Home
This is a good one from lake house thank you!!
ERBIL - Iraqi leaders are expressing optimism that a new streamlined process will produce an oil law endorsed by both Baghdad and the semi-autonomous Kurdistan region, despite long-standing tensions that have been strained further by ExxonMobil's recent signing of Kurdish oil contracts.
The first stages of negotiations will involve just two men: Oil Minister Abdul Karim Luaibi and Ashti Hawrami, the minister of natural resources for the Kurdistan Regional Government (KRG). Their starting point will be a 2007 draft oil law, which was delayed by disputes between leaders in Baghdad and the Kurdish capital of Erbil.
"There is good will on both sides that we need to solve this problem, and Mr. Maliki in particular is keen to get it out of the way," Hawrami said in an interview with Iraq Oil Report on the sidelines of the CWC Kurdistan Oil and Gas conference in Erbil. "We have an overall agreement on the process, so we just need to get down to the job."
The process will proceed in a few stages, Hawrami said. He and Luaibi will each propose changes to the 2007 draft law, adopt any that are mutually agreeable, and register their points of disagreement in memoranda. That package of documents will go to the Cabinet and then the Parliament, where legislators will make final changes before a vote.
"We are looking forward to meeting in the next few days, or this month anyway," Hawrami said, referring to the initial negotiations with Luaibi. "I don't expect it to be a prolonged discussion. We don't expect it to be committees around me or Mr. Luaibi to sit down doing this."
The new negotiating framework comes out of an Oct. 27 meeting between Iraqi Prime Minister Nouri al-Maliki and KRG Prime Minister Barham Salih, at which the two leaders discussed several key issues between the central and Kurdish governments, including both the oil law and territorial disputes.
At that meeting, Salih also informed Maliki that the KRG had signed production sharing contracts with ExxonMobil on Oct. 18 to explore for oil in six northern blocks. Baghdad has long maintained that the central government has sole authority to sign such deals, and has enforced a blacklist policy banning any company signed with the KRG from participating in the southern oil sector.
Shortly after the KRG's Exxon deal was made public, Deputy Prime Minister for Energy Hussain al-Shahristani, a top Maliki ally, said the same policy still applies. Other top Baghdad officials have confirmed that Exxon's ongoing project at the super-giant West Qurna 1 oil field in Basra is in jeopardy.
Yet the controversy over the Exxon signing evidently did not foreclose the possibility of political progress on oil issues. At their October meeting, not only did Maliki and Salih set the new negotiating framework, but they also agreed to increase the KRG's exports through the Baghdad-controlled northern pipeline to Ceyhan, from 100,000 barrels per day (bpd) this year to 175,000 bpd in 2012, according to Hawrami.
They also agreed that Baghdad's Finance Ministry would begin auditing the KRG's contracts – a key step in any process that would reconcile the Kurdish deals with the rest of Iraq's oil sector. Central government auditors arrived in the KRG shortly before the Eid holiday, and resumed their work auditing projects run by Norway's DNO and Turkey's Genel Energy this week.
Despite the signs of cooperation, however, Baghdad and Erbil still disagree about the same fundamental questions of federalism that derailed the 2007 oil legislation. Maliki's administration has favored a strong central government, while leaders in Erbil have advocated for regional autonomy – and in a country where 95 percent of state revenue comes from oil, political power flows largely from the control of hydrocarbon resources.
In recent weeks, both sides have underscored their differing positions.
Maliki has responded negatively to fledgling attempts by various provinces to form federated regions with a similar legal status to the KRG. After the Salahuddin provincial council took a vote to initiate a region-formation process, Maliki publicly criticized local leaders for undermining the unity of Iraq and attempting to create a "safe house" for Saddam Hussein's banned Baath party.
In Erbil, both Salih and Hawrami strongly affirmed their position on autonomy.
"We believe that the evil of centralized system of government that inevitably leads to dictatorship and tyranny has been proven a total, utter failure in Iraq," Salih said in a speech at the Erbil oil conference. "Kurdistan has a constitutional right to develop its oil resources, and there is no way that we will allow ourselves yet again, ever again, to be held hostage to the whims of some bureaucrats in Baghdad."
Salih also invoked the atrocities of Saddam Hussein to make his point, citing the lack of development in Kurdistan during the previous regime as evidence that the KRG should chart its own course.
Hawrami echoed Salih's stance. Drawing a pointed contrast between Kurdistan's rapid development and southern Iraq's relative stagnation since the 2003 U.S.-led invasion, he defended the KRG's policy of pursuing foreign oil companies without the central government's blessing.
