 ERBILFrom The Economist print edition
The federal government is letting Iraq’s Kurds export from their new oilfields
ON JUNE 1st a man in a hard hat in the blazing sun will ritually turn a switch to let oil flow through a pipeline. In oil-rich Iraq that should not warrant comment. But this operation, at the Tawke oilfield near Iraq’s northern frontier with Turkey, will be beamed live to a giant screen in a new conference centre in Erbil, capital of Iraq’s self-ruling Kurdistan region. Hundreds of leading Kurds will cheer as they watch pictures of oil being offloaded from tankers at an export facility at Khurmala, south-west of Erbil, from which it will be pumped to Baiji and into the same northbound pipeline (see map).
The reason for the excitement is that the crude is being extracted from the first newly developed oilfield to have come on stream since the Americans invaded Iraq in 2003—indeed, the first to have come on stream anywhere in Iraq for 30-odd years. It is also the first instance of exploration leading to extraction and export by private companies in Iraq since oil was nationalised in 1972. Iraq’s Kurds, who have signed a string of controversial production-sharing agreements (PSAs) with private companies, are proud that the oil is flowing anew from fields that they control.
The oil ready for export comes from two fields. One is at Tawke, developed by DNO International, a small Norwegian firm. The other is at Taq-Taq, where Addax Petroleum, listed in London and Toronto, runs a joint venture with Turkey’s Genel Enerji, which also has a stake in the Tawke show. Ashti Hawrami, the Iraqi Kurds’ natural-resources minister, praises the Turkish companies involved. Relations between Turkey’s government and the Iraqi Kurdish regional one are plainly improving.
document.write('');
The Tawke field will start by pumping 60,000 barrels a day (b/d). A new pipeline will carry the crude from the wells east of Zakho to join the main northern pipeline on the Iraqi side of the Turkish border. Meanwhile 40,000 b/d will be trucked from the Taq-Taq site to Khurmala. The crude from both fields will flow through Turkey to the Mediterranean port of Ceyhan. Mr Hawrami says the new fields should produce 450,000 b/d by 2011 and 1m b/d by the end of 2012. That would represent 42% of Iraq’s production, if output from the rest of the country stays the same.
The operations at Taq-Taq and Tawke are run under PSAs whereby private companies get 10-20% of the profit. The rest goes to the federal government in Baghdad before being distributed across the rest of Iraq. But Iraq’s oil ministry and its trade unions dislike PSAs. A long row between the Kurds and the authorities in Baghdad over rules for the north has yet to be resolved. Baghdad wants to approve all oil deals. The Kurds say the federal constitution lets them run—and profit from—their own oil industry, though they accept that revenue should somehow be shared. The Kurds’ parliament passed a hydrocarbons law in 2007. But a new national oil law has been stalled in the federal parliament in Baghdad for at least three years.
The Kurds say they have shown up the decrepitude of Iraq’s oil establishment. Despite billions of dollars of investment since 2003, production is still just over 2m b/d, about what it was when Saddam Hussein was toppled. The federal oil minister, Hussein al-Shahristani, loathes the Kurds’ success and has tried to stop them running their own oil industry, declaring all deals (now at least 20) signed by them to be illegal. He has also threatened to blacklist any oil company that does business up north from applying for licences down south.
But the global recession may be helping the Kurds. The fall in the oil price has played havoc with the central budget. Iraq needs cash quickly. That, presumably, is why the federal government was forced to let the Kurds export oil off their own bat.
Saturday, September 20, 2008
Iraq oil minister blames Kurds for delay in oil law
The new oil law has been awaiting approval for ages now and as this article points out it is no nearer to being passed now. The Kurds have made an end run around the law and the central government although not violating the law is also agreeing to new service contracts. This is from AFP via Yahoo.
Iraq oil minister blames Kurds for delay in oil law
by Jay Deshmukh and Salam FarajFri Sep 19, 6:11 AM ET
A series of contracts awarded by Kurdish leaders is blocking the passage of a national oil law, prompting Baghdad to use Saddam Hussein era rules for new deals, Oil Minister Hussein al-Shahristani said.
In an interview with AFP, Shahristani said a majority of parliament's 275 members were hesitating to pass the new oil law after the northern Kurdish administration signed contracts ahead of the national law.
"The KRG (Kurdistan Regional Government) has gone ahead and signed even production sharing agreements. This has created concern among parliamentary blocs," said the former nuclear physicist.
Shahristani said some MPs want the new law to be modified in order to "ban production sharing contracts."
"Others are questioning the usefulness of the new law. They say if the KRG is not abiding by the new law in spite of participating in negotiations during the framing of the bill, why have a new law?," the minister said.
"They say the KRG contracts are clear violations of the new law and the administration is not abiding by the law, then what is the point of passing the new bill. We might as well keep the old law."
The passing of the oil law is seen by Washington as a key benchmark in boosting national unity in the violence-wracked country.
The draft legislation has been intensely disputed by Iraq's bitterly divided communities over how revenues from oil sales would be distributed in the 18 provinces.
The dispute aggravated after the KRG signed a series of contracts with foreign oil companies to boost oil production in its northern territory.
The bulk of Iraq's oil reserves, the world's third largest, are in the Kurdish north and the Shiite south.
Shahristani, a strong opponent of the KRG contracts, said he does not see the law being passed in parliament in the near term.
"If the KRG does not cancel its contracts and make a clear commitment to abide by the new law, parliamentarians would not pass the law," he said, adding Baghdad was left with no option but to tap the existing law from Saddam's regime to boost its own oil production.
"The new law does not offer any more benefits to foreign companies than the prevailing law. After waiting for more than a year, the government decided to go ahead and use the prevailing law to boost production."
Baghdad has recently signed two contracts with foreign companies -- one with state-owned China National Petroleum and the other with Royal Dutch Shell.
China National would develop the Al-Ahdab oil field in central Iraq as part of a service agreement with Baghdad.
The company has managed to get a foothold in the Iraqi oil sector by reviving its 1997 contract signed with the former Iraqi regime.
However, activities were suspended due to UN sanctions and security issues following the US-led war of 2003 that toppled Saddam.
Shahristani said Baghdad has managed to change the previous joint venture contract into a mere service agreement.
In the second venture, Iraq's state-owned South Oil Company will hold a 51 percent stake with Shell holding 49 percent. The new company would capture gas from an oil field in the southern province of Basra.
These two deals do not violate the languishing oil law, said Shahristani, adding "we want to abide by the new law even if it is still to be approved."
Shahristani said the ministry has embarked on an aggressive plan for the next three to four years as it taps the prevailing oil law to ramp up production.
Iraq is estimated to have 115 billion barrels of oil.
It has 80 proven oil and gas fields, including 27 which are operational, the minister said.
"The plan is to offer all these to international bidding gradually."
He said Iraq also has 65 exploration blocks which it plans to offer for similar bidding.
"The decision is to develop oil production as fast as possible by cooperating with international companies," he added.
"The whole idea of bid rounds is to find what is the best offer you can get and what kind of capital investment is required. We are talking of tens of billions of dollars here."
Iraq also plans to step up its refining capacity by adding extra units to existing refineries as well as constructing "new state-of-the-art units."
Shahristani said new refineries are being planned in the provinces of Nasiriyah, Karbala, Kirkuk and Maysan.
Copyright © 2008 Agence France Presse. All rights reserved. Copyright © 2008 Yahoo All rights reserved.
Iraq oil minister blames Kurds for delay in oil law
by Jay Deshmukh and Salam FarajFri Sep 19, 6:11 AM ET
A series of contracts awarded by Kurdish leaders is blocking the passage of a national oil law, prompting Baghdad to use Saddam Hussein era rules for new deals, Oil Minister Hussein al-Shahristani said.
In an interview with AFP, Shahristani said a majority of parliament's 275 members were hesitating to pass the new oil law after the northern Kurdish administration signed contracts ahead of the national law.
"The KRG (Kurdistan Regional Government) has gone ahead and signed even production sharing agreements. This has created concern among parliamentary blocs," said the former nuclear physicist.
Shahristani said some MPs want the new law to be modified in order to "ban production sharing contracts."
"Others are questioning the usefulness of the new law. They say if the KRG is not abiding by the new law in spite of participating in negotiations during the framing of the bill, why have a new law?," the minister said.
"They say the KRG contracts are clear violations of the new law and the administration is not abiding by the law, then what is the point of passing the new bill. We might as well keep the old law."
The passing of the oil law is seen by Washington as a key benchmark in boosting national unity in the violence-wracked country.
The draft legislation has been intensely disputed by Iraq's bitterly divided communities over how revenues from oil sales would be distributed in the 18 provinces.
The dispute aggravated after the KRG signed a series of contracts with foreign oil companies to boost oil production in its northern territory.
The bulk of Iraq's oil reserves, the world's third largest, are in the Kurdish north and the Shiite south.
Shahristani, a strong opponent of the KRG contracts, said he does not see the law being passed in parliament in the near term.
"If the KRG does not cancel its contracts and make a clear commitment to abide by the new law, parliamentarians would not pass the law," he said, adding Baghdad was left with no option but to tap the existing law from Saddam's regime to boost its own oil production.
"The new law does not offer any more benefits to foreign companies than the prevailing law. After waiting for more than a year, the government decided to go ahead and use the prevailing law to boost production."
Baghdad has recently signed two contracts with foreign companies -- one with state-owned China National Petroleum and the other with Royal Dutch Shell.
China National would develop the Al-Ahdab oil field in central Iraq as part of a service agreement with Baghdad.
The company has managed to get a foothold in the Iraqi oil sector by reviving its 1997 contract signed with the former Iraqi regime.
However, activities were suspended due to UN sanctions and security issues following the US-led war of 2003 that toppled Saddam.
Shahristani said Baghdad has managed to change the previous joint venture contract into a mere service agreement.
In the second venture, Iraq's state-owned South Oil Company will hold a 51 percent stake with Shell holding 49 percent. The new company would capture gas from an oil field in the southern province of Basra.
These two deals do not violate the languishing oil law, said Shahristani, adding "we want to abide by the new law even if it is still to be approved."
Shahristani said the ministry has embarked on an aggressive plan for the next three to four years as it taps the prevailing oil law to ramp up production.
Iraq is estimated to have 115 billion barrels of oil.
It has 80 proven oil and gas fields, including 27 which are operational, the minister said.
"The plan is to offer all these to international bidding gradually."
He said Iraq also has 65 exploration blocks which it plans to offer for similar bidding.
"The decision is to develop oil production as fast as possible by cooperating with international companies," he added.
"The whole idea of bid rounds is to find what is the best offer you can get and what kind of capital investment is required. We are talking of tens of billions of dollars here."
Iraq also plans to step up its refining capacity by adding extra units to existing refineries as well as constructing "new state-of-the-art units."
Shahristani said new refineries are being planned in the provinces of Nasiriyah, Karbala, Kirkuk and Maysan.
Copyright © 2008 Agence France Presse. All rights reserved. Copyright © 2008 Yahoo All rights reserved.
Saturday, March 15, 2008
Iraq oil minister slams KRG on Turkey trip
There is still no sign of a federal oil bill being passed after almost a year so it is not too surprising that the KRG is going its own way. However, it is the Kurdish reluctance to give much power over oil to the central government that is part of the problem. The issue is not likely to go away. This is from UPI.
Iraq oil minister slams KRG on Turkey trip
Published: March 10, 2008 at 9:22 PM
Print story Email to a friend Font size:ANKARA, Turkey, March 10 (UPI) -- Iraq's oil minister reaffirmed ties with Turkey and rejected Iraqi Kurdistan's oil deals in visits to Ankara over the weekend.
Turkey, which wants to further develop Iraq oil and gas to ship to and through its territory, is also sparring with Iraq's Kurds over rebels in the northern Iraq mountains.
Hussain al-Shahristani made overtures to Turkey on a project to build a refinery in Iraq, which badly needs fuels, and other joint projects between the countries' respective oil firms, Today's Zaman reports.
Iraq already has a pipeline sending oil to a Turkish port. The countries have talked of adding another line and increasing flow, which is below capacity, as well as adding a parallel line to send Iraqi gas north.
"Iraq is open to the world when it comes to oil cooperation especially with the neighboring countries," Oil Ministry spokesman Assem Jihad told United Press International last week. He said the pipeline is sending between 250,000 and 350,000 barrels per day to Turkey, and the short-term goal is 500,000. Jihad said gas in Iraq's western desert could be developed and sent to Turkey, and on to Europe, via Syria as well.
"So Turkey is a spot of our oil and gas transferring to the outside world," he said.
After a meeting with Turkish Energy Minister Hilmi Guler, Shahristani assured "all contracts will be handled by the central government, referring to the Kurdistan Regional Government's dozens of oil deals with international oil companies.
The move, as well as a regional oil law, has challenged Baghdad's control over the oil sector in Iraq. Shahristani has called the deals illegal, stopped oil sales to two firms that signed with the KRG and threatened to keep all such firms out of future Iraqi oil deals.
Turkey views the deals as emboldening Iraq's Kurds, possibly bolstering their future call for an independent state and empowering Turkey's sizeable Kurdish population. Turkey has recently stepped up attacks, including a five-day incursion, on the separatist Kurdistan Workers Party's camps in northern Iraq mountains. The PKK is considered a terrorist organization by the United States, the European Union, Turkey and, ostensibly, Iraq. The organization has killed tens of thousands in its decades-long quest for Kurdish independence and human rights in Turkey.
In an opening on Turkish-Kurdish relations, the Iraq delegation was led by President Jalal Talabani, a Kurd.
Iraq oil minister slams KRG on Turkey trip
Published: March 10, 2008 at 9:22 PM
Print story Email to a friend Font size:ANKARA, Turkey, March 10 (UPI) -- Iraq's oil minister reaffirmed ties with Turkey and rejected Iraqi Kurdistan's oil deals in visits to Ankara over the weekend.
Turkey, which wants to further develop Iraq oil and gas to ship to and through its territory, is also sparring with Iraq's Kurds over rebels in the northern Iraq mountains.
Hussain al-Shahristani made overtures to Turkey on a project to build a refinery in Iraq, which badly needs fuels, and other joint projects between the countries' respective oil firms, Today's Zaman reports.
Iraq already has a pipeline sending oil to a Turkish port. The countries have talked of adding another line and increasing flow, which is below capacity, as well as adding a parallel line to send Iraqi gas north.
"Iraq is open to the world when it comes to oil cooperation especially with the neighboring countries," Oil Ministry spokesman Assem Jihad told United Press International last week. He said the pipeline is sending between 250,000 and 350,000 barrels per day to Turkey, and the short-term goal is 500,000. Jihad said gas in Iraq's western desert could be developed and sent to Turkey, and on to Europe, via Syria as well.
"So Turkey is a spot of our oil and gas transferring to the outside world," he said.
After a meeting with Turkish Energy Minister Hilmi Guler, Shahristani assured "all contracts will be handled by the central government, referring to the Kurdistan Regional Government's dozens of oil deals with international oil companies.
The move, as well as a regional oil law, has challenged Baghdad's control over the oil sector in Iraq. Shahristani has called the deals illegal, stopped oil sales to two firms that signed with the KRG and threatened to keep all such firms out of future Iraqi oil deals.
Turkey views the deals as emboldening Iraq's Kurds, possibly bolstering their future call for an independent state and empowering Turkey's sizeable Kurdish population. Turkey has recently stepped up attacks, including a five-day incursion, on the separatist Kurdistan Workers Party's camps in northern Iraq mountains. The PKK is considered a terrorist organization by the United States, the European Union, Turkey and, ostensibly, Iraq. The organization has killed tens of thousands in its decades-long quest for Kurdish independence and human rights in Turkey.
In an opening on Turkish-Kurdish relations, the Iraq delegation was led by President Jalal Talabani, a Kurd.
Tuesday, February 12, 2008
Iraq oil dealings ongoing, met by protests.
This is from the Earthtimes. The Oil law one of Bush's main benchmarks is still stalled after almost a year. Meanwhile Kurds passed their own law. The meetings described in this article apparently are not of sufficient news value to make it into mainstream media news reports. I guess that is because the Iraq war is not supposed to have anything to do with oil. Shhhh!
