Home
Iraq Cabinet gives its oil law the green light
Published August 28, 2011
*****The Iraqi Cabinet approved a draft oil and gas law *****and warned Parliament to scrap its rival draft, *****setting the stage for a showdown over competing interests in governing the oil sector.*****
Earlier this month, frustrated with government inaction, Parliament's Oil and Energy Committee pushed forward a version of a draft law. Parliamentarians even began giving it a first reading, but they lost quorum when several MPs, led by those loyal to Prime Minister Nouri al-Maliki, walked out of the session, ending the reading.
"The House of Representatives should … withdraw all previous versions," the Cabinet said in a statement, adding that "this draft is to be the only version submitted to the House of Representatives."
*****There are no details of the bill,***** per the Cabinet's usual discretion. Meetings take place behind closed doors. *****The approval of the law was only announced Sunday, Aug. 28, *****though the decision was taken on Thursday, Aug. 25.*****
*****Parliament is on recess until Sept. 6,***** after the Eid al-Fitr holiday, which marks the end of Ramadan. *****It's unclear when this bill will be taken up, how the legislative process will account for multiple drafts, *****and how to apply the late 2010 ruling by the Federal Supreme Court that *****only the Council of Ministers – not Parliament –***** has the sole authority *****to submit official draft laws for consideration.*****
Based on contracts with foreign oil companies, Iraq has plans to increase oil production capacity from 2.75 million barrels per day (bpd) now to more than 13.5 million bpd in seven years. The country exported 2.167 million bpd of crude in July, earning more than $7.3 billion.
Iraq also wants to be self-sufficient in natural gas, refined products and electricity, eventually becoming a net exporter of all three. The Oil Ministry held a bidding round for three dry gas field development contracts last year, and has begun partnering with Shell and Mitsubishi in a controversial deal that would capture associated gas from crude production in Basra.
The 2005 Constitution called for a new law to govern the oil sector, but politicized disputes delayed any meaningful dialogue over the legislation. The most heated arguments have centered on the distribution of power between the central and local governments and the role that foreign oil companies should play in oil development.
A draft law was submitted by Iraqi oil experts in late 2006, and was agreed to in principle by central and Kurdistan regional government officials in early 2007 – but then promptly disintegrated into competing versions amidst bellicose politics.
Since then, both the Kurdistan Regional Government and the central government have signed, combined, more than 55 oil and gas contracts. Each criticizes the other's deals as being illegal or detrimental to the country's proper oil sector development.
Without a broad law governing such issues, legal ambiguity remains. In essence, the country has two oil sectors, and the friction between them has ignited disputes over the proper redistribution of the revenues.
The Parliament committee has been the most vocal proponent of coming to a resolution. Its chairman, Adanan al-Janabi, has said that new laws – a framework law to govern the oil sector and another law to re-form the Iraqi National Oil Company – could be vehicles for reconciliation.
*****Janabi's committee has also officially requested that***** Parliament pass a ban on all oil deals *****signed by the federal or local governments *****until an oil law is reached.***** Such a measure draws on Parliament's position that under the current ad hoc legal regime, any oil deal requires approval by the legislature – a claim that both the KRG and the Maliki government has rejected.
*****Still, the threatened ban on oil deals could help pressure the political factions to move forward on the oil law.*****
[You must be registered and logged in to see this link.]