"Waiting for Baghdad to adopt a centralized oil and gas law was not an option for Kurdistan," Hawrami said. "The region's stability wouldn't have been secure and ensured – if people were starving, people were without water and electricity, Kurdistan could not tolerate that – and we would be just like every other insecure part of Iraq."
Since the first oil legislation was publicly debated in 2007, Baghdad has signed 15 oil and gas contracts and the KRG has signed more than 40. Those deals, negotiated on diverging sets of legal and philosophical assumptions, now pose an additional obstacle to the progress of an oil law.
"Five years later a lot has moved on in the north and the south," Hawrami said, acknowledging that the 2007 draft could require substantial changes, on which he and Luaibi might struggle to agree.
These widening differences were reflected in two more recent draft oil laws, which were introduced over the summer. The Cabinet's energy committee produced a draft that would concentrate power in Baghdad, while the Parliament's oil and energy committee wrote a version that decentralized oil sector authority, winning support from the KRG.
The legislature began its formal reading of the Parliament version on Aug. 17, even as the Cabinet insisted that its draft was the only legitimate version. MPs ultimately put both laws on hold, saying the legislative process had gone as far as possible without a broader agreement among the political factions.
Those two laws have now been thrown into limbo, under the new negotiating framework. Yet they could still play a role in the legislative process, according to Adnan Janabi, the head of the Parliament oil committee, who spoke with Iraq Oil Report on the sidelines of a parliamentary workshop in Beirut.
Janabi suggested that elements of the newer draft laws – which were also based on the 2007 draft – could be incorporated into the version that comes from Luaibi and Hawrami.
It's still unclear whether the new negotiating framework will yield a broad political agreement, or whether the latest oil legislation will encounter the same parliamentary logjam that halted oil laws this summer and in 2007. Given the structure of the process, the primary opportunity for a breakthrough compromise appears to rest with Luaibi and Hawrami.
"We may walk into our first meeting and just say, 'Let's leave it alone and send it to Parliament as it is,'" Hawrami said. "Everybody can write a memorandum of their choices of what they want to see… and then Parliament, they take the amendments under consideration. It might be easier, rather than trying to amend things (ourselves)." [You must be registered and logged in to see this link.] [b]
ERBIL - Iraqi leaders are expressing optimism that a new streamlined process will produce an oil law endorsed by both Baghdad and the semi-autonomous Kurdistan region, despite long-standing tensions that have been strained further by ExxonMobil's recent signing of Kurdish oil contracts.
The first stages of negotiations will involve just two men: Oil Minister Abdul Karim Luaibi and Ashti Hawrami, the minister of natural resources for the Kurdistan Regional Government (KRG). Their starting point will be a 2007 draft oil law, which was delayed by disputes between leaders in Baghdad and the Kurdish capital of Erbil.
"There is good will on both sides that we need to solve this problem, and Mr. Maliki in particular is keen to get it out of the way," Hawrami said in an interview with Iraq Oil Report on the sidelines of the CWC Kurdistan Oil and Gas conference in Erbil. "We have an overall agreement on the process, so we just need to get down to the job."
The process will proceed in a few stages, Hawrami said. He and Luaibi will each propose changes to the 2007 draft law, adopt any that are mutually agreeable, and register their points of disagreement in memoranda. That package of documents will go to the Cabinet and then the Parliament, where legislators will make final changes before a vote.
"We are looking forward to meeting in the next few days, or this month anyway," Hawrami said, referring to the initial negotiations with Luaibi. "I don't expect it to be a prolonged discussion. We don't expect it to be committees around me or Mr. Luaibi to sit down doing this."
The new negotiating framework comes out of an Oct. 27 meeting between Iraqi Prime Minister Nouri al-Maliki and KRG Prime Minister Barham Salih, at which the two leaders discussed several key issues between the central and Kurdish governments, including both the oil law and territorial disputes.
At that meeting, Salih also informed Maliki that the KRG had signed production sharing contracts with ExxonMobil on Oct. 18 to explore for oil in six northern blocks. Baghdad has long maintained that the central government has sole authority to sign such deals, and has enforced a blacklist policy banning any company signed with the KRG from participating in the southern oil sector.
Shortly after the KRG's Exxon deal was made public, Deputy Prime Minister for Energy Hussain al-Shahristani, a top Maliki ally, said the same policy still applies. Other top Baghdad officials have confirmed that Exxon's ongoing project at the super-giant West Qurna 1 oil field in Basra is in jeopardy.