Iraq oil dealings ongoing, met by protests
Posted : Wed, 06 Feb 2008 00:30:22 GMT
Author : General News Editor
LONDON, Feb. 5 Negotiations between international oil companies and Iraq Oil Ministry officials appear to be progressing, despite protests at a conference in London.Iraq is in direct talks with the world's largest oil companies and is prepping for a first round of bids to develop its oil fields. Iraq's reserves, the third largest in the world, are producing about 2.3 million barrels per day, and Iraq Oil Minister Hussain al-Shahristani said the direct talks will help boost that to 2.8 million bpd by the end of the year.The Middle East Economic Survey confirms widespread reports that top officials at Shell, BP, ExxonMobil and Chevron met last week in Amman with a delegation from Baghdad, led by Natiq al-Bayati, the Oil Ministry's director general of the Petroleum Contracts & Licensing Directorate.Shahristani said contracts will be signed "within a few weeks," MEES reports. The technical service agreements will dedicate expertise, training and equipment to a handful of Iraq's oldest and largest fields. Iraq has given a Feb. 18 deadline for any interested oil firms to pre-register to be considered for more extensive contracts to develop Iraq oil fields, which Shahristani said will be an open bidding and transparent process. It's expected to take place later this year.Oil companies are interested, as evidenced by continual discussions with the Oil Ministry over the past five years and the upcoming bidding round. But security and legal questions remain."It is a country of interest to us but we are waiting for political and security stability to return before we will take anything further," a BP spokesman told The Guardian, confirming the Jordan meeting."We are in the race so to say, we would like to work in Iraq," Shell Chief Executive Officer Jeroen van der Veer said last week, the Financial Times reports, "but the petroleum law is not ratified so we don't know the conditions. We would like to know the rules of the game."MEES quoted a source from one of the Big Oil firms that there are concerns on "rates of return, how these contracts are going to be structured, will they be honored. There are concerns over Parliament's reaction in the absence of a hydrocarbon law."The draft oil law is in a major holdup, however. The central and Kurdish regional governments dispute the extent of control over Iraq's oil sector. The Kurds are so frustrated they passed a regional oil law and have signed dozens of production-sharing contracts.Iraq's oil unions and civil society organizations around the world have taken the oil law to task for allowing contracts such as the PSCs, which they fear will lead to control over Iraq's oil by oil companies.A Middle East oil conference in London Tuesday, where Iraqi, British and industry oil leaders attended, was met by protesters who fear Iraq's oil wealth will be squandered.Copyright 2008 by UPI
Iraq oil dealings ongoing, met by protests
Posted : Wed, 06 Feb 2008 00:30:22 GMT
Author : General News Editor
LONDON, Feb. 5 Negotiations between international oil companies and Iraq Oil Ministry officials appear to be progressing, despite protests at a conference in London.Iraq is in direct talks with the world's largest oil companies and is prepping for a first round of bids to develop its oil fields. Iraq's reserves, the third largest in the world, are producing about 2.3 million barrels per day, and Iraq Oil Minister Hussain al-Shahristani said the direct talks will help boost that to 2.8 million bpd by the end of the year.The Middle East Economic Survey confirms widespread reports that top officials at Shell, BP, ExxonMobil and Chevron met last week in Amman with a delegation from Baghdad, led by Natiq al-Bayati, the Oil Ministry's director general of the Petroleum Contracts & Licensing Directorate.Shahristani said contracts will be signed "within a few weeks," MEES reports. The technical service agreements will dedicate expertise, training and equipment to a handful of Iraq's oldest and largest fields. Iraq has given a Feb. 18 deadline for any interested oil firms to pre-register to be considered for more extensive contracts to develop Iraq oil fields, which Shahristani said will be an open bidding and transparent process. It's expected to take place later this year.Oil companies are interested, as evidenced by continual discussions with the Oil Ministry over the past five years and the upcoming bidding round. But security and legal questions remain."It is a country of interest to us but we are waiting for political and security stability to return before we will take anything further," a BP spokesman told The Guardian, confirming the Jordan meeting."We are in the race so to say, we would like to work in Iraq," Shell Chief Executive Officer Jeroen van der Veer said last week, the Financial Times reports, "but the petroleum law is not ratified so we don't know the conditions. We would like to know the rules of the game."MEES quoted a source from one of the Big Oil firms that there are concerns on "rates of return, how these contracts are going to be structured, will they be honored. There are concerns over Parliament's reaction in the absence of a hydrocarbon law."The draft oil law is in a major holdup, however. The central and Kurdish regional governments dispute the extent of control over Iraq's oil sector. The Kurds are so frustrated they passed a regional oil law and have signed dozens of production-sharing contracts.Iraq's oil unions and civil society organizations around the world have taken the oil law to task for allowing contracts such as the PSCs, which they fear will lead to control over Iraq's oil by oil companies.A Middle East oil conference in London Tuesday, where Iraqi, British and industry oil leaders attended, was met by protesters who fear Iraq's oil wealth will be squandered.Copyright 2008 by UPI
Monday, January 21, 2008
Iraq MP: Kurds, government stall oil law.
This is from UPI. In spite of being one of the main "benchmarks" the oil law is still stuck almost a year after it was approved by the Iraq cabinet. The Kurds have just gone their own way and signed contracts themselves. The oil law seems not even to be in parliament!
Iraq MP: Kurds, government stall oil law
BAGHDAD, Jan. 10 (UPI) -- The leader of the Iraqi Parliament's Energy Committee has accused Iraq's Kurdish leadership and the national ministerial council of holding up a draft oil law.
Abdul Hadi al-Hassani also said the federal government should keep up the pressure against the Kurdistan Regional Government for moving forward unilaterally on developing its oil sector in the north.
"The Parliament awaits for the government's approval of any of the draft law's four copies," Hassani told the Voices of Iraq news agency. He blamed the holdup on politics.
The draft law has been under negotiation for more than a year and is stuck in disputes between the Kurds, who want decentralized control over the oil sector, and Iraqi Arab leaders who want the national government in charge.
The law has seen many ups and downs. It was approved last February. Then a dispute broke out over which oil fields would be under the central government's control. It's also been altered a number of times -- so much that two of the three original authors oppose it -- and there are now more than one version.
Hassani's comments appear to mean the law isn't before the Parliament, as previously thought, but a step behind in the legislative process, waiting for a final version from the council of ministers.
Hassani reiterated the national government's reference of the KRG deals as "illegal." The KRG has passed its own regional oil law and signed more than 20 deals in the past six months. It feels the national government is moving too slow.
"The central government can use its political relations with the neighboring countries to pressure the government of Iraq's Kurdistan region to cancel these contracts," he said.
The Oil Ministry, which has threatened to blacklist firms that signed with the KRG, has told a South Korean oil importer to decide between purchasing Iraq oil and being part of a consortium in a KRG deal.
Iraq MP: Kurds, government stall oil law
BAGHDAD, Jan. 10 (UPI) -- The leader of the Iraqi Parliament's Energy Committee has accused Iraq's Kurdish leadership and the national ministerial council of holding up a draft oil law.
Abdul Hadi al-Hassani also said the federal government should keep up the pressure against the Kurdistan Regional Government for moving forward unilaterally on developing its oil sector in the north.
"The Parliament awaits for the government's approval of any of the draft law's four copies," Hassani told the Voices of Iraq news agency. He blamed the holdup on politics.
The draft law has been under negotiation for more than a year and is stuck in disputes between the Kurds, who want decentralized control over the oil sector, and Iraqi Arab leaders who want the national government in charge.
The law has seen many ups and downs. It was approved last February. Then a dispute broke out over which oil fields would be under the central government's control. It's also been altered a number of times -- so much that two of the three original authors oppose it -- and there are now more than one version.
Hassani's comments appear to mean the law isn't before the Parliament, as previously thought, but a step behind in the legislative process, waiting for a final version from the council of ministers.
Hassani reiterated the national government's reference of the KRG deals as "illegal." The KRG has passed its own regional oil law and signed more than 20 deals in the past six months. It feels the national government is moving too slow.
"The central government can use its political relations with the neighboring countries to pressure the government of Iraq's Kurdistan region to cancel these contracts," he said.
The Oil Ministry, which has threatened to blacklist firms that signed with the KRG, has told a South Korean oil importer to decide between purchasing Iraq oil and being part of a consortium in a KRG deal.
Friday, December 14, 2007
The oil law and the situation in Basra
This is just a small excerpt from an article at Democracy Now. It gives a glimpse into the situation and conflict in the Basra area. No doubt violence could break out at any time.
RICK ROWLEY: But some opponents of the oil law still see Prime Minister Maliki as an American ally and worry that this current draft will lead to privatization and an American oil grab.
FALEH ABOOD UMARA: [translated] The law was written by the American administration, and it serves the American interest in Iraq.
RICK ROWLEY: Faleh Abood, head of the Southern Oil Workers’ Union, has led several strikes against the government.
FALEH ABOOD UMARA: [translated] We achieved many things. We were able to raise salaries and get workers pieces of land. But what made people oppose us was our opposition to the oil and gas law.
RICK ROWLEY: In fact, Oil Minister Shahristani used a Saddam-era law that the Americans left in place to declare the union illegal and has pledged to stop future strikes.
HUSSAIN AL-SHAHRISTANI: The law under Saddam was reinstated, so even after the fall of the regime, that was the law, and anybody who tries to disrupt oil production and export would be liable to government actions, because this would be considered as a sabotage of national economy.
RICK ROWLEY: Back in Basra, the political storm is growing around Governor al-Waili, whose party is linked to the Oil Workers’ Union. Prime Minister Maliki has called for his resignation, and charges of corruption, mismanagement and fraud are circulating in the press. The Iraqi newspaper Kitabat alleged that he skimmed $80 million from reconstruction contracts.
We leave the governor’s compound to try to see what normal Basrans think of this crisis, but the governor refuses to let us go without an escort of twelve heavily armed guards. One man is brave enough to speak to us, telling us that he has not seen any of the $340 million worth of projects the governor claims are 85% complete.
BASRAN MAN: [translated] There are no services, no reconstruction. There is a lot of fraud.
RICK ROWLEY: When asked about political parties in Basra, this man is too frightened to say anything more.
BASRAN MAN: [translated] I voted, but I’d rather not say.
RICK ROWLEY: After that interview, the governor was reluctant to let us talk to anyone else in Basra or to visit any of his reconstruction projects. Claiming it was for our security, he locked us in a house on his compound, surrounded by soldiers. We escaped once in hopes of doing more interviews on the street, but were spotted before we even left the compound and firmly escorted back to our quarters by armed men. After being held four more days, we were taken to the airport and flown back to Baghdad.
RICK ROWLEY: But some opponents of the oil law still see Prime Minister Maliki as an American ally and worry that this current draft will lead to privatization and an American oil grab.
FALEH ABOOD UMARA: [translated] The law was written by the American administration, and it serves the American interest in Iraq.
RICK ROWLEY: Faleh Abood, head of the Southern Oil Workers’ Union, has led several strikes against the government.
FALEH ABOOD UMARA: [translated] We achieved many things. We were able to raise salaries and get workers pieces of land. But what made people oppose us was our opposition to the oil and gas law.
RICK ROWLEY: In fact, Oil Minister Shahristani used a Saddam-era law that the Americans left in place to declare the union illegal and has pledged to stop future strikes.
HUSSAIN AL-SHAHRISTANI: The law under Saddam was reinstated, so even after the fall of the regime, that was the law, and anybody who tries to disrupt oil production and export would be liable to government actions, because this would be considered as a sabotage of national economy.
RICK ROWLEY: Back in Basra, the political storm is growing around Governor al-Waili, whose party is linked to the Oil Workers’ Union. Prime Minister Maliki has called for his resignation, and charges of corruption, mismanagement and fraud are circulating in the press. The Iraqi newspaper Kitabat alleged that he skimmed $80 million from reconstruction contracts.
We leave the governor’s compound to try to see what normal Basrans think of this crisis, but the governor refuses to let us go without an escort of twelve heavily armed guards. One man is brave enough to speak to us, telling us that he has not seen any of the $340 million worth of projects the governor claims are 85% complete.
BASRAN MAN: [translated] There are no services, no reconstruction. There is a lot of fraud.
RICK ROWLEY: When asked about political parties in Basra, this man is too frightened to say anything more.
BASRAN MAN: [translated] I voted, but I’d rather not say.
RICK ROWLEY: After that interview, the governor was reluctant to let us talk to anyone else in Basra or to visit any of his reconstruction projects. Claiming it was for our security, he locked us in a house on his compound, surrounded by soldiers. We escaped once in hopes of doing more interviews on the street, but were spotted before we even left the compound and firmly escorted back to our quarters by armed men. After being held four more days, we were taken to the airport and flown back to Baghdad.
Monday, November 12, 2007
Iraqi leaders still can't agree on oil law.
This is from Reuters UK
This oil law was supposed to be in place ages ago but it is still stalled because of objections. The Kurds have gone ahead with their own law and have even signed new contracts that are not cleared by the central government. Of course the Kurds do not even fly the Iraqi flag!
Iraq's leaders still can't agree on new oil law-PM
... BAGHDAD, Nov 11 (Reuters) - Iraq's political leaders are in intensive talks to resolve lingering disputes over a draft law that will decide control of the world's third-largest oil reserves, Iraqi Prime Minister Nuri al-Maliki said on Sunday.
"Everyone agrees that this law should be passed. There is positive progress and understanding between the parties. I believe talks in the coming days will be intensive to resolve the disputes," he told reporters in Baghdad.
The oil law is seen as vital to securing foreign investment to boost Iraq's oil output and rebuild its shattered economy. Most of Iraq's proven oil reserves are in the Shi'ite south and in the Kurdish north.
The cabinet agreed on a draft in February and sent it to parliament for approval, despite disagreement over the rights of regions to negotiate contracts with foreign oil companies and whether the federal or regional governments would control the oil fields.
Maliki said the bill, which will provide a legal framework for foreign firms to do business in Iraq, had since been sent back to cabinet for more talks to iron out the disputes.
The prime minister said there was still disagreement over the exploration of undeveloped fields and production-sharing agreements, as well as contracts that had already been signed with some foreign companies.
Iraq's Kurdish region said last week it had signed seven new oil and gas contracts with international firms.
The Kurds say the draft law's annexes are unconstitutional, objecting to a proposal that would wrest oilfields from regions and place them under the control of a new state oil company.
Maliki said some parties in the negotiations wanted the annexes separated from the draft law to ease its passage through parliament.
"These disputes, some of them are based on the interests of the whole country and others are based on specific provinces," Maliki said, without referring to Kurdistan by name. (Reporting by Waleed Ibrahim, writing by Ross Colvin; Editing by Matthew Jones)
© Reuters2007All rights reserved.
This oil law was supposed to be in place ages ago but it is still stalled because of objections. The Kurds have gone ahead with their own law and have even signed new contracts that are not cleared by the central government. Of course the Kurds do not even fly the Iraqi flag!
Iraq's leaders still can't agree on new oil law-PM
... BAGHDAD, Nov 11 (Reuters) - Iraq's political leaders are in intensive talks to resolve lingering disputes over a draft law that will decide control of the world's third-largest oil reserves, Iraqi Prime Minister Nuri al-Maliki said on Sunday.
"Everyone agrees that this law should be passed. There is positive progress and understanding between the parties. I believe talks in the coming days will be intensive to resolve the disputes," he told reporters in Baghdad.
The oil law is seen as vital to securing foreign investment to boost Iraq's oil output and rebuild its shattered economy. Most of Iraq's proven oil reserves are in the Shi'ite south and in the Kurdish north.
The cabinet agreed on a draft in February and sent it to parliament for approval, despite disagreement over the rights of regions to negotiate contracts with foreign oil companies and whether the federal or regional governments would control the oil fields.
Maliki said the bill, which will provide a legal framework for foreign firms to do business in Iraq, had since been sent back to cabinet for more talks to iron out the disputes.
The prime minister said there was still disagreement over the exploration of undeveloped fields and production-sharing agreements, as well as contracts that had already been signed with some foreign companies.
Iraq's Kurdish region said last week it had signed seven new oil and gas contracts with international firms.
The Kurds say the draft law's annexes are unconstitutional, objecting to a proposal that would wrest oilfields from regions and place them under the control of a new state oil company.
Maliki said some parties in the negotiations wanted the annexes separated from the draft law to ease its passage through parliament.
"These disputes, some of them are based on the interests of the whole country and others are based on specific provinces," Maliki said, without referring to Kurdistan by name. (Reporting by Waleed Ibrahim, writing by Ross Colvin; Editing by Matthew Jones)
© Reuters2007All rights reserved.
Saturday, November 3, 2007
Iraq ex-oil chief accuses Kurds of suspect contract
This is not the first person to note the problem with the Kurdish contracts. THe Kurds are tired waiting for an oil bill to pass parliament. They are becoming more and more independent. They will not even fly the Iraqi flag. They are going to be at odds with both the TUrkey and the US once action is taken against the PKK--assuming it is.
Iraq's ex-oil chief accuses Kurds of suspect contract
Oct 12, 2007
NICOSIA (AFP) — An Iraqi oil minister under executed dictator Saddam Hussein accused the Kurdistan Regional Government of awarding an oil contract last month to a US company for areas outside its territorial control.
In an interview published in the latest edition of the Middle East Economic Survey, Jordan-based Issam Chalabi said the production-sharing contract signed with Hunt Oil will cause more friction between the Baghdad government and the Kurdish authorities.
Baghdad has already criticised the Kurdish authorities for signing deals with international oil companies before the federal oil law has been approved.
If confirmed, the latest development would suggest the KRG may have broader political ambitions for control of oil and gas in the disputed areas adjacent to its territory in northern Iraq, said Chalabi.
The Hunt deal covers four structures in Blocks 6, 7 and 8 - Jabal Kand, Fajir, Nerjis and Ain-Sifni - in the Dahuk area in the northwest of the KRG region, he said. The Kurdish authorities have released no specific details of the deal.
Chalabi, who held the Iraqi oil portfolio from 1987 to 1990, said "the first three structures fall outside the jurisdiction of the KRG, in the Nineveh governorate."
He told MEES that Hunt's signing with the KRG for terrain outside its three governorates of Dahuk, Arbil and Sulaimaniyah would have negative legal and political implications.
"This will be considered a very serious matter from a political point of view between the central government and the KRG," he said, adding that this was especially true since Hunt Oil is a US company.
The former minister said his suspicions about the Hunt agreement were raised because, in contrast to other awards made by the KRG, no information about the blocks concerned or their location was announced by the Kurdish authorities.
Speaking in general terms about Kurdish contracts with international oil companies, Chalabi said he supported the Iraqi government's denouncement of the contracts as illegal.
"I think they are absolutely right, because even if you go to the constitution it says in Article 111 that oil and gas are the property of all the Iraqi people.
"This means agreements ought to be signed by the only body that represents those Iraqi people, and in the absence of an oil law that gives particular authorisation to anyone else, it must be only the central government that has the right to sign these contracts," he said.
Iraq's ex-oil chief accuses Kurds of suspect contract
Oct 12, 2007
NICOSIA (AFP) — An Iraqi oil minister under executed dictator Saddam Hussein accused the Kurdistan Regional Government of awarding an oil contract last month to a US company for areas outside its territorial control.
