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New Draft Oil Law – Expert Analysis
Posted on 30 August 2011. Tags: Ahmed Mousa Jiyad, hydrocarbon law, oil law
On Sunday 28th August the Council of Ministers approved the draft oil and gas law prepared by the Ministry of Oil, considering it the only text that represent the council’s view, and treating all other previous versions as invalid. Also the council decided to send the proposed draft to the parliament and request to table the proposed law for discussion in the parliament.
Our Expert Blogger, Ahmed Mousa Jiyad, has prepared a detailed analysis of this new version of the oil law, and you can download it now by clicking here.
Mr Jiyad is an independent development consultant, scholar and Associate with Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: firstname.lastname@example.org).
Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
English Translation of Draft Oil and Gas Law
Posted on 05 October 2011.
The Iraq Energy Institute has translated the new draft hydrocarbon law into English.
There are two versions provided: (Click on ONE)
o Compiled by the Parliamentarian Oil & Energy Committee, and presented to the Council of Representatives on 17th August 2011;
o Compiled by the Federal Ministry of Oil, and presented to the Council of Ministers on 25th August 2011.
Please click here to read a comprehensive analysis of the version approved by the Council of Ministers, prepared by our Expert Blogger Ahmed Mousa Jiyad.
Iraq’s Oil and Gas Law Threatens Stability of Gov’t
Posted on 04 October 2011. Tags: hydrocarbon law, Maliki, oil law (all 4 pages of the article are included below)
Who controls the Iraqi oil fields that could make the nation one of the richest in the region? As political rivals squabble, that question could be one that topples the precariously balanced Iraqi government, according to this report from Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
Iraq is officially the owner of the third largest oil reserves in the world and in August, it produced almost 2.2 million barrels a day, according to data provided by the Iraqi oil ministry. Those numbers are expected to continue to rise and Iraq could become one of the biggest investment areas for energy companies from all around the world.
Read More Link on Right
But there is one big obstacle: the federal oil and gas law. Efforts to come up with legislation that is acceptable to all parties to a hydrocarbons deal inside Iraq have so far failed. And with developments this month, the issue looks like it could cause further trouble inside the fledgling democracy, with its precariously balanced ruling coalition.
The first draft of a federal oil and gas law was formulated by the Iraqi cabinet in 2007. Although it was the subject of much debate and was never passed by the Iraqi parliament, that version did give regional powers, such as those in the semi-autonomous state of Iraqi Kurdistan, at least partial authority over the oil reserves in their own area.
However in early September, Iraqi Prime Minister Nouri al-Maliki approved a new formulation of the same law and again, has sent it to parliament for approval.
Several important, and potentially even more controversial, things changed in this version.
The draft law makes a national Iraqi oil company the ultimate authority in the formulation of policies, orders on procedures for drilling and production and in the signing of deals with investors. The council heading the Iraqi National Oil Company (or INOC) would have control over all the oil fields that are already producing crude.
This means the council at the top of the INOC gets a lot more authority – under the old version of the law, the council could only draw up policies and issue instructions.
The INOC would also get authority over the bidding for almost all of Iraq’s oil and gas fields; previously they were only able to conduct auctions on new – read: undiscovered, undeveloped – fields.
The new draft of the law also eliminates an important clause that said that the INOC’s authority must include representation from Shiite Muslim parties, Sunni Muslim parties and from the Kurdish sector. It also reserves a seat on the council for the deputy prime minister for energy – currently this is Hussein al-Shahristani, well known as a close ally of al-Maliki’s.
None of this has gone down well with Kurdish politicians, both in Baghdad and in their own semi-autonomous state of Iraqi Kurdistan. Who owns the oil fields inside the Kurdish region, which has its own government and its own legislation, has long been a contentious issue between the Arab government in Baghdad and the Kurdish one in Erbil.
In fact in 2007, the Kurdish regional government came up with its own oil and gas law and then set about signing 41 production contracts, according to information from the Kurdish Ministry of Natural Resources, with a number of foreign firms. Baghdad has described those contracts as illegal and has accused the regional Kurdish government of a lack of transparency while making the deals.
In protest, the Kurds shut down production at their oil fields from late 2009 until early 2011. And after the federal oil and gas legislation was pushed through a few weeks ago, they again halted production at their fields.
And the Kurdish now seem to be drawing the political battle lines proper, making moves toward political alliances that could threaten to topple the precarious ruling coalition with which al-Maliki holds power in Baghdad.
