Draft Law Keeps Central Control Over Oil In Iraq

BAGHDAD, Jan. 19 — After months of tense bargaining, a cabinet-level committee has produced a draft law governing Iraqs vast oil fields that would distribute all revenues through the federal government and grant Baghdad wide powers in exploration, development and awarding major international contracts.

The draft, described Friday by several members of the committee, could still change and must be approved by the Iraqi cabinet and Parliament before it becomes law. Negotiations have veered off track in the past, and members of the political and sectarian groups with interest in the law could still object as they read it more closely.

But if approved in anything close to its present form, the law would appear to settle a longstanding debate over whether the oil industry and its revenues should be overseen by the central government or the regions dominated by Kurds in the north and Shiite Arabs in the south, where the richest oil fields are located.

The draft comes down firmly on the side of central oversight, a decision that advocates for Iraqs unity are likely to trumpet as a triumph. Because control of the oil industry touches so directly on the interests of all Iraqs warring sectarian groups, and therefore the future of the country, the proposed law has been described as the most critical piece of pending legislation.

This will give us the basis of the unity of this country, said Ali Baban, the Iraqi planning minister and a member of the Sunni-dominated Tawafaq party who serves on the negotiating committee. We pushed for the center in Baghdad, but we didnt neglect the Kurds and other regions, Mr. Baban said.

Negotiators said that the final weeks of wrangling on the draft focused on a federal committee that would be set up to review the oil contracts. Kurdish, and to some extent Shiite, parties wanted to maintain regional control over the contracts, while Sunni Arabs, with few oil resources on territories they dominate, insisted that the federal committee have the power to approve contracts, rather than just reviewing them and offering advice.

The negotiators appear to have finessed that issue by allowing the regions to initiate the process of tendering contracts before sending them to Baghdad for approval. To limit the powers of the committee, they also have drawn up an exacting set of criteria to govern the deliberations of the committee rather than simply relying on its independent discretion. And in a bow to the Kurds, who objected to the use of the word approve in describing the committees duties, the draft law says instead that the committee may review and reject contracts that do not meet the criteria.

The draft law would also radically restructure parts of Iraqs state-controlled oil industry by giving wide independence — possibly leading to eventual privatization — to the government companies that control oil exports, the maintenance of pipelines and the operation of oil platforms in the Persian Gulf.

The law would also revive the Iraqi National Oil Company, a countrywide umbrella organization that was essentially closed by Saddam Hussein.

At the same time, the law would place substantial administrative authorities outside Baghdad by allowing any region that produces at least 150,000 barrels of oil a day to create its own operating company, according to Hussain al-Shahristani, the Iraqi oil minister and member of a powerful coalition of Shiite political parties who also serves on the negotiating committee.

Barham Salih, a deputy prime minister and the chairman of the negotiating committee, said that the precise wording of clauses could still change. He was speaking by telephone from Iraqi Kurdistan, where Mr. Salih, a Kurd, said he was still working to cement support for some provisions in the draft law.

This is the most important piece of legislation that Iraq will adopt, and it is not a surprise that it is taking long, tedious rounds of negotiations, Mr. Salih said. We are close, but we have not yet closed the deal. We are making progress and need to continue.

The developments come with several additional cautions, not the least of which is that in Iraqs chaotic wartime environment, even laws that do get passed can have little impact. In one example of a document arrived at through similar negotiations, Iraqs Constitution, it remains unclear what effect many of the fastidiously negotiated clauses are having in the governance of the country.

Yerevan Adham contributed reporting from Iraqi Kurdistan.

Tag Cloud

External Information

Additional Information

Where Am I?