In an interview published in the latest edition of the Middle East Economic Survey, Jordan-based Issam Chalabi said the production-sharing contract signed with Hunt Oil will cause more friction between the Baghdad government and the Kurdish authorities.
Baghdad has already criticised the Kurdish authorities for signing deals with international oil companies before the federal oil law has been approved.
If confirmed, the latest development would suggest the KRG may have broader political ambitions for control of oil and gas in the disputed areas adjacent to its territory in northern Iraq, said Chalabi.
The Hunt deal covers four structures in Blocks 6, 7 and 8 - Jabal Kand, Fajir, Nerjis and Ain-Sifni - in the Dahuk area in the northwest of the KRG region, he said. The Kurdish authorities have released no specific details of the deal.
Chalabi, who held the Iraqi oil portfolio from 1987 to 1990, said "the first three structures fall outside the jurisdiction of the KRG, in the Nineveh governorate."
He told MEES that Hunt's signing with the KRG for terrain outside its three governorates of Dahuk, Arbil and Sulaimaniyah would have negative legal and political implications.
"This will be considered a very serious matter from a political point of view between the central government and the KRG," he said, adding that this was especially true since Hunt Oil is a US company.
The former minister said his suspicions about the Hunt agreement were raised because, in contrast to other awards made by the KRG, no information about the blocks concerned or their location was announced by the Kurdish authorities.
Speaking in general terms about Kurdish contracts with international oil companies, Chalabi said he supported the Iraqi government's denouncement of the contracts as illegal.
"I think they are absolutely right, because even if you go to the constitution it says in Article 111 that oil and gas are the property of all the Iraqi people.
"This means agreements ought to be signed by the only body that represents those Iraqi people, and in the absence of an oil law that gives particular authorisation to anyone else, it must be only the central government that has the right to sign these contracts," he said.
Saturday, October 6, 2007
Deal close on Iraqi oil law?
The law was supposed to be passed last Spring. No details of the final law here. The parliament may want to debate the law for some time. We will see whether this is wishful thinking or reality.
WASHINGTON, Oct. 5 Iraq's national security adviser says a deal is "very close" on a federal oil law -- one where "everybody goes home partly unhappy."
Mowaffak al-Rubaie was largely optimistic Friday in a speech during a Washington visit, including on plans to protect and bolster the crucial energy sector.
The most prominent part of this has been a national oil law. It's stalled in Parliament over concerns private and foreign companies will be allowed too much access to the currently nationalized oil sector and a larger debate over how much control the federal, regional and provincial powers will have.
"I wouldn't like to say the hydrocarbons law only needs to cross the t's and dot the i's," Rubaie said at the Center for Strategic & International Studies, a Washington think tank. "We have been saying this for long. But I'll tell you what: There is a huge pressure from everywhere, inside and outside the country."
The U.S. government has pushed the Iraqi government on passing the controversial law both publicly and behind closed doors. It is billed as a way toward reconciliation, since sales from the world's third-largest reserves last year brought in 93 percent of the federal budget.
"We need to apply more pressure, on everyone, to agree on a compromise hydrocarbons law whereby all parties go home partly unhappy," Rubaie added. "That's the best compromise I think, whereby everybody goes home partly unhappy. And that compromise, I think we are very close to that. We need some tweaking on that."
He said the debate is more a constitutional one than political. The Kurdistan Regional Government interprets the constitution whereby federalism is decentralized. Many more nationalist blocs in government want the central government to set oil policies.
This week the KRG signed two more oil deals on their own with foreign firms. These and many others it has signed are considered illegal by Baghdad.
Ben Lando, UPI Energy Editor
Copyright 2007 by UPI
WASHINGTON, Oct. 5 Iraq's national security adviser says a deal is "very close" on a federal oil law -- one where "everybody goes home partly unhappy."
Mowaffak al-Rubaie was largely optimistic Friday in a speech during a Washington visit, including on plans to protect and bolster the crucial energy sector.
The most prominent part of this has been a national oil law. It's stalled in Parliament over concerns private and foreign companies will be allowed too much access to the currently nationalized oil sector and a larger debate over how much control the federal, regional and provincial powers will have.
"I wouldn't like to say the hydrocarbons law only needs to cross the t's and dot the i's," Rubaie said at the Center for Strategic & International Studies, a Washington think tank. "We have been saying this for long. But I'll tell you what: There is a huge pressure from everywhere, inside and outside the country."
The U.S. government has pushed the Iraqi government on passing the controversial law both publicly and behind closed doors. It is billed as a way toward reconciliation, since sales from the world's third-largest reserves last year brought in 93 percent of the federal budget.
"We need to apply more pressure, on everyone, to agree on a compromise hydrocarbons law whereby all parties go home partly unhappy," Rubaie added. "That's the best compromise I think, whereby everybody goes home partly unhappy. And that compromise, I think we are very close to that. We need some tweaking on that."
He said the debate is more a constitutional one than political. The Kurdistan Regional Government interprets the constitution whereby federalism is decentralized. Many more nationalist blocs in government want the central government to set oil policies.
This week the KRG signed two more oil deals on their own with foreign firms. These and many others it has signed are considered illegal by Baghdad.
Ben Lando, UPI Energy Editor
Copyright 2007 by UPI
Sunday, September 30, 2007
J. Jay Park on the Iraq Oil Law.
This fellow obviously knows his stuff. The mainstream media hardly noticed the Dubai meeting even though it was obviously very important. I guess it was just not sexy enough! Interesting that Park was involved in drafting a law for Somalia. The development of oil there is a part of the determination not to allow the Islamists to gain control. Until the security situation improves there is not likely to be much development.
The Iraq oil law still seems to be in limbo.
Interview: J. Jay Park on the Iraq oil law
Published: Sept. 26, 2007 at 6:02 PM
Print story Email to a friend Font size:By BEN LANDO
UPI Energy Editor
DUBAI, United Arab Emirates, Sept. 26 (UPI) -- J. Jay Park's work on international legal petroleum regimes has taken him around the world. He helped craft Somalia's new hydrocarbons law and has led training sessions for officials in Iraq's Oil Ministry.
He also represented Western Oil Sands, a Canadian firm, in its deal with the Iraqi Kurdistan Regional Government.
Earlier this month in Dubai, Park held a daylong workshop on the ins and outs of Iraq's draft oil law, as part of the Iraq Petroleum 2007 summit, organized by The CWC Group. Also at the summit were representatives from oil firms around the world, as well as top Iraqi oil officials, including Oil Minister Hussain al-Shahristani.
United Press International sat down with Park on the sidelines of the summit to discuss the mind frame for crafting an oil law; what decisions the Iraqi government now faces; what type of regime Iraq can choose from; and what types of contracts -- including the controversial production sharing agreement -- work for Iraq's oil.
UPI: You’ve worked either with companies working within certain legal regimes or helped the governments set up legal regimes, so you’ve seen this from both sides. Looking at the Iraq situation, how do you see them being able to find compromise, to agree on … to pass an oil law, either this (draft) one or another one?
Park: When I’m looking at a resource law from a legal standpoint there are certain attributes that I want to see it addresses. The attributes from the point of view of the state are: is there going to be fair share of resource revenue going to the state? Is there going to be adequate addressing of environmental, health and safety issues? Are they going to ensure there are local benefits accruing to the economy through employment, through training, through technology? Are they going to ensure that opportunities for development in respect to the resource can be seized within the economy and not just exported? And is there a transparent process for the award of rights and the administration of the business?
From the point of view of the investor, what they want to know is: is this a regime in which if they make a discovery they will be able to complete that development so they can monetize the investment that they make? Number two, is the agreement a stable agreement so that once they make an investment they’re going to be able to recover what they’ve invested, so the deal won't change on the them, which is a problem we see in a lot of places, what we call the problem of the obsolescing bargain? And then finally, are they going to be able to have adequate legal means for remedies if there is non-compliance with the agreement?
So if you’ve got all those features addressed in a petroleum law then I think the law itself is a good law because it addresses well the issues that arise between a state and investor. That’s what I look at. That’s a technical kind of analysis.
When you then say, politically, how are they going to get this passed, that to me is really an issue for Iraqis. One of the things that I always look to is this issue of the sharing of the resource. In Iraq, they address this issue in part in the constitution. It needed more definition in the petroleum law and a revenue-sharing law, and that is part and parcel of the process.
Now the biggest issue you have with respect to sharing of the resource revenue is who gets to receive the revenue. And I’m advised that there has been a deal, that they have agreed to share the revenue resulting from the resource economy on a demographically equal basis. That’s the biggest issue. If they have solved the biggest issue, all the other issues about who controls activity, they’re less important. So if they’ve solved the big issue, then already then in my view the other issues are surely able to be solved and therefore I’m optimistic the (oil) law is going to be passed. Because once you’ve solved the revenue issue and how you’re going to share it, then it’s in everyone’s interest to make the revenue pie bigger. And when you’ve got everybody aligned in that sense, then I think you’re going to see success.
Q: In the oil minister’s presentation, when asked about what happens if the law is dragged out for so long, and he said ‘well we have the legal right to move forward on our own because we need to develop whether there is a new law or not,’ can you explain that, what he bases that on?
A: Iraq has an oil law. It was passed in the 1980s. It is a short law, seven or eight pages, 17 articles. It grants the power to the government to manage the industry and award rights in respect to petroleum activities. It doesn’t contain a great deal of detail on how that is to be done and you can follow from that then there is a great deal of discretion in the government as to how it may run the industry under the terms of that law.
What I believe the ministry is saying by that is ‘there is not a vacuum with respect to petroleum law in Iraq. We’d like to see the new law passed because it’s a better law than the old law,’ and I’m inclined to agree. From a technical petroleum law viewpoint, the new law is a better law than the old law. What I think the minister is saying, in effect, ‘we want this law passed and if it isn’t passed then we’ll have to just work with the old law.’
Q: You started your presentation explaining your frame of mind when you go into drafting an oil law. We have the Iraq scenario where we know there’s a lot of oil and gas and we assume there’s a lot more oil and gas and the industry is already established for a long time. Compared to, for example, Somalia or another country where we think there might be oil and gas but we don’t know so that’s why we’re creating this regime so we can figure it out, we can have the legal tools to do the exploration and development. So what are your thoughts when you’re creating, what is the difference when you’re creating the law, your mind frame when you sit down to write it.
A: The difference between developing a law for a regime that does not know if it has any oil and gas versus developing a law for a regime that knows it has a substantial existing base is what do you do with a substantial existing resource base?
What many countries have done is they’ve established a state oil company and give it the management and ownership of the existing resource base. The enhancement and the development of that resource base is then within the control of that state oil company. But new exploration operations would then be open for assessment as to how the state should deal with that. Many states take different approaches to that.
Mexico says only the state oil company can do any exploration. Consequently, there’s not a great deal of exploration and Mexico’s production is declining because their state oil company lacks the capital to explore it extensively.
Other countries, I come from Canada, says ‘no, we’re not going to have a state oil company but we’re going to award these rights to private investors.’
Iraq has chosen a middle ground. Iraq has said a state oil company will hold the existing producing base. It will also hold the discovered but undeveloped areas that are close to existing production and it may invite other companies to assist it in developing those resources but fundamentally they will be owned by the state oil company.
Then with respect to exploration areas and other discovered areas that need a lot of work to develop them, the scope is broader for how that can be done in terms of many different types of petroleum contracts that could be used, with many different structures, although it's clearly suggested that a joint venture with Iraqi participants is to be encouraged.
Q: What would you say are the risks in entering Iraq’s oil sector?
A: The principle risk that oil companies are designed to address is geological risk …
Q: Is there oil or not, will you put the money in and come up with nothing …
A: … Exactly. That generally the record on exploration is that out of every 10 exploratory wells only one or two are going to be successful. But the geology and opportunities around the world vary widely and so clearly Iraq is one of those places where the geology offers wonderful opportunities because we’ve already seen how much exploration there’s been and there’s a great deal more yet to be explored. Clearly the geological risk in Iraq is less than it is in Ireland.
Q: In your presentation you had the four annexes up there. (The annexes are a draft list of the categories of Iraq’s oil fields and exploration blocks, which the Iraq Oil Ministry has created.) You said this is the contract that you would use for each. Can you explain what specific contract per annex and why not the other ones?
A: Annex 1 is just producing fields. It’s likely the existing producing fields involve minimal to no risk in terms of, you know, it’s producing and what’s needed is services to enhance production and enhance facilities to allow production to occur. In those regimes around the world that use a service contract, that’s the type of contract that it’s used for.
Other fields that need development work, drilling of further wells, construction of more significant facilities because they are not currently producing, often a development type contract is designed differently and has different work commitments and even you might need a different skill set as well, so that’s why I deduced from the language of the draft law that a development contract is something that is suited to that kind of an arrangement.
And finally when it comes to areas that don’t have a discovery, that’s where there is a more significant degree of risk and a risk exploration contract is best suited to that. It’s designed to encourage exploration activity and if exploration is successful, to allow development.
Q: What’s the difference between the risk contract and the exploration and development contract?
A: In my opinion you’re just mixing up different terms. An exploration and development contract and a risk exploration contract, to me, would mean the same thing.
Q: So the terms that they’re (Iraqi government) putting up there, why do they have these two mixed terms?
A: One, I believe, is intended to be a broad term to describe a wide range of contracts called exploration and development contracts and then the other term, the risk exploration contract, is a specific contract they have in mind. It’s one of the details of the law that needs to be further elaborated, either in the regulations or in the model contract.
Q: And if they decided to go the route of the production sharing agreement or some modified version that would fit within the law, where within these annexes would that fall? Would that be Annex 4?
A: A production sharing type contract could be a form of risk exploration contract that would be suited to Annex 4. The word development and production contract doesn’t to me define a specific type of agreement, it defines what the activities will occur under the agreement. Consequently, that’s another area that needs better definition in the regulations and in the model contracts that will follow.
Q: But when you just take a production sharing agreement or production sharing contract, and if those were to be one of the model contracts that are available for the Iraq government to sign with an oil company, where do you see this being applicable, in the four annexes, and where would it not make sense to do a production sharing agreement, from the government’s standpoint? In Annex 1, would you sign a PSA in Annex 1?
A: The problem is we’re using a set of terms that are designed to apply to a different concept, which is exploration activities and all the types of activities we tend to see for exploration type petroleum activities, and seeking to apply it to an existing, producing resource base.
Q: So you’re saying a PSA is for when exploration is involved.
A: It would be rare to see a production sharing agreement used and granted at a time of, for a field with existing production.
Q: What about for a discovered but not producing field?
A: A discovered but undeveloped field could conceivably be the subject of a production sharing contract if the state decides that that’s the appropriate tool to use.
Q: But there’s far less risk because you know that there’s oil there.
A: The usual kinds of activities under a production sharing contract would need to be suitably revised to suit the development, instead of an exploration and development situation.
--
(e-mail: energy@upi.com)
The Iraq oil law still seems to be in limbo.
Interview: J. Jay Park on the Iraq oil law
Published: Sept. 26, 2007 at 6:02 PM
Print story Email to a friend Font size:By BEN LANDO
UPI Energy Editor
DUBAI, United Arab Emirates, Sept. 26 (UPI) -- J. Jay Park's work on international legal petroleum regimes has taken him around the world. He helped craft Somalia's new hydrocarbons law and has led training sessions for officials in Iraq's Oil Ministry.
He also represented Western Oil Sands, a Canadian firm, in its deal with the Iraqi Kurdistan Regional Government.
Earlier this month in Dubai, Park held a daylong workshop on the ins and outs of Iraq's draft oil law, as part of the Iraq Petroleum 2007 summit, organized by The CWC Group. Also at the summit were representatives from oil firms around the world, as well as top Iraqi oil officials, including Oil Minister Hussain al-Shahristani.
United Press International sat down with Park on the sidelines of the summit to discuss the mind frame for crafting an oil law; what decisions the Iraqi government now faces; what type of regime Iraq can choose from; and what types of contracts -- including the controversial production sharing agreement -- work for Iraq's oil.
UPI: You’ve worked either with companies working within certain legal regimes or helped the governments set up legal regimes, so you’ve seen this from both sides. Looking at the Iraq situation, how do you see them being able to find compromise, to agree on … to pass an oil law, either this (draft) one or another one?
Park: When I’m looking at a resource law from a legal standpoint there are certain attributes that I want to see it addresses. The attributes from the point of view of the state are: is there going to be fair share of resource revenue going to the state? Is there going to be adequate addressing of environmental, health and safety issues? Are they going to ensure there are local benefits accruing to the economy through employment, through training, through technology? Are they going to ensure that opportunities for development in respect to the resource can be seized within the economy and not just exported? And is there a transparent process for the award of rights and the administration of the business?
From the point of view of the investor, what they want to know is: is this a regime in which if they make a discovery they will be able to complete that development so they can monetize the investment that they make? Number two, is the agreement a stable agreement so that once they make an investment they’re going to be able to recover what they’ve invested, so the deal won't change on the them, which is a problem we see in a lot of places, what we call the problem of the obsolescing bargain? And then finally, are they going to be able to have adequate legal means for remedies if there is non-compliance with the agreement?
So if you’ve got all those features addressed in a petroleum law then I think the law itself is a good law because it addresses well the issues that arise between a state and investor. That’s what I look at. That’s a technical kind of analysis.
When you then say, politically, how are they going to get this passed, that to me is really an issue for Iraqis. One of the things that I always look to is this issue of the sharing of the resource. In Iraq, they address this issue in part in the constitution. It needed more definition in the petroleum law and a revenue-sharing law, and that is part and parcel of the process.
