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Kurdistan Oil Law Poses Problem For Iraqi
Baghdad
8.11.2006
By Sumedha Senanayake |
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NEW YORK,
November 8, -- On October 22, the Kurdistan regional
government published a final draft of the petroleum
law. The draft document is to be debated within the
regional assembly and, if passed, it would place the
region's government in opposition to the central
government in Baghdad, which has indicated that it
will publish its own completed hydrocarbon law
sometime in December or early 2007.
If parallel legal frameworks are established in the
Kurdish autonomous region and Baghdad, foreign firms
wanting to do business may have to sign separate
contracts and adhere to the laws of two governments.
Thus, the issue remains as to whether a compromise
can be reached between the Kurds and the Iraqi
central government, or whether the division of oil
revenues will prove to be a source of further
instability in a country already reeling from
insurgency and sectarian strife.
Kurds Push Own Oil Policy
While violence engulfs much of Iraq and the Baghdad
central government continues negotiations over a
petroleum law, the Kurds have moved ahead and are
poised to pass their own oil law. In addition, they
have already signed a handful of contracts with
foreign firms to explore oil fields in the north. |
Oil fields in Kurdistan Region (Iraq) |
Issam al-Chalabi, a former Iraqi oil minister, said
the right to control local oil reserves constitutes
a major complication between the Kurds and the
central government, AP reported on October 25.
"The Kurds have submitted a draft petroleum act to
be adopted that gives them the right to control oil,
regardless of the government in Baghdad. The Oil
Ministry has submitted another completely different
draft that gives the authority to the ministry, not
regions. It's the main issue of the conflict: oil
and Kurds," he said.
The establishment of a petroleum law in the Kurdish
region not only underscores the decentralization of
oil resources, but it constitutes another step in
the Kurds' move away from the Baghdad government.
Tension Over Signed Oil
Contracts
In another area of contention, the Kurdish
administration has moved ahead and signed
exploration contracts with several foreign oil
firms, including the Norwegian oil company DNO and
the Turkish firms PetOil and Genel Enerji. The
contracts place the local administration at odds
with Baghdad by stressing Erbil's autonomy at the
expense of the central government.
The issue came to a head when Iraqi Oil Minister
Husayn al-Shahristani told the state-owned daily
"Al-Sabah" on September 24 that contracts signed
with foreign firms to develop oil fields in the
north without the approval of the central government
were subject to review by the ministry.
Officials in the Oil Ministry also said that foreign
firms currently working in the Kurdish region would
be blacklisted in the future from attaining
contracts to develop oil fields in southern Iraq.
In response, Kurdistan Prime Minster Nechirvan
Barzani said the move would be unconstitutional and
he issued a statement suggesting that his government
may secede if the contracts were rejected. "If
Baghdad ministers refuse to abide by that
constitution, the people of Kurdistan reserve the
right to reconsider our choice," he said.
'Future Oil Fields'
The key issue concerns the control and management of
so-called "future oil fields". Although Article 108
of the Iraqi Constitution says, "oil and gas are the
ownership of all the people of Iraq" and are to be
managed by the federal government in conjunction
with regional governorates, only "current" oil
fields, which are controlled by the central
government, are mentioned, not any discovered in the
future.
Kurdish Natural Resources Minister Ashti Hawrami
insisted that future oil fields in the Kurdish
region are to be managed by Irbil and won't be
shared with Baghdad, "USA Today" reported on
November 6. "In management of new fields, we are
adamant that we will not share with the federal
government. Planning, coordination -- no problem.
But who has the right to write contracts? We can
consult with the center, but the ultimate authority
lies with the Kurds," he said.
The issue of future oil fields will becomes all the
more significant when the fate of Kirkuk is decided
by a referendum in 2007. Recent demographic shifts
as part of the Kurds' attempts to reverse the
Hussein regime's "Arabization" campaign suggest that
Kirkuk may very well have a Kurdish majority,
thereby placing the Kurdish government in a good
position to annex Kirkuk and take control of its
massive oil fields.
Outlook Unclear
The fact that the Kurds have already drafted their
own petroleum law even before the creation of a
federal law is itself indicative of the strength of
Irbil's position, in that the Kurds are a major
component of the Shi'ite-led coalition government
and without their support the government would
probably fall.
Conversely, it may be in the Kurdish
administration's interest to back down and show a
willingness to compromise with Baghdad. The Kurdish
region is land-locked and export outlets are
crucial. Experts contend that the existing Ceyhan
pipeline from northern Iraq to Turkey does not have
the capacity to carry additional crude exports.
Furthermore, if Kirkuk is annexed by the Kurds, it
may complicate matters with Turkey, which is already
concerned that the Iraqi Kurds' ambitions of
autonomy may incite their own sizable Kurdish
population to follow in their footsteps.
Even if the dispute is resolved, the oil industry
itself is in shambles because of rampant corruption
and insurgent attacks. The Special Inspector General
for Iraq Reconstruction, the U.S. agency responsible
for overseeing Iraq's reconstruction, issued a
report on July 30 describing smuggling as
"pervasive" and "virtually pandemic," which
threatens Iraq's ability to maintain, let alone
increase oil production.
Even though Iraq is rich in crude oil and natural
gas, it must import much of its refined petroleum.
Years of UN sanctions left much of Iraq's oil
infrastructure in a dilapidated condition, crippling
its refining capacity.
Finally, caught in the middle of the dispute are the
Sunni Arabs, who fear that Iraq is moving toward
partition into three sections: a Kurdish north and
Shi'ite south, both rich in oil, while the Sunnis
are left with a resource-poor center.
The Kurds' demands and aggressive posturing might
aggravate the Sunnis' feelings of marginalization
and provide more fuel for radicals among them.
rferl org
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