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*****Iraqi cabinet seeks to cancel previous federal oil law drafts*****
Baghdad (Platts)--29Aug2011/1129 am EDT/1529 GMT
*****Iraq's cabinet has approved a new draft of the country's long-awaited federal oil and gas law which should supersede all previous drafts, Ali al-Dabbagh, the cabinet spokesman, announced on his website Monday.*****
The cabinet will refer the draft to Iraq's parliament, which has previously attempted to debate a different draft of the oil law proposed by the parliamentary oil and energy committee. Baghdad wants that version dropped.*****
"All other previous drafts are regarded as cancelled and withdrawn and this draft is regarded as the only one that is presented to the Council of Representatives," Dabbagh said.*****
Iraq's federal hydrocarbon law was first introduced in late 2006, following a 2005 Constitutional clause mandating a new law be put The law was delayed by politics, especially the dispute between Baghdad and the Kurdish Regional Government over the extent of federalism and rights to sign contracts.
*****Nonetheless, enacting the law is a priority for the various political elements forming Iraq's current Parliament. The Kurdish block made its timely passage a precondition for joining the fragile coalition government led by Prime Minister Nouri al-Maliki.*****
Pressure for Cabinet to present its draft *****has been building since July, *****when the parliamentary oil committee demanded that Baghdad stop issuing oil and gas licenses pending the law's enactment.*****
Iraq's oil ministry is preparing to hold its fourth post-war licensing round in January 2012, in which it will seek to award 12 exploration blocks.
On July 13, Iraq's Deputy Prime Minister for energy, Hussain al-Shahristani, said the Cabinet Energy Committee, which he chairs, had amended a previous draft of the oil law and was preparing to send it to Parliament.
A July 28 draft prepared by the ministry's Legal Affairs Directorate was obtained by Platts and resembles a version that Cabinet sent to Parliament in July 2007.
It proposes a Federal Oil and Gas Committee chaired by the Prime Minister, with a membership largely representing central government interests.
The federal oil committee would have wide-ranging powers, including setting energy policy, approving oil and gas contract models, awarding contracts and developing plans to supervise and coordinate various federal, regional and provincial energy authorities.
The draft states that all oil and gas contracts would require committee approval.
It also proposes giving the federal committee responsibility for assigning fields for development and deciding which should be developed by a national oil company, to be created under a separate law.
Regional authorities -- presently only the KRG -- could hold oil and gas licensing rounds and award contracts, but only in accordance with models and procedures established by the federal committee.
The Cabinet draft law also states that new Iraqi regions created after enactment of the oil law would be be granted the same authority over local hydrocarbon resources as the KRG.
Some observers believe this would would encourage the subdivision of Iraq, presaging its disintegration as a unitary state.
The Cabinet draft also stipulates that pipelines and other oil and gas infrastructure would be federally owned, and that the proposed Iraqi National Oil Company (INOC) would have the right to sign contracts with foreign companies to develop fields under its jurisdiction.
It proposes giving the federal oil committee binding authority to rule on whether existing federal and KRG contracts are consistent with the oil law.
The parliamentary oil committee presented its draft of the oil law, dated June 9, for first reading in Parliament on August 17. But the reading was postponed after a number of Maliki supporters walked out. Maliki contends that a late 2010 Supreme Court ruling gives only Cabinet the authority to submit laws for parliamentary consideration.
The oil committee draft, a copy of which was obtained earlier by Platts, suggests a different mechanism for selecting members of a proposed federal oil and gas council; granting Iraq's oil-producing governorates the same jurisdiction over local petroleum resources as the KRG; and forming a select committee consisting of the federal oil minister, the Kurdistan natural resources minister and the chairman of the parliamentary oil and energy committee to resolve the dispute over KRG oil contracts.
It also proposes diminished roles for the Iraq's oil ministry, INOC and Cabinet in managing the country's upstream oil and gas industry, with expanded roles for regional authorities.
The oil committee draft was initialed by 61 MPs, mainly from the Kurdish block, but most experts reckon there is little chance of the full parliament approving it.
It is unclear how the cabinet draft will be received by stakeholders inside and outside Parliament. If recent Iraqi history is any indication, it is likely to be contentious and undergo many revisions.
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