Now the biggest issue you have with respect to sharing of the resource revenue is who gets to receive the revenue. And I’m advised that there has been a deal, that they have agreed to share the revenue resulting from the resource economy on a demographically equal basis. That’s the biggest issue. If they have solved the biggest issue, all the other issues about who controls activity, they’re less important. So if they’ve solved the big issue, then already then in my view the other issues are surely able to be solved and therefore I’m optimistic the (oil) law is going to be passed. Because once you’ve solved the revenue issue and how you’re going to share it, then it’s in everyone’s interest to make the revenue pie bigger. And when you’ve got everybody aligned in that sense, then I think you’re going to see success.
Q: In the oil minister’s presentation, when asked about what happens if the law is dragged out for so long, and he said ‘well we have the legal right to move forward on our own because we need to develop whether there is a new law or not,’ can you explain that, what he bases that on?
A: Iraq has an oil law. It was passed in the 1980s. It is a short law, seven or eight pages, 17 articles. It grants the power to the government to manage the industry and award rights in respect to petroleum activities. It doesn’t contain a great deal of detail on how that is to be done and you can follow from that then there is a great deal of discretion in the government as to how it may run the industry under the terms of that law.
What I believe the ministry is saying by that is ‘there is not a vacuum with respect to petroleum law in Iraq. We’d like to see the new law passed because it’s a better law than the old law,’ and I’m inclined to agree. From a technical petroleum law viewpoint, the new law is a better law than the old law. What I think the minister is saying, in effect, ‘we want this law passed and if it isn’t passed then we’ll have to just work with the old law.’
Q: You started your presentation explaining your frame of mind when you go into drafting an oil law. We have the Iraq scenario where we know there’s a lot of oil and gas and we assume there’s a lot more oil and gas and the industry is already established for a long time. Compared to, for example, Somalia or another country where we think there might be oil and gas but we don’t know so that’s why we’re creating this regime so we can figure it out, we can have the legal tools to do the exploration and development. So what are your thoughts when you’re creating, what is the difference when you’re creating the law, your mind frame when you sit down to write it.
A: The difference between developing a law for a regime that does not know if it has any oil and gas versus developing a law for a regime that knows it has a substantial existing base is what do you do with a substantial existing resource base?
What many countries have done is they’ve established a state oil company and give it the management and ownership of the existing resource base. The enhancement and the development of that resource base is then within the control of that state oil company. But new exploration operations would then be open for assessment as to how the state should deal with that. Many states take different approaches to that.
Mexico says only the state oil company can do any exploration. Consequently, there’s not a great deal of exploration and Mexico’s production is declining because their state oil company lacks the capital to explore it extensively.
Other countries, I come from Canada, says ‘no, we’re not going to have a state oil company but we’re going to award these rights to private investors.’
Iraq has chosen a middle ground. Iraq has said a state oil company will hold the existing producing base. It will also hold the discovered but undeveloped areas that are close to existing production and it may invite other companies to assist it in developing those resources but fundamentally they will be owned by the state oil company.
Then with respect to exploration areas and other discovered areas that need a lot of work to develop them, the scope is broader for how that can be done in terms of many different types of petroleum contracts that could be used, with many different structures, although it's clearly suggested that a joint venture with Iraqi participants is to be encouraged.
Q: What would you say are the risks in entering Iraq’s oil sector?
A: The principle risk that oil companies are designed to address is geological risk …
Q: Is there oil or not, will you put the money in and come up with nothing …
A: … Exactly. That generally the record on exploration is that out of every 10 exploratory wells only one or two are going to be successful. But the geology and opportunities around the world vary widely and so clearly Iraq is one of those places where the geology offers wonderful opportunities because we’ve already seen how much exploration there’s been and there’s a great deal more yet to be explored. Clearly the geological risk in Iraq is less than it is in Ireland.
Q: In your presentation you had the four annexes up there. (The annexes are a draft list of the categories of Iraq’s oil fields and exploration blocks, which the Iraq Oil Ministry has created.) You said this is the contract that you would use for each. Can you explain what specific contract per annex and why not the other ones?
A: Annex 1 is just producing fields. It’s likely the existing producing fields involve minimal to no risk in terms of, you know, it’s producing and what’s needed is services to enhance production and enhance facilities to allow production to occur. In those regimes around the world that use a service contract, that’s the type of contract that it’s used for.
Other fields that need development work, drilling of further wells, construction of more significant facilities because they are not currently producing, often a development type contract is designed differently and has different work commitments and even you might need a different skill set as well, so that’s why I deduced from the language of the draft law that a development contract is something that is suited to that kind of an arrangement.
And finally when it comes to areas that don’t have a discovery, that’s where there is a more significant degree of risk and a risk exploration contract is best suited to that. It’s designed to encourage exploration activity and if exploration is successful, to allow development.
Q: What’s the difference between the risk contract and the exploration and development contract?
A: In my opinion you’re just mixing up different terms. An exploration and development contract and a risk exploration contract, to me, would mean the same thing.
Q: So the terms that they’re (Iraqi government) putting up there, why do they have these two mixed terms?
A: One, I believe, is intended to be a broad term to describe a wide range of contracts called exploration and development contracts and then the other term, the risk exploration contract, is a specific contract they have in mind. It’s one of the details of the law that needs to be further elaborated, either in the regulations or in the model contract.
Q: And if they decided to go the route of the production sharing agreement or some modified version that would fit within the law, where within these annexes would that fall? Would that be Annex 4?
A: A production sharing type contract could be a form of risk exploration contract that would be suited to Annex 4. The word development and production contract doesn’t to me define a specific type of agreement, it defines what the activities will occur under the agreement. Consequently, that’s another area that needs better definition in the regulations and in the model contracts that will follow.
Q: But when you just take a production sharing agreement or production sharing contract, and if those were to be one of the model contracts that are available for the Iraq government to sign with an oil company, where do you see this being applicable, in the four annexes, and where would it not make sense to do a production sharing agreement, from the government’s standpoint? In Annex 1, would you sign a PSA in Annex 1?
A: The problem is we’re using a set of terms that are designed to apply to a different concept, which is exploration activities and all the types of activities we tend to see for exploration type petroleum activities, and seeking to apply it to an existing, producing resource base.
Q: So you’re saying a PSA is for when exploration is involved.
A: It would be rare to see a production sharing agreement used and granted at a time of, for a field with existing production.
Q: What about for a discovered but not producing field?
A: A discovered but undeveloped field could conceivably be the subject of a production sharing contract if the state decides that that’s the appropriate tool to use.
Q: But there’s far less risk because you know that there’s oil there.
A: The usual kinds of activities under a production sharing contract would need to be suitably revised to suit the development, instead of an exploration and development situation.
--
(e-mail: energy@upi.com)
Saturday, September 22, 2007
Iraq parliament to discuss oil law early in October.
The passage of the law is about a year late. Even if the parliament starts to discuss the law it may not pass for some time. Interesting that the exact wording of the law and annexes remains to be released.
Iraq parliament to discuss key oil law
Thu Sep 20, 2007 2:17pm BST
By Mariam Karouny
BAGHDAD (Reuters) - Iraq's parliament should start in early October to debate an oil law, needed to regulate how wealth from world's third largest oil reserves will be shared by its sectarian and ethnic groups, the deputy speaker said.
Khaled al-Attiya said the parliament would take its time to discuss the draft, which is seen as key to reconciling warring Iraqis and attracting foreign investment. But he expected it to pass before the end of the year.
The legislation, which had been expected to pass before the end of 2006, was delayed due to disagreements over control of oil reserves, much of which are in the semi-autonomous Kurdistan region in northern Iraq and in the country's south.
The draft was approved by the cabinet in February but faced opposition from the Kurds, who felt they were getting a bad deal.
In July, the cabinet approved "some linguistic changes" to February's draft.
Attiya, a senior member in the ruling Shi'ite Alliance, told Reuters late on Wednesday there has been an agreement between the powerful Shi'ite Alliance and the Kurdish coalition to go with the draft approved by the cabinet in February.
"That helped in putting the law on schedule (for debate). Possibly in early October," he said.
He said the law should be debated fully, not decided by some back-room deal.
"This law is not like any other law. This is a strategic law," he said.
"So it is only right that we give this law all the time it deserves in discussions in the parliament and not to have a political deal about it among the political blocs behind closed doors."
But he said: "I do not think that the time will extend beyond the end of the second legislative quarter ... from now until before the end of the year."
Deputy Prime Minister Barham Salih said that there has been a basic agreement between Shi'ite Prime Minister Nuri al-Maliki and the Kurdish Regional Government (KRG) that the draft passed in February stands.
"The prime minister and KRG remain committed to the text voted on unanimously, including the Accordance (Sunni Arabs) ministers in February," Salih said.
The Kurds had previously said some of the annexes were unconstitutional because they wrested oilfields from regional governments and placed them under a new state oil company.
The annexes also covered control over discovered and undiscovered oilfields and who would have the power to negotiate contracts with international oil companies.
February's draft refers to annexes but they were neither discussed nor voted on then.
© Reuters 2006. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Reuters journalists are subject to the Reuters Editorial Handbook which requires fair presentation and disclosure of relevant interests.
Iraq parliament to discuss key oil law
Thu Sep 20, 2007 2:17pm BST
By Mariam Karouny
BAGHDAD (Reuters) - Iraq's parliament should start in early October to debate an oil law, needed to regulate how wealth from world's third largest oil reserves will be shared by its sectarian and ethnic groups, the deputy speaker said.
Khaled al-Attiya said the parliament would take its time to discuss the draft, which is seen as key to reconciling warring Iraqis and attracting foreign investment. But he expected it to pass before the end of the year.
The legislation, which had been expected to pass before the end of 2006, was delayed due to disagreements over control of oil reserves, much of which are in the semi-autonomous Kurdistan region in northern Iraq and in the country's south.
The draft was approved by the cabinet in February but faced opposition from the Kurds, who felt they were getting a bad deal.
In July, the cabinet approved "some linguistic changes" to February's draft.
Attiya, a senior member in the ruling Shi'ite Alliance, told Reuters late on Wednesday there has been an agreement between the powerful Shi'ite Alliance and the Kurdish coalition to go with the draft approved by the cabinet in February.
"That helped in putting the law on schedule (for debate). Possibly in early October," he said.
He said the law should be debated fully, not decided by some back-room deal.
"This law is not like any other law. This is a strategic law," he said.
"So it is only right that we give this law all the time it deserves in discussions in the parliament and not to have a political deal about it among the political blocs behind closed doors."
But he said: "I do not think that the time will extend beyond the end of the second legislative quarter ... from now until before the end of the year."
Deputy Prime Minister Barham Salih said that there has been a basic agreement between Shi'ite Prime Minister Nuri al-Maliki and the Kurdish Regional Government (KRG) that the draft passed in February stands.
"The prime minister and KRG remain committed to the text voted on unanimously, including the Accordance (Sunni Arabs) ministers in February," Salih said.
The Kurds had previously said some of the annexes were unconstitutional because they wrested oilfields from regional governments and placed them under a new state oil company.
The annexes also covered control over discovered and undiscovered oilfields and who would have the power to negotiate contracts with international oil companies.
February's draft refers to annexes but they were neither discussed nor voted on then.
© Reuters 2006. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Reuters journalists are subject to the Reuters Editorial Handbook which requires fair presentation and disclosure of relevant interests.
Thursday, September 13, 2007
Oil Law Compromise Seems to be Collapsing
This is from the international New York Times.
The Kurds seem to be going their own way through already signing agreements with foreign oil companies. I understand that the Iraqi flag is not even flown in Kurdistan. It looked a few days ago as if some sort of agreement was reached. None of these backroom deals are out in the open and there seems to be no process by which the general public or even interest groups such as oil unions can have any input. Of course according to the government there are no legal oil unions!
Compromise on Oil Law in Iraq Seems to Be Collapsing
By JAMES GLANZ
Published: September 13, 2007
BAGHDAD, Sept. 12 — A carefully constructed compromise on a draft law governing Iraq’s rich oil fields, agreed to in February after months of arduous talks among Iraqi political groups, appears to have collapsed. The apparent breakdown comes just as Congress and the White House are struggling to find evidence that there is progress toward reconciliation and a functioning government here.
» Senior Iraqi negotiators met in Baghdad on Wednesday in an attempt to salvage the original compromise, two participants said. But the meeting came against the backdrop of a public series of increasingly strident disagreements over the draft law that had broken out in recent days between Hussain al-Shahristani, the Iraqi oil minister, and officials of the provincial government in the Kurdish north, where some of the nation’s largest fields are located.
Mr. Shahristani, a senior member of the Arab Shiite coalition that controls the federal government, negotiated the compromise with leaders of the Kurdish and Arab Sunni parties. But since then, the Kurds have pressed forward with a regional version of the law that Mr. Shahristani says is illegal. Many of the Sunnis who supported the original deal have also pulled out in recent months.
The oil law — which would govern how oil fields are developed and managed — is one of several benchmarks that the Bush administration has been pressing the Iraqis to meet as a sign that they are making headway toward creating an effective government.
Again and again in the past year, agreement on the law has been fleetingly close before political and sectarian disagreements have arisen to stall the deal.
One of the participants in Wednesday’s meeting, Deputy Prime Minister Barham Salih, who has worked for much of the past year to push for the original compromise, said some progress had been made at the meeting, but that he could not guarantee success.
“This has been like a roller coaster,” said Mr. Salih, who is Kurdish. “There were occasions where we seemed to be there, where we seemed to have closure, only to fail at that.”
“Given the seriousness of the issue, I don’t want to create false expectations, but I can say there is serious effort to bring this to closure,” he said.
The legislation has already been presented to the Iraqi Parliament, which has been unable to take virtually any action on it for months. Contributing to the dispute is the decision by the Kurds to begin signing contracts with international oil companies before the federal law is passed. The most recent instance, announced last week on a Kurdish government Web site, was an oil exploration contract with the Hunt Oil Company of Dallas.
The Sunni Arabs who removed their support for the deal did so, in part, because of a contract the Kurdish government signed earlier with a company based in the United Arab Emirates, Dana Gas, to develop gas reserves.
The Kurds say their regional law is consistent with the Iraqi Constitution, which grants substantial powers to the provinces to govern their own affairs. But Mr. Shahristani believes that a sort of Kurdish declaration of independence can be read into the move. “This to us indicates very serious lack of cooperation that makes many people wonder if they are really going to be working within the framework of the federal law,” Mr. Shahristani said in a recent interview, before the Hunt deal was announced.
Kurdish officials dispute that contention, saying that they are doing their best to work within the Constitution while waiting for the Iraqi Parliament, which always seems to move at a glacial pace, to consider the legislation.
“We reject what some parties say — that it is a step towards separation — because we have drafted the Kurdistan oil law depending on Article 111 of the Iraqi Constitution, which says oil and natural resources are properties of Iraqi people,” said Jamal Abdullah, a spokesman for the Kurdistan Regional Government. “Both Iraqi and Kurdish oil laws depend on that article,” Mr. Abdullah said.
The other crucial players are the Sunnis and Prime Minister Nuri Kamal al-Maliki. Some members of one of the main Sunni parties, Tawafiq, which insists on federal control of contracts and exclusive state ownership of the fields, bolted when it became convinced that the Kurds had no intention of following those guidelines.
But the prime minister’s office believes there is a simpler reason the Sunnis abandoned or at least held off on the deal: signing it would have given Mr. Maliki a political success that they did not want him to have. “I think there is a political reason behind that delay in order not to see the Iraqi government achieve the real agreement,” said Sadiq al-Rikabi, a political adviser to Mr. Maliki. Mr. Rikabi was at Wednesday’s meeting.
Ali Baban, who as a senior member of Tawafiq negotiated the compromise, said that allegation was untrue. “I have a good relationship” with Mr. Maliki, he said. “This is an issue of Iraqi unity. This could cause a split in this country.”
Mr. Maliki has suggested returning to the original language agreed to in February and trying once again to push the law through Parliament. Mr. Salih says there is basic agreement on returning to that language, but conceded that Sunni participants in Wednesday’s meeting might insist on a deal that includes changes to the Iraqi Constitution to safeguard their interests in the distribution of revenues. A law on how the revenue should be shared is being developed as a critical companion piece of legislation to the draft law.
The central element of the compromise was agreed to in February after months of difficult negotiations among Iraq’s political groups.
The main parties in those negotiations were Iraqi Kurds, who were eager to sign contracts with international oil companies to develop their northern fields; Arab Shiites, whose population is concentrated around the country’s southern fields; and Arab Sunnis, with fewer oil resources where they predominate.
Those facts meant that the compromise law had to satisfy both the Sunni insistence that the central government maintain strong control over the fields as well as the push by the Kurds and Shiites to give provincial governments substantial authority to write contracts and carry out their own development plans.
Somehow negotiators managed to strike that balance, but soon after, the agreement began to crumble. Many of the negotiations centered on a federal committee that would be set up to review the contracts signed with oil companies to carry out the development and exploitation of the fields. The Kurds objected to any requirement that the committee would have to approve contracts. So in a nuanced bit of language, the negotiators gave the committee the power only to reject contracts that did not meet precisely specified criteria.
But problems immediately cropped up after the cabinet approved the draft law and, in what seemed to be a perfunctory step, it went to a council that was supposed to hone the language to be sure it complied with Iraqi legal conventions.
When the draft emerged from that council, the members of some parties, particularly the Kurdish ones, thought that the careful balance struck in the draft had been upset, and they accused Mr. Shahristani of meddling. Then the law languished in Parliament and, said Hoshyar Zebari, the Iraqi foreign minister, the Kurds decided to send a signal that they would not wait indefinitely and signed the contract with Dana Gas.
“It served as a reminder: ‘If you keep stalling, life goes on,’ ” said Mr. Zebari, who is Kurdish.
