Analysis: Fight rages over Iraq oil law

[Joanne98]

By BEN LANDO
http://www.earthtimes.org/articles/show/56817.html
Discussions turned contentious among the more than 60 Iraqi oil officials reviewing Iraq's draft hydrocarbons bill last week in the United Arab Emirates.

But the dispute highlighted the need for further negotiations on the proposed law that was stalled in talks for nearly eight months, then pushed through Iraq's Cabinet without most key provisions.

Tariq Shafiq, one of three authors of the law, said he attended the Dubai summit "reluctantly," at the request of Oil Minister Hussein al-Shahristani. "I thought it would help," Shafiq said, hoping all Iraqi sides in the debate over its oil law would meet and iron out their differences. "Apparently it did not." Petroleum Intelligence Weekly reports talks in Dubai led to "heated exchanges." Instead, the voices of those who disagree with the law or, like Shafiq, oppose what it has become since the initial draft and how it was kept from the public, were not given part of the platform.

"Had there been genuine interest in having consensus," Shafiq said, "the two differing parties should have sat -- not publicly in front of the television -- to discuss with an open heart how you can reach a compromise. But this apparently was not their aim." Most of the law, which is better referred to as a regime, or a set of interworking laws, has yet to be finalized. But the main sticking points have the central government and Kurdistan Regional Government at loggerheads still.

Although the Bush administration, led by former U.S. Ambassador to Iraq and now U.N. Ambassador Zalmay Khalilzad, praised passage of the framework law when Iraq's Cabinet approved it late February, it doesn't quite qualify as one of the benchmarks he has set for success in Iraq.

"To give every Iraqi citizen a stake in the country's economy, Iraq will pass legislation to share oil revenues among all Iraqis," Bush said in a national address Jan. 10. But neither the KRG nor the central government has agreed on the percentage of oil revenue to be shared. The KRG wants an automatic mechanism to redistribute the funds, while the central government wants it collected to the central bank, to be doled out by the Iraqi finance minister. Before any more development of the oil sector, struggling to produce 2 million barrels per day, both sides must agree on which of the 116 billion barrels worth of fields will be under the control of the central government -- most likely via the reconstituted Iraq National Oil Co. -- and which fields the regions and governorates will control. The Iraqi constitution, passed in 2005, was written vaguely to garner enough support, but fueled the current disagreement over control of oil reserves, the world's third-largest.

Shahristani told reporters on the sidelines of the Dubai meeting that Parliament would take up the law this week -- which didn't happen -- while Ashti Hawrami, the KRG's oil minister, vowed Kurdish parliamentarians would veto it as written.

Negotiations continue on other aspects, such as the contract models allowed to sign with much-needed investors and the exact roles the federal oil and gas council, Iraq Oil Minister and INOC will play.

All this is supposed to be done by May 31, a deadline set by a Bush administration that needs a progress marker for Iraq, a fragile Iraqi central government that is falling apart and the KRG that is ready to continue development in its semi-autonomous and relatively peaceful northern region.

"I just don't see that. It's just too much," said Frank A. Verrastro, director and senior fellow of the energy program at the Center for Strategic and International Studies, a centrist Washington think tank. The framework is important, he said, but it has no value standing alone. He said at least in Dubai they realized there are "significant issues" to resolve still. There are many who oppose the law. Iraq's oil unions have threatened to shutdown production if foreign companies are allowed too much control. Many political and sectarian blocs also feel that way. And Sunnis, a minority group without oil land and the power wielded while Saddam Hussein reigned, fear they'll wind up without if the central government is weak.
http://www.earthtimes.org/articles/show/56817.html

[bemildred]

1. Unless you can arrange for nobody to want to blow your oil infrastructure up,

this is all an elaborate way to pound sand.

[Hecate]

2. More here than meets the initial eye

There's no interest in coming to a "consensus"... that would thwart the actual intent. What's missing (at least from above the fold) is the law provides for 75% of all oil profits to be given to foreign oil companies, at least until initial drilling costs are recouped. After that, it's 20% of the profits, although that's something like double the average for these types of deals. These guys are arguing over who's going to distribute 25% of the profits, by whom and to whom. Problem is, this is nearly as big a 'secret' in Iraq as it is here in the U.S. If the average Iraqi knew about this we'd see one heck of a surge in the "insurgency."

Note: These contract deals (Exxon and BP) have been in the works since the interim gov't was setup. Until this issue is passed... and passed to Bush and Cheney's preferences, we're not leaving Iraq, IMO. This -is- the oil companys' administration, after all. It's also why we'll never see a huge push to alternative fuels development from these neo-cons.

See http://www.dailykos.com/storyonly/2007/2/27/85931/5853 for a draft of the law and http://www.dailykos.com/storyonly/2007/1/7/64615/82767 for a better analysis than I could do here.

Hea... be gentle with me. I'm a newbie here! ;)

[Theduckno2]

3. Welcome to the DU!

Thanks for the links. The draft oil law is one prize the neocons were after and another was permanent military basing in Iraq.

The one issue that gives me the creeps is the federal oil and gas council, for it looks like it could get considerable authority.

:hi:

edit: to add "federal"