Yet the controversy over the Exxon signing evidently did not foreclose the possibility of political progress on oil issues. At their October meeting, not only did Maliki and Salih set the new negotiating framework, but they also agreed to increase the KRG's exports through the Baghdad-controlled northern pipeline to Ceyhan, from 100,000 barrels per day (bpd) this year to 175,000 bpd in 2012, according to Hawrami.
They also agreed that Baghdad's Finance Ministry would begin auditing the KRG's contracts – a key step in any process that would reconcile the Kurdish deals with the rest of Iraq's oil sector. Central government auditors arrived in the KRG shortly before the Eid holiday, and resumed their work auditing projects run by Norway's DNO and Turkey's Genel Energy this week.
Despite the signs of cooperation, however, Baghdad and Erbil still disagree about the same fundamental questions of federalism that derailed the 2007 oil legislation. Maliki's administration has favored a strong central government, while leaders in Erbil have advocated for regional autonomy – and in a country where 95 percent of state revenue comes from oil, political power flows largely from the control of hydrocarbon resources.
In recent weeks, both sides have underscored their differing positions.
Maliki has responded negatively to fledgling attempts by various provinces to form federated regions with a similar legal status to the KRG. After the Salahuddin provincial council took a vote to initiate a region-formation process, Maliki publicly criticized local leaders for undermining the unity of Iraq and attempting to create a "safe house" for Saddam Hussein's banned Baath party.
In Erbil, both Salih and Hawrami strongly affirmed their position on autonomy.
"We believe that the evil of centralized system of government that inevitably leads to dictatorship and tyranny has been proven a total, utter failure in Iraq," Salih said in a speech at the Erbil oil conference. "Kurdistan has a constitutional right to develop its oil resources, and there is no way that we will allow ourselves yet again, ever again, to be held hostage to the whims of some bureaucrats in Baghdad."
Salih also invoked the atrocities of Saddam Hussein to make his point, citing the lack of development in Kurdistan during the previous regime as evidence that the KRG should chart its own course.
Hawrami echoed Salih's stance. Drawing a pointed contrast between Kurdistan's rapid development and southern Iraq's relative stagnation since the 2003 U.S.-led invasion, he defended the KRG's policy of pursuing foreign oil companies without the central government's blessing.
"Waiting for Baghdad to adopt a centralized oil and gas law was not an option for Kurdistan," Hawrami said. "The region's stability wouldn't have been secure and ensured – if people were starving, people were without water and electricity, Kurdistan could not tolerate that – and we would be just like every other insecure part of Iraq."
Since the first oil legislation was publicly debated in 2007, Baghdad has signed 15 oil and gas contracts and the KRG has signed more than 40. Those deals, negotiated on diverging sets of legal and philosophical assumptions, now pose an additional obstacle to the progress of an oil law.
"Five years later a lot has moved on in the north and the south," Hawrami said, acknowledging that the 2007 draft could require substantial changes, on which he and Luaibi might struggle to agree.
These widening differences were reflected in two more recent draft oil laws, which were introduced over the summer. The Cabinet's energy committee produced a draft that would concentrate power in Baghdad, while the Parliament's oil and energy committee wrote a version that decentralized oil sector authority, winning support from the KRG.
The legislature began its formal reading of the Parliament version on Aug. 17, even as the Cabinet insisted that its draft was the only legitimate version. MPs ultimately put both laws on hold, saying the legislative process had gone as far as possible without a broader agreement among the political factions.
Those two laws have now been thrown into limbo, under the new negotiating framework. Yet they could still play a role in the legislative process, according to Adnan Janabi, the head of the Parliament oil committee, who spoke with Iraq Oil Report on the sidelines of a parliamentary workshop in Beirut.
Janabi suggested that elements of the newer draft laws – which were also based on the 2007 draft – could be incorporated into the version that comes from Luaibi and Hawrami.
It's still unclear whether the new negotiating framework will yield a broad political agreement, or whether the latest oil legislation will encounter the same parliamentary logjam that halted oil laws this summer and in 2007. Given the structure of the process, the primary opportunity for a breakthrough compromise appears to rest with Luaibi and Hawrami.
"We may walk into our first meeting and just say, 'Let's leave it alone and send it to Parliament as it is,'" Hawrami said. "Everybody can write a memorandum of their choices of what they want to see… and then Parliament, they take the amendments under consideration. It might be easier, rather than trying to amend things (ourselves)." [You must be registered and logged in to see this link.] [b]
