Iraq leaders agree draft oil law

BAGHDAD (Reuters) — Iraq’s oil committee has agreed a final draft of an oil law that sets rules for sharing revenues and boosting output and aims to bring in billions of dollars of foreign investment, an oil ministry spokesman said on Wednesday.

The draft, drawn up by senior national and regional leaders, calls for a federal committee headed by the prime minister to oversee all future contracts. It will have the power to review existing deals signed under Saddam Hussein or by the Kurdish regional government, spokesman Asim Jihad said.

“The committee has finalised the draft of the law last night which has been approved unanimously by all the members of the committee and it will be before the Cabinet early next week,” Jihad told Reuters.

Passing an oil law to help settle potentially explosive disputes among Iraq’s ethnic and sectarian communities over the division of the world’s third biggest known crude oil reserves has been a key demand of the United States in providing further military support to the national unity government.

“Everybody sees this law as a big achievement and as a national project. There are no differences on the law,” Jihad said.

The oil committee, headed by Deputy Prime Minister Barham Salih, will send the draft to Cabinet next week for full approval. After that it will go to parliament. Officials hope that the broad base of the negotiating team means it will pass easily.

The final draft was in line with earlier versions described last month after a previous round of talks. A national oil company would be set up to develop production and exports and the law is intended to ensure balanced development of the oil industry across Iraq’s regions, Jihad said.

It establishes a mechanism for centralising oil revenues and distributing them to the various regions.

“The law sets clear restrictions that all contracts will ensure the best benefit for Iraq,” Jihad said.

Jihad refused to say who will negotiate with the international firms but said that a federal council will have the final word on approving the contracts.


Regional divisions


Senior oil industry sources told Reuters last month that the regions will negotiate with big oil companies on crude contracts and oilfields developments but the centre must approve them.

Iraq desperately needs foreign investment to revive its shattered economy, which relies heavily on oil export revenues.

The division of oil is a key factor in communal tensions in Iraq. The southern oil fields around Basra lie in territory controlled by competing factions of the dominant Shiite Islamist political forces, some of whom are close to Iran.

The northern fields lie on the edge of Iraqi Kurdistan around the city of Kirkuk. Kurds want to annexe the city as their regional capital and ethnic Arabs and Turkmen accuse the Kurds of ethnic cleansing before a referendum on the city’s future which, under the constitution, is due this year.

The Sunni Arab minority dominant under ousted president Saddam Hussein is concentrated in Baghdad and regions immediately to the north and west where there are few known hydrocarbon reserves — though some potential future finds.

Sunnis have been particularly insistent that the central government in Baghdad control the oil industry, despite a new, US-sponsored constitution, opposed by most Sunnis, which gives newly created federal regions some powers over oil and gas.

Washington and the government of Shiite Prime Minister Nouri Maliki are mounting a major security crackdown in the divided capital Baghdad over the coming months to avert an all-out civil war there between Sunni insurgents and Shiite factions.

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