On Monday the Kurdistan Regional Government, or K.R.G., issued another rejoinder to the oil minister’s views that the Kurds’ moves were illegal. “His views are irrelevant to what the K.R.G. is doing legally and constitutionally in Kurdistan,” the regional government said.
Mr. Shahristani was apparently traveling and did not respond to e-mail messages sent Wednesday. But Saleem Abdullah al-Juburi, a Tawafiq member who participated in Wednesday’s meeting, gave his own assessment of the Kurdish agreements with Hunt and Dana Gas. “The contracts are not legal,” he said.
Reporting was contributed by Ahmad Fadam, Ali Hamdani and Khalid al-Ansary from Baghdad, and an Iraqi employee of The New York Times from northern Iraq.
More Articles in International »
The Kurds seem to be going their own way through already signing agreements with foreign oil companies. I understand that the Iraqi flag is not even flown in Kurdistan. It looked a few days ago as if some sort of agreement was reached. None of these backroom deals are out in the open and there seems to be no process by which the general public or even interest groups such as oil unions can have any input. Of course according to the government there are no legal oil unions!
Compromise on Oil Law in Iraq Seems to Be Collapsing
By JAMES GLANZ
Published: September 13, 2007
BAGHDAD, Sept. 12 — A carefully constructed compromise on a draft law governing Iraq’s rich oil fields, agreed to in February after months of arduous talks among Iraqi political groups, appears to have collapsed. The apparent breakdown comes just as Congress and the White House are struggling to find evidence that there is progress toward reconciliation and a functioning government here.
» Senior Iraqi negotiators met in Baghdad on Wednesday in an attempt to salvage the original compromise, two participants said. But the meeting came against the backdrop of a public series of increasingly strident disagreements over the draft law that had broken out in recent days between Hussain al-Shahristani, the Iraqi oil minister, and officials of the provincial government in the Kurdish north, where some of the nation’s largest fields are located.
Mr. Shahristani, a senior member of the Arab Shiite coalition that controls the federal government, negotiated the compromise with leaders of the Kurdish and Arab Sunni parties. But since then, the Kurds have pressed forward with a regional version of the law that Mr. Shahristani says is illegal. Many of the Sunnis who supported the original deal have also pulled out in recent months.
The oil law — which would govern how oil fields are developed and managed — is one of several benchmarks that the Bush administration has been pressing the Iraqis to meet as a sign that they are making headway toward creating an effective government.
Again and again in the past year, agreement on the law has been fleetingly close before political and sectarian disagreements have arisen to stall the deal.
One of the participants in Wednesday’s meeting, Deputy Prime Minister Barham Salih, who has worked for much of the past year to push for the original compromise, said some progress had been made at the meeting, but that he could not guarantee success.
“This has been like a roller coaster,” said Mr. Salih, who is Kurdish. “There were occasions where we seemed to be there, where we seemed to have closure, only to fail at that.”
“Given the seriousness of the issue, I don’t want to create false expectations, but I can say there is serious effort to bring this to closure,” he said.
The legislation has already been presented to the Iraqi Parliament, which has been unable to take virtually any action on it for months. Contributing to the dispute is the decision by the Kurds to begin signing contracts with international oil companies before the federal law is passed. The most recent instance, announced last week on a Kurdish government Web site, was an oil exploration contract with the Hunt Oil Company of Dallas.
The Sunni Arabs who removed their support for the deal did so, in part, because of a contract the Kurdish government signed earlier with a company based in the United Arab Emirates, Dana Gas, to develop gas reserves.
The Kurds say their regional law is consistent with the Iraqi Constitution, which grants substantial powers to the provinces to govern their own affairs. But Mr. Shahristani believes that a sort of Kurdish declaration of independence can be read into the move. “This to us indicates very serious lack of cooperation that makes many people wonder if they are really going to be working within the framework of the federal law,” Mr. Shahristani said in a recent interview, before the Hunt deal was announced.
Kurdish officials dispute that contention, saying that they are doing their best to work within the Constitution while waiting for the Iraqi Parliament, which always seems to move at a glacial pace, to consider the legislation.
“We reject what some parties say — that it is a step towards separation — because we have drafted the Kurdistan oil law depending on Article 111 of the Iraqi Constitution, which says oil and natural resources are properties of Iraqi people,” said Jamal Abdullah, a spokesman for the Kurdistan Regional Government. “Both Iraqi and Kurdish oil laws depend on that article,” Mr. Abdullah said.
The other crucial players are the Sunnis and Prime Minister Nuri Kamal al-Maliki. Some members of one of the main Sunni parties, Tawafiq, which insists on federal control of contracts and exclusive state ownership of the fields, bolted when it became convinced that the Kurds had no intention of following those guidelines.
But the prime minister’s office believes there is a simpler reason the Sunnis abandoned or at least held off on the deal: signing it would have given Mr. Maliki a political success that they did not want him to have. “I think there is a political reason behind that delay in order not to see the Iraqi government achieve the real agreement,” said Sadiq al-Rikabi, a political adviser to Mr. Maliki. Mr. Rikabi was at Wednesday’s meeting.
Ali Baban, who as a senior member of Tawafiq negotiated the compromise, said that allegation was untrue. “I have a good relationship” with Mr. Maliki, he said. “This is an issue of Iraqi unity. This could cause a split in this country.”
Mr. Maliki has suggested returning to the original language agreed to in February and trying once again to push the law through Parliament. Mr. Salih says there is basic agreement on returning to that language, but conceded that Sunni participants in Wednesday’s meeting might insist on a deal that includes changes to the Iraqi Constitution to safeguard their interests in the distribution of revenues. A law on how the revenue should be shared is being developed as a critical companion piece of legislation to the draft law.
The central element of the compromise was agreed to in February after months of difficult negotiations among Iraq’s political groups.
The main parties in those negotiations were Iraqi Kurds, who were eager to sign contracts with international oil companies to develop their northern fields; Arab Shiites, whose population is concentrated around the country’s southern fields; and Arab Sunnis, with fewer oil resources where they predominate.
Those facts meant that the compromise law had to satisfy both the Sunni insistence that the central government maintain strong control over the fields as well as the push by the Kurds and Shiites to give provincial governments substantial authority to write contracts and carry out their own development plans.
Somehow negotiators managed to strike that balance, but soon after, the agreement began to crumble. Many of the negotiations centered on a federal committee that would be set up to review the contracts signed with oil companies to carry out the development and exploitation of the fields. The Kurds objected to any requirement that the committee would have to approve contracts. So in a nuanced bit of language, the negotiators gave the committee the power only to reject contracts that did not meet precisely specified criteria.
But problems immediately cropped up after the cabinet approved the draft law and, in what seemed to be a perfunctory step, it went to a council that was supposed to hone the language to be sure it complied with Iraqi legal conventions.
When the draft emerged from that council, the members of some parties, particularly the Kurdish ones, thought that the careful balance struck in the draft had been upset, and they accused Mr. Shahristani of meddling. Then the law languished in Parliament and, said Hoshyar Zebari, the Iraqi foreign minister, the Kurds decided to send a signal that they would not wait indefinitely and signed the contract with Dana Gas.
“It served as a reminder: ‘If you keep stalling, life goes on,’ ” said Mr. Zebari, who is Kurdish.
On Monday the Kurdistan Regional Government, or K.R.G., issued another rejoinder to the oil minister’s views that the Kurds’ moves were illegal. “His views are irrelevant to what the K.R.G. is doing legally and constitutionally in Kurdistan,” the regional government said.
Mr. Shahristani was apparently traveling and did not respond to e-mail messages sent Wednesday. But Saleem Abdullah al-Juburi, a Tawafiq member who participated in Wednesday’s meeting, gave his own assessment of the Kurdish agreements with Hunt and Dana Gas. “The contracts are not legal,” he said.
Reporting was contributed by Ahmad Fadam, Ali Hamdani and Khalid al-Ansary from Baghdad, and an Iraqi employee of The New York Times from northern Iraq.
More Articles in International »
Thursday, August 30, 2007
Iraq oil law set to pass with majority.
This is from this site. It could hardly pass without a majority! This article seems quite confident. However, there seem to be a lot of groups opposed to the law as it stood. Perhaps it has been modified. The present text does not seem available. So much for democracy, transparency, and accountability. Perhaps the law will be passed in time for the Dubai meetings in September.
Iraqi oil law set to pass with majority
DUBAI: Iraq's draft oil law should pass by a comfortable majority when parliament meets to discuss it after the end of its summer break in September, Iraqi Vice President Adel Abdul-Mahdi said.
"The oil law was completed in cabinet... the draft that was approved in cabinet is the one that will be presented to parliament," he said.
"The parliament remains now in recess and will return at the start of September when we will reaffirm that the law will be presented to the parliament."
The controversial federal oil law has been approved by the Iraqi government after months of talks but has yet to be debated by parliament, which must approve it if it is to pass into law.
The law, which decides who controls the world's third-largest oil reserves, is now in limbo while Iraq's parliament takes its summer break.
No date has been set to debate the law, which aims to provide a legal framework to attract foreign investment and sets up a new state oil firm to oversee the sector.
Washington has pushed Iraq for months to speed up its passage and that of other legislation, which it sees as pivotal to reconciling warring Iraqis, rebuilding Iraq's shattered economy and attracting foreign investment.
The draft oil law aims resolve the sharing in oil profits and most of the reserves are in the Kurdish north and south of the country.
But there has been fierce debate over the shares and how much control regional governments will have over the existing and undiscovered oil reserves, as well as the sorts of contracts that will be included.
Abdul-Mahdi said that some appendices to the law could be included to ensure the broadest possible political consensus, even though the law was expected to pass comfortably as it is.
"There are some parliamentary blocs that call for the addition of some appendices to this law. Fine, the committee is studying this and the appendices could be included in this law despite the fact that if the voting took place in parliament now... the law would be expected to pass with a comfortable majority," Abdul-Mahdi said.
"But in the interests of national consensus, it is seen that their addition would be more beneficial and get a higher level of consensus than the comfortable majority that would be expected if it was presented now."
Iraqi oil law set to pass with majority
DUBAI: Iraq's draft oil law should pass by a comfortable majority when parliament meets to discuss it after the end of its summer break in September, Iraqi Vice President Adel Abdul-Mahdi said.
"The oil law was completed in cabinet... the draft that was approved in cabinet is the one that will be presented to parliament," he said.
"The parliament remains now in recess and will return at the start of September when we will reaffirm that the law will be presented to the parliament."
The controversial federal oil law has been approved by the Iraqi government after months of talks but has yet to be debated by parliament, which must approve it if it is to pass into law.
The law, which decides who controls the world's third-largest oil reserves, is now in limbo while Iraq's parliament takes its summer break.
No date has been set to debate the law, which aims to provide a legal framework to attract foreign investment and sets up a new state oil firm to oversee the sector.
Washington has pushed Iraq for months to speed up its passage and that of other legislation, which it sees as pivotal to reconciling warring Iraqis, rebuilding Iraq's shattered economy and attracting foreign investment.
The draft oil law aims resolve the sharing in oil profits and most of the reserves are in the Kurdish north and south of the country.
But there has been fierce debate over the shares and how much control regional governments will have over the existing and undiscovered oil reserves, as well as the sorts of contracts that will be included.
Abdul-Mahdi said that some appendices to the law could be included to ensure the broadest possible political consensus, even though the law was expected to pass comfortably as it is.
"There are some parliamentary blocs that call for the addition of some appendices to this law. Fine, the committee is studying this and the appendices could be included in this law despite the fact that if the voting took place in parliament now... the law would be expected to pass with a comfortable majority," Abdul-Mahdi said.
"But in the interests of national consensus, it is seen that their addition would be more beneficial and get a higher level of consensus than the comfortable majority that would be expected if it was presented now."
Friday, August 24, 2007
What is Holding up the Iraqi Oil Law?
This is one of the best short analyses of the situation regarding the Oil Law that I have seen. Not all Chalabis are equal!
ZNet | Iraq
What is holding up the delivery of the long-awaited Iraqi oil law?
by Munir Chalabi; August 22, 2007
As deadline after deadline and benchmark after benchmark passes and with all the pressure imposed by the IMF, the US Administration, the US oil lobby and International Oil Companies (IOCs) on the Iraqi government, the oil law, against all the odds, refuses to be born.
Despite all the attempts by the Occupation's Governing Council (GC) and its appointed puppet, Allawi's Government, as well as the efforts by both of the elected governments, several US/IMF deadlines have passed including one in December 2006, then in March, May and the latest one in July 2007, but the draft of the law has not even been presented officially to the Federal Parliament in Baghdad.
In parallel with all these deadlines and benchmarks, we have seen several versions of the drafts for the new Iraqi oil law leaked one way or another to the international press. This includes one in June 2006, another on January 15, then February 15, June 25, and finally July 3, 2007.
Many international political analysts and oil experts cannot comprehend how such unprecedented pressure can fail to produce results.
The answer to this is to be found within the methodology used in investigating the reasons behind the failure of the US Administration in achieving their objectives.
Analysts must not only look for external influences on any US plan in Iraq but they should also study and analyze the internal Iraqi causes affecting the success or the failure of the plan.
A. External factors and influences:
External influences were for the most part, behind the approval of a draft of the oil law, which will be the first and major step in the privatization of Iraqi oil wealth and will ensure that the oil will be produced and marketed by the IOCs with enormous profit to them.
Neither the US Republican administration nor the Democrats had any disagreement with this policy and made the approval of the oil law a benchmark for future US strategy in Iraq within the Iraqi Study Group report.[1]
The IMF made the approval of the oil law one of the main conditions for reducing the Iraqi international debts, as declared in December 1, 2005 in the Paris meetings between the IMF and representatives of the Iraqi Government.
The IOCs were united in their approval of the oil law and there were no indications from any of them to the contrary.
In addition, we have to remember that Iraq is still under US occupation. Over 180,000 US/multinational troops and over 50,000 active mercenaries are putting all types of pressure on the Iraqi government and parliament to ensure the success of the US oil plans.
Several international organizations which oppose the oil Law, including a number of environmental groups, anti-occupational movements and several international trade unions[2] provide vital support to the Iraqi anti-oil law movements and had very positive media campaigns. However, their effectiveness was understandably limited, as they could not influence the international decision-making powers.
B. Domestic influences and factors:
There are several Iraqi factors behind all the delays in the delivery of the oil law and these include:
1. The Disagreement between the Central Government and the Kurdistan Regional Government on several issues of the law including who should control the strategic oil policies and which giant oil fields should be given to the IOCs. The Kurdish Government insisted that several of the major oil fields which are allocated to the Iraqi National Oil Company under annex 2 of the draft, be moved to annex 3 in order to be given to the IOCs.
2. Increased Iraqi public awareness and pressure -- the public awareness has increased noticeably in the past year against the oil law. We have seen this public pressure mounting because of:
· An increased awareness by the public of the Iraqi civil society organizations, trade unions, in particular the IFOU ("Iraqi Federation of Oil Unions"[3]), oil experts[4], economists and the Iraqi media concerning the threat of the oil law on the future of the sovereignty of the nation, which has consequently increased the opposition to the law.
· More and more MPs are calling for the law to be carefully studied before its approval. The Iraqi parliament has gone into summer recess without discussing the oil law, but up until now the only members who are openly standing against the oil law are the MPs from Sadr's Movement and some individual members from the "Iraqi Accord," the Dawa Party and some independent MPs.
· The "State Shuraa Council," which is the highest legal office in the Iraqi Ministry of Justice, submitted on July 25, 2007, 13 legal comments on the "Draft Oil & Gas Law" to the Iraqi government. The main points included the need to first re-establish the Iraqi National Oil Company which was dissolved by the Baath regime in 1987 (in their first step to privatize the nation's oil wealth) before the Oil & Gas Law is be put to parliament. Also the Council emphasized the importance of the leading role of the central government in planning the strategic policies concerning the future of the nation's oil and gas wealth in accordance with the needs of article 111 of the Iraqi Constitution. The third vital comment by the Council was their recommendation that all agreements with any international oil companies should be approved by the Iraqi Parliament.
The Council's comments made it more difficult for the Iraqi Government to push the Draft Oil Law through the Iraqi Parliament.
· The latest Oil poll, which was carried out in June and July 2007 by KA Research, has shown that the Iraqis oppose plans to open the country's oil fields to foreign investment by a factor of two to one (63% oppose to 31% for).
3. The security crises: More and more Iraqis are questioning the wisdom of trying to rush the Oil & Gas law through parliament while the country is in such a devastating state.
· Thousands of innocent civilians are slaughtered every month due to suicide bombings by the Al-Qaeda/Baathist terrorists, the occupying forces' military attacks, the secret CIA controlled death squads and the sectarian clashes.
· Most Iraqi cities and towns have either no or severe shortages of electricity, clean water and other basic life necessities
· People are afraid to stay in their homeland and around four million are displaced, many driven from their homes by force.
Conclusions:
The legislation of the new Iraqi Oil & Gas Law by the Iraqi parliament has become the most important benchmark of the US Administration, its oil lobbies, the IOCs, the IMF, and the occupying forces. The Bush administration wants this law to be passed as soon as possible, whatever the cost to the Iraqi people.
The failure of the US policies in the occupation of Iraq, the success of the Democratic Party in the 2006 elections in controlling both legislative houses in the US, and the presidential elections next year, have made the Bush Administration and its allies more desperate in their attempts to reach a successful conclusion on the oil law in order to prepare the ground for a partial US withdrawal from Iraq, within the lifetime of this administration.
This has led to enormous pressure being imposed by the US administration and its forces on the ground in Iraq on Al-Maliki's government in the past eight months. They insisted that the government should go ahead and get this oil law approved by parliament, together with the re-Baathification law, and other privatization laws such as the privatization of the Iraqi oil processing industries which they succeeded in passing through parliament three days before the start of summer session.
