31 August 2006
An Iraqi government committee has been hammering away at contentious issues in a draft hydrocarbon law to regulate the oil and gas industry before it is submitted to the cabinet and parliament for approval. But it risks being blocked by a Sunni minority which also disputed the Iraqi constitution adopted by referendum last year.
The committee which has been meeting over the past weeks is made up of about a dozen members, including the ministers of oil, finance, planning, justice, commerce and electricity. Other members include the minister of natural resources of the Kurdistan regional government and the director general of Basrah-based South Oil Co.
Deputy Prime Minister Barham Salih, who heads the committee, said it has already resolved the issue of sharing oil revenues between the different regions of Iraq, but many other matters are still outstanding. These include the roles of the central and regional governments in managing reserves and production from fields that are currently not producing and the question of who will award lucrative oil contracts to foreign firms.
“We have the danger of oil turning into a divisive issue that everyone will fight over. By agreeing to share the revenue we have the potential of turning oil into a unifying element in Iraq society,” Salih said.
Oil and gas revenues will be shared out at the federal level and redistributed to the regions according to their population and needs, he said. Other issues already agreed include the establishment of an “oil council” that would represent all regions in Iraq, and the re-establishment of the Iraq National Oil Co. as a holding company that would incorporate “functional regional companies.”
Salih was speaking on Tuesday from Baghdad in a video conference with reporters in Washington and he appeared to be tailoring his remarks for a US audience.
US President George W. Bush said in June that the new Iraqi government should set up a trust fund to share the country’s oil money with its citizens. The following month US Energy Secretary Samuel Bodman traveled to Baghdad and then hosted a visit to Washington by his Iraqi counterpart Hussein al-Shahristani.
So far, the Iraqi constitution has been the main tool used to sort out differences over various elements of the new draft law.
But leaders of the once-dominant Sunni Arab minority have voiced concern that the constitution, ratified in a referendum last year, could hand control of Iraq’s vast oil reserves to powerful new regional governments in the Shiite south and Kurdish north leaving their oil-poor areas in central Iraq with nothing.
With support from the US, Sunnis won a guarantee that the constitution could be amended, though observers still question their chances of achieving a parliamentary majority for significant changes. The deal brokered by the US gave them four months after the assembly was sworn in to introduce those changes, but none have been forthcoming so far.
The composition of the committee preparing the draft hydrocarbon law suggests that Sunni grievances and interests will not get much of a hearing, even though the issues under consideration are at the heart of power struggles between the different sectarian and ethnic groups in Iraq.
Two members of the committee have stood out so far: the Kurdistan regional government’s minister of natural resources Ashti Hawrami and Jabbar Luaybi, the director general of South Oil Co.
Hawrami has been very active since his appointment earlier this year in drawing up an oil bill for the northern Kurdish region which gives the regional government extensive control over oil and gas fields independently of the central government in Baghdad.
Luaybi, a member of the majority Shiite community, has been instrumental in improving security in Shiite southern Iraq and ensuring uninterrupted exports from the region’s vast oil fields.
Salih, an influential figure in Kurdish politics, said the aim is to submit the draft law to parliament by the end of this year. Iraqi analysts expect to see clashes in parliament based on different interpretations of the constitution, especially on the vital issue of how to develop Iraq’s huge untapped oil reserves, most of which are located in southern Iraq.
By Ruba Husari, Dubai
(Published in International Oil Daily Aug. 31, 2006)