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Analysis: Iraq oil law author now a critic
5.5.2007 |
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May 5, 2007
WASHINGTON -- A critic of Iraq's draft oil
law with perhaps the biggest shadow - one of its
original authors - says the version penned by oil
experts has been compromised by politics and he no
longer wants it approved.
"I think really the majority of the oil technocrats
are against it," Tariq Shafiq, director of the oil
consultant firm Petrolog & Associates and one of
three authors of Iraq's draft hydrocarbons law, said
from his home in Amman, Jordan.
Shafiq said the drafters' goal was to create a law
that managed Iraq's oil reserves - estimated at
between 115 billion and 116 billion barrels - in a
federal planning process that included regions and
governorates in decision-making roles.
"It required central, united plans and policies for
oil development that take into consideration the
whole country and not any part of it," Shafiq said.
And, he says, though it took him, Farouk Al Qassem,
and Thamir Ghadban three months to write the law
last summer, the compromises reached in the
subsequent eight months of negotiations between the
central government and the Kurdistan Regional
Government (KRG) have turned the proposal into one
he can no longer sign off on.
"These political accommodations have fragmented and
weakened the central objective of the first
petroleum draft: that of a unified and balanced oil
resource management policy run from the center by
the federal authorities, not only in cooperation
with ... but also, in many instances, through the
participation of the regions and governorates,"
Shafiq wrote last week in an article published by
the Middle East Economic Survey.
(Qassem also opposes the law now. Ghadban, a
respected oil expert, former oil minister, and
current adviser to the prime minister on oil issues,
represented the central government in negotiations
with Ashti Hawrami, the KRG's oil minister.)
The two sides cannot come to terms on which oil
fields are given to the central government and which
are under the regions' purview. This will need to be
resolved by an official interpretation of the
constitution, passed in 2005, and a possible
amendment to the document. And though there is
agreement that oil revenues will be kicked to the
federal government to be redistributed, there is no
deal on how much the KRG receives.
Iraqi President Saddam Hussein, toppled by US forces
in March 2003 and executed in December 2006 for a
massacre, deprived the now semi-autonomous and
relatively peaceful northern Kurdistan region of
investment and oil funds. Now the KRG wants an
automatic mechanism for the redistribution of the
wealth - out of the hands of the Central Bank or
finance ministry, which the Kurds fear will withhold
the money for political reasons.
The hydrocarbons framework - a portion of the
legislative regime needed to govern Iraq's oil - was
approved by negotiators and Iraq's Cabinet in
February. The Bush administration immediately hailed
it as a major step forward; passing an oil law is
one of US President Bush's benchmarks for success in
Iraq. Iraq's parliament needs to approve the
document for it to become law, but the remaining
pieces of the legislation need to be finalized
first.
Now, however, the process is falling apart. Iraqi
oil minister Hussein Al Shahristani told reporters
at a conference two weeks ago in Dubai, the United
Arab Emirates, that parliament would take it up last
week. It did not.
At the same meeting, Hawrami said the list of
control over oilfields is unacceptable to the Kurds
and said their parliamentarians will vote against
the law.
The oil unions and Sunni and Shiite parliamentarians
and politicians have come out against the law.
Shafiq, whose brother was killed recently in the
sectarian violence in Iraq, says now is the time to
put the law on hold and deal with resolving key
issues first. Shafiq and 60 other experts wrote a
letter to the government urging officials to do just
that.
"While all revenue is earmarked to the whole nation,
this may not necessarily be the maximum revenue as
long as the management of the resources is not
optimal," he wrote in the Middle East Economic
Survey article, which was a call for central
planning for Iraq 's oil sector. "An optimal
management plan can only be based on unbiased
allocation after assessing the whole resource and
infrastructural base of the country."
He says the regions do not have the "necessary
institutions" or "required expertise" to develop and
operate their oilfields without the help of the
central government - via the reconstituted Iraq
National Oil Co. (INOC) (Shafiq was founding
executive director of INOC in 1964) - or
international oil companies. He fears, however, the
regions will then be too reliant on foreign
companies.
In order to satisfy concerns of both the central and
regional governments, the original draft gave
overall planning responsibilities to the federal
government via a federal oil and gas council and the
re-established INOC. However, regional
representatives would still be part of the council
and sit on INOC's board.
Criticism from Shafiq is a blow, said Muhammad Ali
Zainy, senior energy economist and analyst at the
London-based Center for Global Energy Studies.
"He is good; he is well-respected," said Zainy, an
Iraqi-born oil expert who defected in 1982. "He is
well-qualified and he has plenty of experience -
over 40 years, more than that. He is one of the
pioneers."
At the meeting in Dubai last month, Shafiq said
critics were kept from airing complaints publicly.
He did, however, have a chance to exchange views
with Hawrami, the KRG's oil negotiator.
"I was pleasantly surprised, when we sat and
discussed many points," Shafiq recounts, "he tells
me: 'Had we sat, you and I, a long time ago, many of
these problems would not have existed.'"
UPI
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