The Bush Administration and their Ambassador in Baghdad had openly threatened to replace Al-Maliki's government with a new government, headed by their man in Iraq -- the old Baathist, Iyad Allawi. Al-Maliki has openly accused Allawi in several speeches of attempting to overthrow his government with the help of some units of the Iraqi army and security generals including the head of the Iraqi security forces, the old Baathist general Mohammed Al-Shahwani. These generals were appointed to their positions during Allawi's appointed government by the last US official administrator Paul Bremer back in May 2004, and are still taking their orders directly from the US embassy in Baghdad.
The US administration recognized that a US-led military coup d'etat would not result in any laws being recognized as legitimate by the international community if parliament were to be dissolved. They therefore moved to a new policy, which involved direct interference with the political process in Iraq through their more reliable allies to reorganize the political alliance on which the government relied in order to achieve their goals. They finally succeeded in achieving the establishment of such a front, which was called the "The front of the moderates" on August 15, between the two main Kurdish parties (KDP and PUK), two of the Shiite parties (the SCIRI and Al-Dawa party -- the Al-Maliki wing is called the "External organization"), with negotiations still ongoing to persuade the Islamic Party/Accord front -- the main Sunni party -- to join this new alliance.
The US administration made it clear that the new Iraqi government has important targets to accomplish, and they listed the oil law as the first priority and the re-Baathification law as a second main concern.
The claim of the US Administration that the oil and gas law will allow all Iraqis to share the oil revenue is no more than another peace of misinformation, as the "Revenue Sharing Law" is a separate federal revenue law which is still being negotiated between the different Iraqi parties representing all sectors of Iraqi society.
The US Administration is aware that time is not on their side, especially when it concerns the oil law. They now recognize that as more people come to understand the law, this will increase the chance of its defeat. This was the main reason behind all the attempted secrecy that surrounded any information about the oil law.
The latest oil poll which was carried out in June and July 2007 by KA Research has shown that the vast majority of Iraqis (91%) did not feel informed enough about the oil law. This included the 33% who said they knew a little information on the law, 30% who said that they were not very informed and 28% that stated that they knew nothing about it.
If the formation of the new political right wing alliance succeeds, then this will create for the first time, perilous circumstances which will allow the oil and gas law together with other US benchmarks to be passed through the Iraqi parliament within the next few months.
This danger is very real and should be seriously considered by all the parties who are opposing the law in their future planning.
There have been several attempts by some Iraqi groups opposing the law to raise several important issues, in order to prevent the law being approved by parliament within the near future. Issues such as this law should be treated as sovereignty issues due to their affect on the future of the nation and therefore should only be passed by a referendum.
It is time for the US administration to recognize that their attempts to get the Iraqi parliament to approve this oil law by using all manner of pressure and threats, will not guarantee their chances of succeeding in implementing a law which does not reflect the interests of Iraqis in any shape or form, in the near and long term future, as was the case with many of their original plans.
It is international law which states that the occupying forces have no right to impose laws which reflect their interests only, and do not reflect the interests of the occupied people and that such laws are null and void if any future elected Iraqi parliament declares them to be so.[5]
Notes:
1. Munir Chalabi, "The Future of Iraqi oil as proposed by the Iraqi Study Group," ZNet, Jan. 8, 2007.
2. UK Organizations: PLATFORM; War on Want; US Organizations: Global Policy Forum; Institute for Policy Studies; Oil Change International; US Labor against the War.
3. IFOU, the "Iraqi Federation of Oil Unions," was the first to recognize the threats within the law and started their campaign against the law in May 2005 when they organized the first conference in Basra to discuss the future of the Iraqi oil industry and are in opposition to the PSA type of agreements.
4. Some Iraqi oil experts are having an increase role in raising the awareness of the Iraqi public and the members of the Iraqi Parliament. The letter to parliament from 106 Iraqi oil experts, technocrats is an example of such activities. The Iraqi oil experts Fouad Alamir and Issam Chalabi are leading the campaign.
5. See more details in the analyses of February 2007 draft of the Oil
Law in my article "Is Iraq in need of such an oil law," ZNET, March 11, 2007.
Munir Chalabi is an Iraqi political analyst living in UK.
ZNet | Iraq
What is holding up the delivery of the long-awaited Iraqi oil law?
by Munir Chalabi; August 22, 2007
As deadline after deadline and benchmark after benchmark passes and with all the pressure imposed by the IMF, the US Administration, the US oil lobby and International Oil Companies (IOCs) on the Iraqi government, the oil law, against all the odds, refuses to be born.
Despite all the attempts by the Occupation's Governing Council (GC) and its appointed puppet, Allawi's Government, as well as the efforts by both of the elected governments, several US/IMF deadlines have passed including one in December 2006, then in March, May and the latest one in July 2007, but the draft of the law has not even been presented officially to the Federal Parliament in Baghdad.
In parallel with all these deadlines and benchmarks, we have seen several versions of the drafts for the new Iraqi oil law leaked one way or another to the international press. This includes one in June 2006, another on January 15, then February 15, June 25, and finally July 3, 2007.
Many international political analysts and oil experts cannot comprehend how such unprecedented pressure can fail to produce results.
The answer to this is to be found within the methodology used in investigating the reasons behind the failure of the US Administration in achieving their objectives.
Analysts must not only look for external influences on any US plan in Iraq but they should also study and analyze the internal Iraqi causes affecting the success or the failure of the plan.
A. External factors and influences:
External influences were for the most part, behind the approval of a draft of the oil law, which will be the first and major step in the privatization of Iraqi oil wealth and will ensure that the oil will be produced and marketed by the IOCs with enormous profit to them.
Neither the US Republican administration nor the Democrats had any disagreement with this policy and made the approval of the oil law a benchmark for future US strategy in Iraq within the Iraqi Study Group report.[1]
The IMF made the approval of the oil law one of the main conditions for reducing the Iraqi international debts, as declared in December 1, 2005 in the Paris meetings between the IMF and representatives of the Iraqi Government.
The IOCs were united in their approval of the oil law and there were no indications from any of them to the contrary.
In addition, we have to remember that Iraq is still under US occupation. Over 180,000 US/multinational troops and over 50,000 active mercenaries are putting all types of pressure on the Iraqi government and parliament to ensure the success of the US oil plans.
Several international organizations which oppose the oil Law, including a number of environmental groups, anti-occupational movements and several international trade unions[2] provide vital support to the Iraqi anti-oil law movements and had very positive media campaigns. However, their effectiveness was understandably limited, as they could not influence the international decision-making powers.
B. Domestic influences and factors:
There are several Iraqi factors behind all the delays in the delivery of the oil law and these include:
1. The Disagreement between the Central Government and the Kurdistan Regional Government on several issues of the law including who should control the strategic oil policies and which giant oil fields should be given to the IOCs. The Kurdish Government insisted that several of the major oil fields which are allocated to the Iraqi National Oil Company under annex 2 of the draft, be moved to annex 3 in order to be given to the IOCs.
2. Increased Iraqi public awareness and pressure -- the public awareness has increased noticeably in the past year against the oil law. We have seen this public pressure mounting because of:
· An increased awareness by the public of the Iraqi civil society organizations, trade unions, in particular the IFOU ("Iraqi Federation of Oil Unions"[3]), oil experts[4], economists and the Iraqi media concerning the threat of the oil law on the future of the sovereignty of the nation, which has consequently increased the opposition to the law.
· More and more MPs are calling for the law to be carefully studied before its approval. The Iraqi parliament has gone into summer recess without discussing the oil law, but up until now the only members who are openly standing against the oil law are the MPs from Sadr's Movement and some individual members from the "Iraqi Accord," the Dawa Party and some independent MPs.
· The "State Shuraa Council," which is the highest legal office in the Iraqi Ministry of Justice, submitted on July 25, 2007, 13 legal comments on the "Draft Oil & Gas Law" to the Iraqi government. The main points included the need to first re-establish the Iraqi National Oil Company which was dissolved by the Baath regime in 1987 (in their first step to privatize the nation's oil wealth) before the Oil & Gas Law is be put to parliament. Also the Council emphasized the importance of the leading role of the central government in planning the strategic policies concerning the future of the nation's oil and gas wealth in accordance with the needs of article 111 of the Iraqi Constitution. The third vital comment by the Council was their recommendation that all agreements with any international oil companies should be approved by the Iraqi Parliament.
The Council's comments made it more difficult for the Iraqi Government to push the Draft Oil Law through the Iraqi Parliament.
· The latest Oil poll, which was carried out in June and July 2007 by KA Research, has shown that the Iraqis oppose plans to open the country's oil fields to foreign investment by a factor of two to one (63% oppose to 31% for).
3. The security crises: More and more Iraqis are questioning the wisdom of trying to rush the Oil & Gas law through parliament while the country is in such a devastating state.
· Thousands of innocent civilians are slaughtered every month due to suicide bombings by the Al-Qaeda/Baathist terrorists, the occupying forces' military attacks, the secret CIA controlled death squads and the sectarian clashes.
· Most Iraqi cities and towns have either no or severe shortages of electricity, clean water and other basic life necessities
· People are afraid to stay in their homeland and around four million are displaced, many driven from their homes by force.
Conclusions:
The legislation of the new Iraqi Oil & Gas Law by the Iraqi parliament has become the most important benchmark of the US Administration, its oil lobbies, the IOCs, the IMF, and the occupying forces. The Bush administration wants this law to be passed as soon as possible, whatever the cost to the Iraqi people.
The failure of the US policies in the occupation of Iraq, the success of the Democratic Party in the 2006 elections in controlling both legislative houses in the US, and the presidential elections next year, have made the Bush Administration and its allies more desperate in their attempts to reach a successful conclusion on the oil law in order to prepare the ground for a partial US withdrawal from Iraq, within the lifetime of this administration.
This has led to enormous pressure being imposed by the US administration and its forces on the ground in Iraq on Al-Maliki's government in the past eight months. They insisted that the government should go ahead and get this oil law approved by parliament, together with the re-Baathification law, and other privatization laws such as the privatization of the Iraqi oil processing industries which they succeeded in passing through parliament three days before the start of summer session.
The Bush Administration and their Ambassador in Baghdad had openly threatened to replace Al-Maliki's government with a new government, headed by their man in Iraq -- the old Baathist, Iyad Allawi. Al-Maliki has openly accused Allawi in several speeches of attempting to overthrow his government with the help of some units of the Iraqi army and security generals including the head of the Iraqi security forces, the old Baathist general Mohammed Al-Shahwani. These generals were appointed to their positions during Allawi's appointed government by the last US official administrator Paul Bremer back in May 2004, and are still taking their orders directly from the US embassy in Baghdad.
The US administration recognized that a US-led military coup d'etat would not result in any laws being recognized as legitimate by the international community if parliament were to be dissolved. They therefore moved to a new policy, which involved direct interference with the political process in Iraq through their more reliable allies to reorganize the political alliance on which the government relied in order to achieve their goals. They finally succeeded in achieving the establishment of such a front, which was called the "The front of the moderates" on August 15, between the two main Kurdish parties (KDP and PUK), two of the Shiite parties (the SCIRI and Al-Dawa party -- the Al-Maliki wing is called the "External organization"), with negotiations still ongoing to persuade the Islamic Party/Accord front -- the main Sunni party -- to join this new alliance.
The US administration made it clear that the new Iraqi government has important targets to accomplish, and they listed the oil law as the first priority and the re-Baathification law as a second main concern.
The claim of the US Administration that the oil and gas law will allow all Iraqis to share the oil revenue is no more than another peace of misinformation, as the "Revenue Sharing Law" is a separate federal revenue law which is still being negotiated between the different Iraqi parties representing all sectors of Iraqi society.
The US Administration is aware that time is not on their side, especially when it concerns the oil law. They now recognize that as more people come to understand the law, this will increase the chance of its defeat. This was the main reason behind all the attempted secrecy that surrounded any information about the oil law.
The latest oil poll which was carried out in June and July 2007 by KA Research has shown that the vast majority of Iraqis (91%) did not feel informed enough about the oil law. This included the 33% who said they knew a little information on the law, 30% who said that they were not very informed and 28% that stated that they knew nothing about it.
If the formation of the new political right wing alliance succeeds, then this will create for the first time, perilous circumstances which will allow the oil and gas law together with other US benchmarks to be passed through the Iraqi parliament within the next few months.
This danger is very real and should be seriously considered by all the parties who are opposing the law in their future planning.
There have been several attempts by some Iraqi groups opposing the law to raise several important issues, in order to prevent the law being approved by parliament within the near future. Issues such as this law should be treated as sovereignty issues due to their affect on the future of the nation and therefore should only be passed by a referendum.
It is time for the US administration to recognize that their attempts to get the Iraqi parliament to approve this oil law by using all manner of pressure and threats, will not guarantee their chances of succeeding in implementing a law which does not reflect the interests of Iraqis in any shape or form, in the near and long term future, as was the case with many of their original plans.
It is international law which states that the occupying forces have no right to impose laws which reflect their interests only, and do not reflect the interests of the occupied people and that such laws are null and void if any future elected Iraqi parliament declares them to be so.[5]
Notes:
1. Munir Chalabi, "The Future of Iraqi oil as proposed by the Iraqi Study Group," ZNet, Jan. 8, 2007.
2. UK Organizations: PLATFORM; War on Want; US Organizations: Global Policy Forum; Institute for Policy Studies; Oil Change International; US Labor against the War.
3. IFOU, the "Iraqi Federation of Oil Unions," was the first to recognize the threats within the law and started their campaign against the law in May 2005 when they organized the first conference in Basra to discuss the future of the Iraqi oil industry and are in opposition to the PSA type of agreements.
4. Some Iraqi oil experts are having an increase role in raising the awareness of the Iraqi public and the members of the Iraqi Parliament. The letter to parliament from 106 Iraqi oil experts, technocrats is an example of such activities. The Iraqi oil experts Fouad Alamir and Issam Chalabi are leading the campaign.
5. See more details in the analyses of February 2007 draft of the Oil
Law in my article "Is Iraq in need of such an oil law," ZNET, March 11, 2007.
Munir Chalabi is an Iraqi political analyst living in UK.
Monday, August 13, 2007
The Oil Ministry and the Oil Law
This is a good summary of some of the main points having to do with the oil law. THe parts about the oil worker's union is quite interesting. The government is using a law that was passed by Saddam forbidding unions in the public sector to claim there is no legal oil worker's union plus the fact that the government conveniently has failed to implement law that would turn into reality the right of workers to form unions. Very little is said about this and there seems to have been no pressure to make this a benchmark.
ZNet | Iraq
The Iraq Oil Ministry: In the Service of the Oil Companies?
by Ron Jacobs; August 11, 2007
According to the OneWorld news service, a recent poll of 2200 Iraqis representing all religious, social and ethnic groups inside the country conducted by KA Research showed an overwhelming percentage of those polled to be opposed to the privatization of the country's oil resources. The poll, which was paid for by a number of British and US nonprofit organizations including Oil Change International, the Institute for Policy Studies, Global Policy Forum, PLATFORM, and Jubilee Iraq, showed 66 percent of the Sunni, 62 percent of the Shia and 52 percent of the Kurds support national control of Iraq's oil. Meanwhile, Kurdish officials are ignoring this desire and the Baghdad government and are going ahead with plans to offer 40 new oil blocks to foreign companies. In addition to the move by these Kurdish authorities, the Dow Jones newswire reported on August 8, 2007 that "oil giants Total SA and Chevron Corp. have signed a services agreement that would lead to the two jointly exploring and developing hydrocarbons from one of Iraq's biggest oil fields once the country gets an oil law in place." The report goes on, stating that although there is no production sharing agreement (PSA) in place yet with Iraqi Green Zone officials, the agreement between the two corporations the services contract gives them a "large advance" on the exploitation of the oil field in question. That field is known as the Majnoon field and lies near the Iranian border. It holds an estimated 12 billion barrels of oil, making it the fourth largest in Iraq. Besides, the Majnoon field, the two corporations are also looking to seal an agreement on a smaller field in the same region.
To date, there is no oil law in place in Iraq, but if Washington and its Iraqi clients inside the Green Zone have their way, the law currently being considered will be passed in September. As most followers of the Iraqi situation know, this law will essentially remove Iraqi control over any unexploited oil resources inside Iraq territory. That control will then be sold to the foreign bidders, with US and British corporations predominant among those bidders. The framework within which these transactions will occur are known as production sharing agreements or PSAs. This oil law, which was written as much in the office buildings where Washington bureaucrats and Wall Street capitalists meet and conspire to grab the world's riches as it was in Baghdad, is one of the primary benchmarks that virtually all of official Washington is insisting its client government in Baghdad agree to as soon as possible. Unfortunately for the White House and Congress, a majority of the Iraqi parliament is refusing to go along with the program and has consistently denied Washington this ultimate plum of a reward for its invasion of Iraq and the destruction of its society and infrastructure. What will happen if the law isn't passed by the end of September when US general Petraeus makes his report to Congress remains to be seen.
There are those in the Green Zone government that are doing whatever they can to push this law forward as quickly as possible and with its essential ingredients intact. One of those involved in this attempted robbery of an Iraqi national resource is Hussein Shahrastani, the country's oil minister. Shahrastani's most recent undertaking in support of the effort to make the legislation law was to ban the Iraqi Oil Worker's Union. Although the Iraqi constitution that was put in place in 2005 guarantees 'the right of forming and joining professional associations and unions,' the fact that there have been no laws passed to describe how these workers' organizations will be formed and administered is being used by the Oil Ministry to state that there can be no unions until such laws are written and passed. So, Shahrastani has dusted off an old law from the time of Saddam that forbids the forming of any type of unions and simply denied the Oil Workers' Union's existence. Despite this legal shell game, the oil workers' rank and file is standing with the union and continues to organize against the implementation of the new oil law. If the poll is to be believed (and there is little reason to deny it), then these workers are much more in tune with their fellow Iraqis than those in the Green Zone that support the law and its fountain pen grand larceny.
