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This wasn't in the plans of the Kurds.
Draft law would give oil powers to Baghdad
20.1.2007 |
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Draft Law Keeps Central Control Over Oil in Iraq
January 20, 2007
BAGHDAD, January 19, -- After months of tense
bargaining, a cabinet-level committee has produced a
draft law governing Iraq’s vast oil fields that
would distribute all revenues through the federal
government and grant Baghdad wide powers in
exploration, development and awarding major
international contracts.
The draft, described Friday by several members of
the committee, could still change and must be
approved by the Iraqi cabinet and Parliament before
it becomes law. Negotiations have veered off track
in the past, and members of the political and
sectarian groups with interest in the law could
still object as they read it more closely.
But if approved in anything close to its present
form, the law would appear to settle a longstanding
debate over whether the oil industry and its
revenues should be overseen by the central
government or the regions dominated by Kurds in the
north and Shiite Arabs in the south, where the
richest oil fields are located.
The draft comes down firmly on the side of central
oversight, a decision that advocates for Iraq’s
unity are likely to trumpet as a triumph. Because
control of the oil industry touches so directly on
the interests of all Iraq’s warring sectarian
groups, and therefore the future of the country, the
proposed law has been described as the most critical
piece of pending legislation.
“This will give us the basis of the unity of this
country,” said Ali Baban, the Iraqi planning
minister and a member of the Sunni-dominated Tawafaq
party who serves on the negotiating committee. “We
pushed for the center in Baghdad, but we didn’t
neglect the Kurds and other regions,” Mr. Baban
said.
Negotiators said that the final weeks of wrangling
on the draft focused on a federal committee that
would be set up to review the oil contracts.
Kurdish, and to some extent Shiite, parties wanted
to maintain regional control over the contracts,
while Sunni Arabs, with few oil resources on
territories they dominate, insisted that the federal
committee have the power to approve contracts,
rather than just reviewing them and offering advice.
The negotiators appear to have finessed that issue
by allowing the regions to initiate the process of
tendering contracts before sending them to Baghdad
for approval. To limit the powers of the committee,
they also have drawn up an exacting set of criteria
to govern the deliberations of the committee rather
than simply relying on its independent discretion.
And in a bow to the Kurds, who objected to the use
of the word “approve” in describing the committee’s
duties, the draft law says instead that the
committee may review and reject contracts that do
not meet the criteria.
The draft law would also radically restructure parts
of Iraq’s state-controlled oil industry by giving
wide independence - possibly leading to eventual
privatization — to the government companies that
control oil exports, the maintenance of pipelines
and the operation of oil platforms in the Persian
Gulf.
The law would also revive the Iraqi National Oil
Company, a countrywide umbrella organization that
was essentially closed by Saddam Hussein.
At the same time, the law would place substantial
administrative authorities outside Baghdad by
allowing any region that produces at least 150,000
barrels of oil a day to create its own operating
company, according to Hussain al-Shahristani, the
Iraqi oil minister and member of a powerful
coalition of Shiite political parties who also
serves on the negotiating committee.
Barham Salih, a deputy
prime minister and the chairman of the negotiating
committee, said that the precise wording of clauses
could still change. He was speaking by
telephone from Iraqi Kurdistan, where Mr. Salih, a
Kurd, said he was still working to cement support
for some provisions in the draft law.
“This is the most important piece of legislation
that Iraq will adopt, and it is not a surprise that
it is taking long, tedious rounds of negotiations,”
Mr. Salih said. “We are close, but we have not yet
closed the deal. We are making progress and need to
continue.”
The developments come with several additional
cautions, not the least of which is that in Iraq’s
chaotic wartime environment, even laws that do get
passed can have little impact. In one example of a
document arrived at through similar negotiations,
Iraq’s Constitution, it remains unclear what effect
many of the fastidiously negotiated clauses are
having in the governance of
the country.
And even though Iraq’s main political and sectarian
groups have been represented in the talks over the
oil law, it is still possible that members of those
groups could bridle as the draft is scrutinized more
widely.
As a case in point, the Kurdistan regional
government issued a statement on Friday criticizing
an Oil Ministry spokesman for saying that the oil
law had been agreed upon unanimously and put in
final form.
“Although the process of drafting the oil law is
nearing completion, the important annexes to the law
are still pending,” the statement said.
Some of those annexes will address how to deal with
fields that are already producing oil under existing
contracts, how to begin taking bids for drilling new
wells in known fields and exploring areas where
currently unknown oil fields could be located.
The committee achieved a breakthrough of sorts in
December, when negotiators took a step toward
central control by agreeing that all oil revenues
should first go to the central government before
being sent back to the regions in amounts
proportional to population.
But the talks bogged down on the question of whether
the committee, to be called the Federal Oil and Gas
Council, would be called upon to approve contracts
proposed by the regions or just review those
contracts and offer advice. In its current form, the
draft law avoids the word “approve” and in effect
gives the committee veto power.
Whatever the language, Mr. Shahristani, the oil
minister, said, the committee will in fact pass
judgment on each contract, even when it originates
in a proposed deal between a company and one of the
oil-producing regions.
But the committee must make its decision based on
specific guidelines, like a directive to maximize
profits for Iraq and to keep the contracting process
transparent, Mr. Shahristani said. And there are
other checks and balances written into the law. For
example, while the regions can propose their own
deals, they will have to work with companies that
have been “pre-qualified” in Baghdad.
Directives like that could still generate objections
in Kurdistan, which wants as much freedom as
possible to write its own contracts.
The draft law also specifies that technical experts
in the Oil Ministry are to be included in the
process at all levels. It is the ministry that will
be called upon to write a plan for which oil fields
will be developed and drilled first, and which ones
will follow.
The federal council would simply be called upon to
endorse that plan or send it back for revisions.
The Oil Ministry would also be closely involved in
developing “model contracts” to be used as templates
at all levels of Iraq’s oil industry.
Having an oil law will in principle make it easier
to attract international companies with the
resources and expertise that the country so
desperately needs. Still, hovering over all the
negotiations is the question of whether companies
will want to do business in Iraq.
Mr. Shahristani, for one, says that because of the
financial stakes, companies are already reaching
out.
“The international companies keep contacting me —
every week, without exception,” Mr. Shahristani
said. “They are all very, very keen.”
nytimes com
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