After Iraqi federal elections in late 2010, the Shiite-dominated block led by al-Maliki was almost evenly matched by the Sunni-dominated parties led by the previous Iraqi Prime Minister, Ayed Allawi. Both blocs tried to form a majority and the Kurdish politicians, who had a total of 57 seats in the Iraqi parliament, said they would back whichever group proved most responsive to their demands. Eventually, in order to get Kurdish politicians, to support him, al-Maliki agreed to 18 Kurdish conditions. The Kurdish joined him and he was able to form a government. But even today, the Kurdish bloc continues to play kingmaker inside Iraq’s 325 seat parliament.
And now the Kurds are using their position to put pressure on al-Maliki over the federal oil and gas law.
According to an insider, the Kurdish president of Iraqi Kurdistan, Massoud al-Barzani, has been in touch with former prime minister and al-Maliki’s chief rival, Allawi, to discuss whether it might be possible to propose a vote of no confidence in the al-Maliki’s government. However, the same insider was quick to point out that this was most likely “a mission impossible” mainly because such a vote would require three quarters of the MPs to agree. This would be impossible because the two largest blocs – al-Maliki’s mainly Shiite Muslim bloc and Allawi’s mainly Sunni Muslim bloc are so evenly split. Even with Kurdish support on one side or the other, three quarters could not be achieved.
However things are never that clear cut in Iraqi Kurdistan, where two major political parties – the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK) – often compete. At a federal level, they have tended to vote together in the interests of the Kurdish people but within the state government they are often at odds.
On Sept. 13, al-Barzani met with Kurdish MPs in Erbil to discuss how to combat the new legislation that he felt had been approved by al-Maliki without adequate consultation with all concerned parties.
But while Barzani, a member of the KDP, was rattling his sabres and issuing anti-al-Maliki invective, the Kurdish state’s president, Jalal Talabani, a member of the PUK, made the surprise move of inviting al-Maliki to his house in Iraqi Kurdistan for talks.
A statement issued by al-Talabani after the Sept. 17 meeting said that the two men had discussed how to build a better relationship. “Both sides had confirmed necessity of a visit by the Kurdistan Region’s delegation to Baghdad, that would be welcomed by the Prime Minister, in order to settle the political, economic and social issues,” the Iraqi news agency Aswat al-Iraq reported two days later.
But it was quickly becoming clear that the two biggest Kurdish parties had not agreed on a unified approach to al-Maliki’s government.
One of the 13 members of Talabani’s PUK party who have a seat in the federal Iraqi parliament as part of the so-called Kurdish alliance, Burhan Mohammed Faraj, confirmed this. “There are different opinions within the Kurdish political leadership,” he told NIQASH. “But we all have the same goals and this is what matters in the end.”
Not everyone agreed with Faraj: Bayazid Hassan, one of the Baghdad MPs belonging to another Kurdish political party, the Change Movement, a smaller independent party that broke away from the main political parties in the region in 2006, felt that a lot of statements being made about the federal oil and gas law were driven by selfish interests.
“What is happening now is being driven by personal and partisan interests,” Hassan, who is also a member of the federal commission on oil and energy, told NIQASH. “If the law is passed, then details of oil contracts signed by the region will have to be revealed.”
The opposition parties in Iraqi Kurdistan have been calling upon the state government to show them details of the contracts for around 12 months now.
In order to combat these accusations, and effectively remove those objections from the Kurdish agenda on the federal oil and gas law, the region’s Prime Minister Barham Saleh called a meeting on Sept. 20. There he passed out copies of the contracts to the leaders of the various blocs in the state’s parliament. The contracts were also published on the regional government’s website so that all Kurdish citizens could see them. During the meeting Saleh repeated that the Iraqi Kurdish government was committed to maintaining standards set for the oil business by Transparency International.
Meanwhile often critical independent Kurdish MP, Mahmoud Othman, said that it was important not just to focus on this new draft of the federal oil and gas law. Back in 2010, in order to get Kurdish politicians to support his political bloc, and in order to form the ruling coalition with which he now runs the country, al-Maliki agreed to 18 out of 19 conditions set by Kurdish MPs.
Some of the conditions were specifically related to Kurdish concerns, such as federal funding for the Kurdish Peshmerga, one arm of the military in the fiercely independent, semi-autonomous state as well as Article 140 of the Iraqi Constitution which addresses disputed lands that both the Kurdish and the central Iraqi governments lay claim to.
“The oil and gas law is just as important as the other unresolved problems,” Othman argued. “But federal law cannot be passed this way. It is a violation of the constitution.”
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