As for the move by the Kurdish officials, although it appears to be a further attempt to emphasize Kurdish autonomy, the fact that most Kurds oppose the end of Iraqi national control of the oil resources gives the move a different appearance. Indeed, it appears to be more of an attempt by some Kurdish elites to make grandiose profits for themselves in the name of the Kurdish nation. This would not be the first time such a thing happened, as the modern history of Kurdish nation is replete with instances of men acting for themselves in the name of the Kurdish people.
ZNet | Iraq
The Iraq Oil Ministry: In the Service of the Oil Companies?
by Ron Jacobs; August 11, 2007
According to the OneWorld news service, a recent poll of 2200 Iraqis representing all religious, social and ethnic groups inside the country conducted by KA Research showed an overwhelming percentage of those polled to be opposed to the privatization of the country's oil resources. The poll, which was paid for by a number of British and US nonprofit organizations including Oil Change International, the Institute for Policy Studies, Global Policy Forum, PLATFORM, and Jubilee Iraq, showed 66 percent of the Sunni, 62 percent of the Shia and 52 percent of the Kurds support national control of Iraq's oil. Meanwhile, Kurdish officials are ignoring this desire and the Baghdad government and are going ahead with plans to offer 40 new oil blocks to foreign companies. In addition to the move by these Kurdish authorities, the Dow Jones newswire reported on August 8, 2007 that "oil giants Total SA and Chevron Corp. have signed a services agreement that would lead to the two jointly exploring and developing hydrocarbons from one of Iraq's biggest oil fields once the country gets an oil law in place." The report goes on, stating that although there is no production sharing agreement (PSA) in place yet with Iraqi Green Zone officials, the agreement between the two corporations the services contract gives them a "large advance" on the exploitation of the oil field in question. That field is known as the Majnoon field and lies near the Iranian border. It holds an estimated 12 billion barrels of oil, making it the fourth largest in Iraq. Besides, the Majnoon field, the two corporations are also looking to seal an agreement on a smaller field in the same region.
To date, there is no oil law in place in Iraq, but if Washington and its Iraqi clients inside the Green Zone have their way, the law currently being considered will be passed in September. As most followers of the Iraqi situation know, this law will essentially remove Iraqi control over any unexploited oil resources inside Iraq territory. That control will then be sold to the foreign bidders, with US and British corporations predominant among those bidders. The framework within which these transactions will occur are known as production sharing agreements or PSAs. This oil law, which was written as much in the office buildings where Washington bureaucrats and Wall Street capitalists meet and conspire to grab the world's riches as it was in Baghdad, is one of the primary benchmarks that virtually all of official Washington is insisting its client government in Baghdad agree to as soon as possible. Unfortunately for the White House and Congress, a majority of the Iraqi parliament is refusing to go along with the program and has consistently denied Washington this ultimate plum of a reward for its invasion of Iraq and the destruction of its society and infrastructure. What will happen if the law isn't passed by the end of September when US general Petraeus makes his report to Congress remains to be seen.
There are those in the Green Zone government that are doing whatever they can to push this law forward as quickly as possible and with its essential ingredients intact. One of those involved in this attempted robbery of an Iraqi national resource is Hussein Shahrastani, the country's oil minister. Shahrastani's most recent undertaking in support of the effort to make the legislation law was to ban the Iraqi Oil Worker's Union. Although the Iraqi constitution that was put in place in 2005 guarantees 'the right of forming and joining professional associations and unions,' the fact that there have been no laws passed to describe how these workers' organizations will be formed and administered is being used by the Oil Ministry to state that there can be no unions until such laws are written and passed. So, Shahrastani has dusted off an old law from the time of Saddam that forbids the forming of any type of unions and simply denied the Oil Workers' Union's existence. Despite this legal shell game, the oil workers' rank and file is standing with the union and continues to organize against the implementation of the new oil law. If the poll is to be believed (and there is little reason to deny it), then these workers are much more in tune with their fellow Iraqis than those in the Green Zone that support the law and its fountain pen grand larceny.
As for the move by the Kurdish officials, although it appears to be a further attempt to emphasize Kurdish autonomy, the fact that most Kurds oppose the end of Iraqi national control of the oil resources gives the move a different appearance. Indeed, it appears to be more of an attempt by some Kurdish elites to make grandiose profits for themselves in the name of the Kurdish nation. This would not be the first time such a thing happened, as the modern history of Kurdish nation is replete with instances of men acting for themselves in the name of the Kurdish people.
Monday, July 9, 2007
Opposition to Oil Law
It seems highly unlikely that the oil law will pass through parliament. None of Bush's benchmarks seem likely to be met any time soon. Opposition is building to Maliki but it seems unlikely that any replacement would do any better with the oil law unless it is changed.
Analysis: Iraq (near) united in opposition
By BEN LANDO
UPI Energy Correspondent
WASHINGTON, July 9 (UPI) -- U.S. President Bush may be right: Iraq's oil law, although highly controversial, could be a "benchmark for reconciliation."
When Iraq's council of ministers last week suddenly approved the law, critics of various stripes united in opposition. Shiite and Sunni political parties alike denounced it, vowed to defeat it, even threatened to ensure Parliament can't take it up. It is seen by some as weakening the central government and giving too much to foreign companies.
Iraq depends on the sale of oil for the vast majority of its federal budget. It's infrastructure badly needs investment to boost production. A law governing the world's third largest reserves -- and a sizable amount of natural gas -- has been as elusive as security there.
In one attack alone Saturday in the northern city of Tuz Khurmato, nearly five times as many were killed than at the Virginia Tech massacre in the United States.
In the midst of a war zone of more than four years old, the Bush administration itself could be the most divisive agent. And, it's the White House's support for Prime Minister Nouri al-Maliki's administration, as well as the heavy pressure on it to pass the oil law, that could draw together the fractured country.
The fate of and fight for control over Iraq's oil is the same for the country itself. At issue is to what extent the federal government, as stewards of Iraq as a whole, will decide oil policy. Local governments, especially the Kurdistan Regional Government, disapprove of strong central control; their suspicions rest on memories of Saddam's Iraq, where the central government's uneven investment hand benefited only some, and its heavy hand brutalized the rest.
Much more oil is in the ground than being pumped now, that's likely why a law governing the oil has been held up in the United States as the tool for grand compromise, leading toward the path of more hand-shaking.
President Bush himself, as well as U.S. Ambassador Ryan Crocker, Vice President Dick Cheney and Defense Secretary Robert Gates, in separate meetings in Washington and Baghdad are all regularly urging the passage of the law.
KRG and federal government negotiations on the oil law began last summer. Deals were reached and stalled since late February. Then Tuesday the ministers approved it.
"It has to be a package of laws in which all the Iraqis can agree, which is why it is a benchmark of national reconciliation," a State Department official told UPI in May, adding that's why revenue sharing is the main emphasis of the U.S. government. Revenue sharing would be decided in a revenue sharing law, not the oil law, two of four laws that comprise the package. The revenue sharing law is to be taken up this week by the ministerial council.
The oil law already faced opposition from Iraq oil experts -- including two of the law's three original authors -- as well as the powerful oil unions. The unions say they're willing to stop production and exports if the law gives foreign oil companies too much access to or ownership of the oil.
"The last four years have witnessed repeated attempts at dismantling the basis for any well planned resources management for the whole nation, only to replace it with market oriented destabilization and fragmentation policies that are at variance and in competition with each other and the national interest," said Tariq Shafiq, an Iraqi now living in Amman and London, tasked last spring by the Iraq oil minister to co-write the law. It was subsequently altered in negotiations and he now opposes it.
"Would this law really optimize the management of the oil and gas? Would it really unite the country?," Shafiq said. "I believe sincerely it is naive to think it would."
"It's really important to challenge the notion that the law is going to unite 'warring factions,'" said Ewa Jasiewicz of the London-based campaigner Platform. "The language in which the law is being couched and reported is incredibly sectarian and is creating de facto Sunni, Kurdish and Shiite regional power blocks in the imagination and political landscape and, in the process, the conditions for the creating of these kinds of facts on the ground."
Many political parties opposed Maliki's government before the oil law. As security in Iraq diminishes, so does the political strength of Maliki's coalition of Shiites -- many backed by Iran -- and Kurds.
The ministerial council just barely had quorum last week because of boycotts of key Shiite allies and Sunni parties. Parliament was supposed to take up the oil law Wednesday but boycotts and chronic absenteeism scrapped that.
The Sadr Movement and the Iraqi Accord Front now say they may end the boycott specifically to challenge the law. The former held mass rallies over the weekend in opposition to Maliki. IAF says it will call for a vote of no confidence in him.
The Association of Muslim Scholars issued an edict against any Parliamentarian approving the law. Off the record talk by campaigners, unionists and oil experts express the need to turn up the heat of opposition.
Last week the Iraq Freedom Congress -- whose motto is "Working for a Democratic, Secular and Progressive Alternative to both the U.S. Occupation and Political Islam in Iraq" -- teamed up with the new Anti Oil Law Frontier to rally masses against the law.
All the while a coalition in Iraq grows. It encompasses Shiites, Sunnis, Kurds and secularists. Its goal is to keep Iraq together. But it also wants an end to the U.S. occupation.
"They are also strongly opposed both to the terrorist forces of Al Qaeda in Iraq (AQI) and to the growing influence of Iran in Iraq," Robert Dreyfuss wrote of the opposition in The Nation.
Despite sharing two key tenets of the war on terrorism, the United States isn't supporting the coalition.
State Department Iraq Coordinator David Satterfield, answering questions in March about what has been self-termed the "National Salvation Government," vowed support for Maliki's government. "It is not helpful to talk about alternatives," he said.
But alternatives may force themselves into the conversation, especially on the heels of the oil law.
--
Analysis: Iraq (near) united in opposition
By BEN LANDO
UPI Energy Correspondent
WASHINGTON, July 9 (UPI) -- U.S. President Bush may be right: Iraq's oil law, although highly controversial, could be a "benchmark for reconciliation."
When Iraq's council of ministers last week suddenly approved the law, critics of various stripes united in opposition. Shiite and Sunni political parties alike denounced it, vowed to defeat it, even threatened to ensure Parliament can't take it up. It is seen by some as weakening the central government and giving too much to foreign companies.
Iraq depends on the sale of oil for the vast majority of its federal budget. It's infrastructure badly needs investment to boost production. A law governing the world's third largest reserves -- and a sizable amount of natural gas -- has been as elusive as security there.
In one attack alone Saturday in the northern city of Tuz Khurmato, nearly five times as many were killed than at the Virginia Tech massacre in the United States.
In the midst of a war zone of more than four years old, the Bush administration itself could be the most divisive agent. And, it's the White House's support for Prime Minister Nouri al-Maliki's administration, as well as the heavy pressure on it to pass the oil law, that could draw together the fractured country.
The fate of and fight for control over Iraq's oil is the same for the country itself. At issue is to what extent the federal government, as stewards of Iraq as a whole, will decide oil policy. Local governments, especially the Kurdistan Regional Government, disapprove of strong central control; their suspicions rest on memories of Saddam's Iraq, where the central government's uneven investment hand benefited only some, and its heavy hand brutalized the rest.
Much more oil is in the ground than being pumped now, that's likely why a law governing the oil has been held up in the United States as the tool for grand compromise, leading toward the path of more hand-shaking.
President Bush himself, as well as U.S. Ambassador Ryan Crocker, Vice President Dick Cheney and Defense Secretary Robert Gates, in separate meetings in Washington and Baghdad are all regularly urging the passage of the law.
KRG and federal government negotiations on the oil law began last summer. Deals were reached and stalled since late February. Then Tuesday the ministers approved it.
"It has to be a package of laws in which all the Iraqis can agree, which is why it is a benchmark of national reconciliation," a State Department official told UPI in May, adding that's why revenue sharing is the main emphasis of the U.S. government. Revenue sharing would be decided in a revenue sharing law, not the oil law, two of four laws that comprise the package. The revenue sharing law is to be taken up this week by the ministerial council.
The oil law already faced opposition from Iraq oil experts -- including two of the law's three original authors -- as well as the powerful oil unions. The unions say they're willing to stop production and exports if the law gives foreign oil companies too much access to or ownership of the oil.
"The last four years have witnessed repeated attempts at dismantling the basis for any well planned resources management for the whole nation, only to replace it with market oriented destabilization and fragmentation policies that are at variance and in competition with each other and the national interest," said Tariq Shafiq, an Iraqi now living in Amman and London, tasked last spring by the Iraq oil minister to co-write the law. It was subsequently altered in negotiations and he now opposes it.
"Would this law really optimize the management of the oil and gas? Would it really unite the country?," Shafiq said. "I believe sincerely it is naive to think it would."
"It's really important to challenge the notion that the law is going to unite 'warring factions,'" said Ewa Jasiewicz of the London-based campaigner Platform. "The language in which the law is being couched and reported is incredibly sectarian and is creating de facto Sunni, Kurdish and Shiite regional power blocks in the imagination and political landscape and, in the process, the conditions for the creating of these kinds of facts on the ground."
Many political parties opposed Maliki's government before the oil law. As security in Iraq diminishes, so does the political strength of Maliki's coalition of Shiites -- many backed by Iran -- and Kurds.
The ministerial council just barely had quorum last week because of boycotts of key Shiite allies and Sunni parties. Parliament was supposed to take up the oil law Wednesday but boycotts and chronic absenteeism scrapped that.
The Sadr Movement and the Iraqi Accord Front now say they may end the boycott specifically to challenge the law. The former held mass rallies over the weekend in opposition to Maliki. IAF says it will call for a vote of no confidence in him.
The Association of Muslim Scholars issued an edict against any Parliamentarian approving the law. Off the record talk by campaigners, unionists and oil experts express the need to turn up the heat of opposition.
Last week the Iraq Freedom Congress -- whose motto is "Working for a Democratic, Secular and Progressive Alternative to both the U.S. Occupation and Political Islam in Iraq" -- teamed up with the new Anti Oil Law Frontier to rally masses against the law.
All the while a coalition in Iraq grows. It encompasses Shiites, Sunnis, Kurds and secularists. Its goal is to keep Iraq together. But it also wants an end to the U.S. occupation.
"They are also strongly opposed both to the terrorist forces of Al Qaeda in Iraq (AQI) and to the growing influence of Iran in Iraq," Robert Dreyfuss wrote of the opposition in The Nation.
Despite sharing two key tenets of the war on terrorism, the United States isn't supporting the coalition.
State Department Iraq Coordinator David Satterfield, answering questions in March about what has been self-termed the "National Salvation Government," vowed support for Maliki's government. "It is not helpful to talk about alternatives," he said.
But alternatives may force themselves into the conversation, especially on the heels of the oil law.
--
Sunday, July 8, 2007
Iraq lawmaker quits energy panel: Opposes oil law
We get little information about the details of the draft law. It does not seem to have been released to the press even though it is key to Iraq's future. So much for democracy and accountability. The parliament may not be able to even reach a quorum.
Iraqi lawmaker quits energy panel over oil law
07 Jul 2007 14:04:00 GMT
Source: Reuters
BAGHDAD, July 7 (Reuters) - A member of Iraq's parliamentary energy committee quit on Saturday in protest over a draft oil law, which Washington hopes will help ease violence between Iraq's warring Shi'ite and Sunni Arabs.
Usama al-Nujeyfi told a small news conference that the proposal would cede too much control to global companies and "ruin the country's future". He vowed to work to defeat the draft in parliament.
"I announce my resignation and distance myself from delivering this draft before this parliament and I will carry out my obligation to repeal it inside parliament with all fellow nationalists," al-Nujeyfi said.
The draft was passed by the cabinet of Shi'ite Prime Minister Nuri al-Maliki on Tuesday and must be debated and agreed by parliament before it can become law.
Washington sees it as a key benchmark of progress in reconciliation and hopes the law will help to stem sectarian violence between minority Sunnis and majority Shi'ites.
Iraq has the world's third largest oil reserves, but most of it lies in the Kurdish north and the Shi'ite south. Sunnis, who live mainly in the middle of the country around Baghdad, fear they will miss out on any windfalls.
But al-Nujeyfi, a Sunni member of the Iraq National List, headed by secular politician and former interim prime minister Iyad Allawi, said the proposal would cede too much to foreign firms eager to rebuild Iraq's oil industry.
"I call on my lawmaker brothers and sisters to confront this law which will ruin the country's future and will be in the interest of large global companies at the expense of Iraqis," he said.
Iraqi lawmaker quits energy panel over oil law
07 Jul 2007 14:04:00 GMT
Source: Reuters
BAGHDAD, July 7 (Reuters) - A member of Iraq's parliamentary energy committee quit on Saturday in protest over a draft oil law, which Washington hopes will help ease violence between Iraq's warring Shi'ite and Sunni Arabs.
Usama al-Nujeyfi told a small news conference that the proposal would cede too much control to global companies and "ruin the country's future". He vowed to work to defeat the draft in parliament.
"I announce my resignation and distance myself from delivering this draft before this parliament and I will carry out my obligation to repeal it inside parliament with all fellow nationalists," al-Nujeyfi said.
The draft was passed by the cabinet of Shi'ite Prime Minister Nuri al-Maliki on Tuesday and must be debated and agreed by parliament before it can become law.
Washington sees it as a key benchmark of progress in reconciliation and hopes the law will help to stem sectarian violence between minority Sunnis and majority Shi'ites.
Iraq has the world's third largest oil reserves, but most of it lies in the Kurdish north and the Shi'ite south. Sunnis, who live mainly in the middle of the country around Baghdad, fear they will miss out on any windfalls.
But al-Nujeyfi, a Sunni member of the Iraq National List, headed by secular politician and former interim prime minister Iyad Allawi, said the proposal would cede too much to foreign firms eager to rebuild Iraq's oil industry.
"I call on my lawmaker brothers and sisters to confront this law which will ruin the country's future and will be in the interest of large global companies at the expense of Iraqis," he said.
Wednesday, July 4, 2007
Oil law closer to passage?
This must be a new draft as the older draft went through cabinet ages ago but apparently never went before parliament. It remains to be seen whether there will be any agreement in the legislature. In fact it may be that there will not even be a quorum.
Iraq takes step closer to landmark oil law By Alister Bull and Dean Yates
Tue Jul 3, 9:02 AM ET
BAGHDAD (Reuters) - Iraq's cabinet approved changes to a draft hydrocarbon law on Tuesday and sent it to parliament for immediate debate, taking a big step towards meeting a key political target set by the United States.
Washington has pushed Iraq for months to speed up passage of the law and other pieces of legislation, which are seen as vital to curbing sectarian violence and healing deep divisions between majority Shi'ites and minority Sunni Arabs.
The law is intended to ensure a fair distribution of the world's third largest oil reserves, which are located mainly in the Shi'ite south and the Kurdish north of the country.
Sunni Arabs, the backbone of the insurgency, live mainly in central provinces that have little proven oil wealth and have long feared they would miss out on any windfall should violence ease enough to revive the struggling industry.
"The law was approved unanimously (by the cabinet) ... it was referred to the parliament which will discuss it tomorrow," Shi'ite Prime Minister Nuri al-Maliki told a press conference, calling it the "most important" law in Iraq.
"I call on all our partners in the political process and in this national unity government to respect this deal."
In the latest violence, U.S. forces killed 23 militants suspected of links with al Qaeda during a fierce battle in the western Anbar province over the weekend, the military said.
The U.S. military also said was reviewing an F-16 air strike on insurgent targets in the southern city of Diwaniya after local officials said 10 civilians were killed in the attack. A hospital source said six children were among the dead.
The draft oil law was originally approved by the cabinet in February but faced opposition from the government in autonomous Kurdistan, which felt it was getting a raw deal.
Besides deciding who controls the country's oil reserves and setting up a new oil firm to oversee the industry, the law aims to provide a legal framework for attracting foreign investment.
Other major laws also need to be passed that set provincial elections by the end of the year and that allow some members of Saddam Hussein's Baath party to return to government and the military. Maliki said these would be discussed next week.
CLOCK TICKING
But parliament is running out time to debate and approve the series of laws. It has already extended its current session to the end of July, before legislators take a month off.
That leaves little time before the U.S. military commander in Iraq, General David Petraeus, and Ambassador Ryan Crocker have to present a report to Washington in the middle of September on Iraq's security and political progress.
The report is being viewed as a political watershed, with U.S. President George W. Bush under mounting pressure to show his Iraq strategy is working and with campaigning in the 2008 U.S. presidential race already well under way
Iraq takes step closer to landmark oil law By Alister Bull and Dean Yates
Tue Jul 3, 9:02 AM ET
BAGHDAD (Reuters) - Iraq's cabinet approved changes to a draft hydrocarbon law on Tuesday and sent it to parliament for immediate debate, taking a big step towards meeting a key political target set by the United States.
Washington has pushed Iraq for months to speed up passage of the law and other pieces of legislation, which are seen as vital to curbing sectarian violence and healing deep divisions between majority Shi'ites and minority Sunni Arabs.
The law is intended to ensure a fair distribution of the world's third largest oil reserves, which are located mainly in the Shi'ite south and the Kurdish north of the country.
Sunni Arabs, the backbone of the insurgency, live mainly in central provinces that have little proven oil wealth and have long feared they would miss out on any windfall should violence ease enough to revive the struggling industry.
"The law was approved unanimously (by the cabinet) ... it was referred to the parliament which will discuss it tomorrow," Shi'ite Prime Minister Nuri al-Maliki told a press conference, calling it the "most important" law in Iraq.
"I call on all our partners in the political process and in this national unity government to respect this deal."
In the latest violence, U.S. forces killed 23 militants suspected of links with al Qaeda during a fierce battle in the western Anbar province over the weekend, the military said.
The U.S. military also said was reviewing an F-16 air strike on insurgent targets in the southern city of Diwaniya after local officials said 10 civilians were killed in the attack. A hospital source said six children were among the dead.
The draft oil law was originally approved by the cabinet in February but faced opposition from the government in autonomous Kurdistan, which felt it was getting a raw deal.
Besides deciding who controls the country's oil reserves and setting up a new oil firm to oversee the industry, the law aims to provide a legal framework for attracting foreign investment.
Other major laws also need to be passed that set provincial elections by the end of the year and that allow some members of Saddam Hussein's Baath party to return to government and the military. Maliki said these would be discussed next week.
CLOCK TICKING
But parliament is running out time to debate and approve the series of laws. It has already extended its current session to the end of July, before legislators take a month off.
That leaves little time before the U.S. military commander in Iraq, General David Petraeus, and Ambassador Ryan Crocker have to present a report to Washington in the middle of September on Iraq's security and political progress.
The report is being viewed as a political watershed, with U.S. President George W. Bush under mounting pressure to show his Iraq strategy is working and with campaigning in the 2008 U.S. presidential race already well under way
Tuesday, June 26, 2007
Situation not ripe for a new oil law in Iraq
This is an interesting analysis of the draft oil law in Iraq. I am not sure how privatizing would necessarily mean accountability as opposed to govt. ownership but much of his article makes many good points.
Situation Not Ripe for a New Oil Law in Iraq
Khalil Zahr Al-Hayat - 20/06/07//
Any one who is following up on the ongoing debate among Iraqi oil officials and experts of different walks over the country's oil law cannot help but feel upbeat on the future of the country despite the current bloody situation because of the spirit of objectivity and affirmativeness that dominates the attitudes of a majority of those involved in drafting the oil law and their unmistakable keenness to uphold the unity of Iraq and its higher national interests.
What is hard to grasp, however, is the fact that efforts to study the particularities of this law and the demands for its passing come amid a set of highly unfavorable and oppressive conditions that drastically reduces the chances for arriving at the best model for a law that takes the interests of Iraq into account and allows for the establishment of a successful future oil industry that is able to push the wheel of economic and social development.
The deteriorating security conditions in Iraq that cost many Iraqis their lives, and push many others into destitution have also worsened the exodus of Iraq's qualified cadres, and undermined the country's social fabric and its human resources, which is the most important, if not the only sustainable, of all Iraq's resources.
Therefore, higher priority should be set to reaching the political settlement needed to put an end to the violence and give Iraqis the security and the stability that allows them to think clearly of their other issues, and since it would be difficult to work on developing Iraq's oil resources in light of the current circumstances, there should be no harm in waiting.
Furthermore, debating Iraq's oil law under a foreign military occupation might make the law vulnerable to domestic or international legal challenges in the future, since it would be sanctioned in the presence of a military occupation, by countries that have clear interests that stand to be affected by the wording and the essence of the law being drafted.
Accordingly, it would be normal to expect these country to resort to pressure as means of serving their political and economic strategic interests, as they are certainly anything but neutral, and constitute a main pressure front that influences the ongoing deliberations over the law, particularly in the direction of sanctioning a certain formula during this stage that might not be completely inline with Iraq's national interest as seen by many within and without the country.
The timing of the discussion of the law, coming ahead of a key development taking place in the Kurdish region of Iraq, namely the referendum on the final status of this region, is among the most intriguing factors surrounding the debating of the law, especially since Kurdish politicians constitute the critical mass for the drive to increase the regional and provincial bargaining powers in the debate over the distribution of the exploration, development and oil production operations between the provincial authorities and the central authority in Baghdad.
Since whatever the decision to be taken with this regard is expected to apply to all of Iraq's provinces, and in light of the autonomous nature, which lies at the cornerstone of the attitude that shapes the stance of the Kurdish province, and which sets this province part from the rest of Iraq; the law being drafted would probably lead to the sharing of oil wealth between the central and the provincial governments.
However, any participation by the provincial authorities in the development of Iraq's oil resources would almost certainly guarantee international oil companies a foothold in operations to develop Iraq's oil resources and oil production operations as partners under 'production sharing' contracts as nascent regional oil bodies are seen as lacking the ability to meet the technical, and self-financing requirements needed for the development of the oil field expected to be allocated to it.
It is also wroth taking into account that direct foreign investment in the Iraqi oil sector will not be an advantage to Iraq if national Iraqi oil companies possess these capabilities, especially since Iraq's oil is easily produced and is considered among the cheapest oils to produce world wide.
For these critical technical and funding capabilities to be available, national Iraqi oil companies must be of a certain caliber in terms of their financial assets and production capabilities, which are qualities only available to regional companies as the size of the Iraq oil reserves does not justify the presence of a large number of oil companies, each possessing the needed capabilities.
When it comes to the technical services sector expected to be needed by the Iraqi oil sector, for example in the field of rehabilitating production operations of oilfields that were damaged by the military operations; expert oil companies could be contracted under service contracts that do not entail granting these companies any concessions over Iraq's natural resources or undermining the national sovereignty of Iraq over these companies
Keeping the oil sector completely under the control of a single, central authority does not necessarily entail allowing national oil company to monopolize the oil and gas sectors on the intermediate or the long runs, nor the absence of transparency, which are constitute legitimate concerns by a majority of Iraqi oil experts; leading some to call for a decentralized approach in managing the oil sector.
This is because transparency can be achieved by running the national oil company on commercial basis or completely privatizing it under the appropriate regulatory restrictions.
Moreover, more then one, technically and financial competent national oil companies can be established to ensure competitiveness, high production and transparency levels, since taking into account the amount of confirmed reserve, the Iraqi oil industry might be able to accommodate three or four national oil companies competing in all of the country's regions.
At the same time, the federal oil and gas council proposed by the draft law is largely seen as a suitable framework governing the partnership between the central and provincial authorities in regulating and administering the oil and gas sector. The council also gives provincial authorities, if given the needed powers, the possibility of monitoring and auditing the central administration of the oil sector.
It is also worth mentioning that privatizing the national oil company or companies does not necessarily entail sacrificing the sovereignty of the state over its oil resources, or abandoning the national strategy aimed at developing these resources, since the government - in the event national oil companies were privatized in the future, and in contrast to production sharing contracts - can always maintain shares with a golden cover that allow it to maintain majority control over this critical sector.
When it comes to spending oil-generated revenues, the agreement reached to fairly distribute these revenues among the provinces according to the size of the population is acceptable in principal since it reflects keenness to preserve the unity of the Iraqi people.
The practical implantation of this principal might lie in a methodology for economic and social development that aims at the eliminating the differences between the Iraqi provinces in income distribution and human development in line with the UN report for human development, as such methodology would direct all the central revenues, not just oil revenues toward achieving this critical goal.
Oil revenues might also be streamlined in the initial phase into the process of restructuring, rehabilitating and upgrading the country's infrastructure and basic utilities as demanded by a number of Iraq experts and subject matter specialists.
The bigger part of these revenues, however, should be invested in diversifying the Iraqi economy's productivity base and getting ready to the post-oil era. In this context, Iraq would need massive direct foreign investments, particularly in the field of advanced technologies and the development of high value-added industries.
All this, however, would remain within the realm of wishful thinking or theories if peace and stability could not be maintained throughout the whole of Iraq.
* Mr. Khalil Zahr is an Environmental Affairs Consultant from Lebanon.
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Situation Not Ripe for a New Oil Law in Iraq
Khalil Zahr Al-Hayat - 20/06/07//
Any one who is following up on the ongoing debate among Iraqi oil officials and experts of different walks over the country's oil law cannot help but feel upbeat on the future of the country despite the current bloody situation because of the spirit of objectivity and affirmativeness that dominates the attitudes of a majority of those involved in drafting the oil law and their unmistakable keenness to uphold the unity of Iraq and its higher national interests.
What is hard to grasp, however, is the fact that efforts to study the particularities of this law and the demands for its passing come amid a set of highly unfavorable and oppressive conditions that drastically reduces the chances for arriving at the best model for a law that takes the interests of Iraq into account and allows for the establishment of a successful future oil industry that is able to push the wheel of economic and social development.
The deteriorating security conditions in Iraq that cost many Iraqis their lives, and push many others into destitution have also worsened the exodus of Iraq's qualified cadres, and undermined the country's social fabric and its human resources, which is the most important, if not the only sustainable, of all Iraq's resources.
Therefore, higher priority should be set to reaching the political settlement needed to put an end to the violence and give Iraqis the security and the stability that allows them to think clearly of their other issues, and since it would be difficult to work on developing Iraq's oil resources in light of the current circumstances, there should be no harm in waiting.
Furthermore, debating Iraq's oil law under a foreign military occupation might make the law vulnerable to domestic or international legal challenges in the future, since it would be sanctioned in the presence of a military occupation, by countries that have clear interests that stand to be affected by the wording and the essence of the law being drafted.
Accordingly, it would be normal to expect these country to resort to pressure as means of serving their political and economic strategic interests, as they are certainly anything but neutral, and constitute a main pressure front that influences the ongoing deliberations over the law, particularly in the direction of sanctioning a certain formula during this stage that might not be completely inline with Iraq's national interest as seen by many within and without the country.
The timing of the discussion of the law, coming ahead of a key development taking place in the Kurdish region of Iraq, namely the referendum on the final status of this region, is among the most intriguing factors surrounding the debating of the law, especially since Kurdish politicians constitute the critical mass for the drive to increase the regional and provincial bargaining powers in the debate over the distribution of the exploration, development and oil production operations between the provincial authorities and the central authority in Baghdad.
Since whatever the decision to be taken with this regard is expected to apply to all of Iraq's provinces, and in light of the autonomous nature, which lies at the cornerstone of the attitude that shapes the stance of the Kurdish province, and which sets this province part from the rest of Iraq; the law being drafted would probably lead to the sharing of oil wealth between the central and the provincial governments.
However, any participation by the provincial authorities in the development of Iraq's oil resources would almost certainly guarantee international oil companies a foothold in operations to develop Iraq's oil resources and oil production operations as partners under 'production sharing' contracts as nascent regional oil bodies are seen as lacking the ability to meet the technical, and self-financing requirements needed for the development of the oil field expected to be allocated to it.
It is also wroth taking into account that direct foreign investment in the Iraqi oil sector will not be an advantage to Iraq if national Iraqi oil companies possess these capabilities, especially since Iraq's oil is easily produced and is considered among the cheapest oils to produce world wide.
For these critical technical and funding capabilities to be available, national Iraqi oil companies must be of a certain caliber in terms of their financial assets and production capabilities, which are qualities only available to regional companies as the size of the Iraq oil reserves does not justify the presence of a large number of oil companies, each possessing the needed capabilities.
When it comes to the technical services sector expected to be needed by the Iraqi oil sector, for example in the field of rehabilitating production operations of oilfields that were damaged by the military operations; expert oil companies could be contracted under service contracts that do not entail granting these companies any concessions over Iraq's natural resources or undermining the national sovereignty of Iraq over these companies
Keeping the oil sector completely under the control of a single, central authority does not necessarily entail allowing national oil company to monopolize the oil and gas sectors on the intermediate or the long runs, nor the absence of transparency, which are constitute legitimate concerns by a majority of Iraqi oil experts; leading some to call for a decentralized approach in managing the oil sector.
This is because transparency can be achieved by running the national oil company on commercial basis or completely privatizing it under the appropriate regulatory restrictions.
Moreover, more then one, technically and financial competent national oil companies can be established to ensure competitiveness, high production and transparency levels, since taking into account the amount of confirmed reserve, the Iraqi oil industry might be able to accommodate three or four national oil companies competing in all of the country's regions.
At the same time, the federal oil and gas council proposed by the draft law is largely seen as a suitable framework governing the partnership between the central and provincial authorities in regulating and administering the oil and gas sector. The council also gives provincial authorities, if given the needed powers, the possibility of monitoring and auditing the central administration of the oil sector.
It is also worth mentioning that privatizing the national oil company or companies does not necessarily entail sacrificing the sovereignty of the state over its oil resources, or abandoning the national strategy aimed at developing these resources, since the government - in the event national oil companies were privatized in the future, and in contrast to production sharing contracts - can always maintain shares with a golden cover that allow it to maintain majority control over this critical sector.
When it comes to spending oil-generated revenues, the agreement reached to fairly distribute these revenues among the provinces according to the size of the population is acceptable in principal since it reflects keenness to preserve the unity of the Iraqi people.
The practical implantation of this principal might lie in a methodology for economic and social development that aims at the eliminating the differences between the Iraqi provinces in income distribution and human development in line with the UN report for human development, as such methodology would direct all the central revenues, not just oil revenues toward achieving this critical goal.
Oil revenues might also be streamlined in the initial phase into the process of restructuring, rehabilitating and upgrading the country's infrastructure and basic utilities as demanded by a number of Iraq experts and subject matter specialists.
The bigger part of these revenues, however, should be invested in diversifying the Iraqi economy's productivity base and getting ready to the post-oil era. In this context, Iraq would need massive direct foreign investments, particularly in the field of advanced technologies and the development of high value-added industries.
All this, however, would remain within the realm of wishful thinking or theories if peace and stability could not be maintained throughout the whole of Iraq.
* Mr. Khalil Zahr is an Environmental Affairs Consultant from Lebanon.
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