Friday, June 22, 2007

Draft Iraq oil law makes headway

A draft oil law has been submitted to Iraq's parliament after the government and the Iraqi Kurdistan regional authority resolved differences on the sharing of the country's oil reserves, officials have said.

A spokesman for Iraq's oil minister said he expected politicians to begin debating the draft law in the next few days.

"A deal has been reached and the draft has been delivered to parliament to be discussed... in the coming days. An agreement has been reached covering all disputes," Asim Jihad said.

An official in the Kurdish regional government said an agreement had been made, but did not give further details.

Oil wealth sharing

The draft oil law is crucial in regulating how wealth from Iraq's huge oil reserves will be distributed between sectarian and ethnic groups.

The bill was approved by the cabinet in February but many Kurds opposed it.

The real reason we're still here, naturally.

Article 9: Grant of Rights

A- The rights for conducting Petroleum Operations shall be granted on the basis of an Exploration and Production contract. The contract shall be entered between the Ministry (or the Regional Authority) and an Iraqi or Foreign Person, natural or legal, which has demonstrated to the Ministry or the Regional authority the technical competence and financial capability that are adequate for the efficient conduct of Petroleum Operations according to the guidelines of the Federal Oil and Gas Council and as mentioned in Article 5C Fifth, and in accordance with the mechanisms of negotiations and contracting stated in Article 10 of this Law.


Fourth: All model contracts shall be formulated to honour the following objectives and
1- National control;
2- Ownership of the resources;
3- Optimum economic return to the country;
4- An appropriate return on investment to the investor; and
5- Reasonable incentives to the investor for ensuring solutions which are optimal to the
country in the long-term related to
a- improved and enhanced recovery,
b- technology transfer,
c- training and development of Iraqi personnel,
d- optimal utilisation of the infrastructure, and
e- environmentally friendly solutions and plans.


Sixth: Only pre-qualified companies by the Ministry or the Regional Authority shall be considered in any licensing round. The criteria for prequalification shall be specified in the invitation to bidding according to the regulation and instructions issued by the Federal Oil and Gas Council.

Seventh: Evaluation of pre-qualified applicants shall aim at establishing a short list of successful candidates for negotiations.

Control the flow of oil, get our oil companies a piece of the pie through a rigged bidding process, and let the Iraqi people rot once it's done. We'll stay here until the oil law is passed, and not much longer.

Discussion at BCF:

MadSatyrist says:

Somewhat, yes, somewhat no. Like a lot of things, its mixed.

As far as I'm concerned, the whole Iraq war was about modernizing the oil infrastructure in Iraq. That's why we won't pull out until the country is either peaceful or dead.

Saddam wasn't upgrading, and why should he? He was under low production caps, and the old infrastructure was adequate for that purpose.

So getting rid of Saddam was step one. The second step was putting up a contract process where an outside company would step in and put say 5,000,000,000 up for production and development on a single part of the fields, and that means security of contracts and a guarantee of no nationalization or sudden tax increases. Incremental injections of money over time is different, the huge funds needed to rebuild Iraqi oil fields mean some kind of security. So Bush used the military to provide that security.

France or Russia would have done it under Saddam, and the US would not have controlled the oil. That was intolerable to Bush (and Clinton was ready to invade Iraq several times - this I know for a fact) and to most of our Congress, so they acted on the first excuse for a war.

A nasty business, but not that far outside our common practice in the past. Anyone from South America would recognize the pattern. That we took it on the road to the MidEast is the only unique part of this particular adventure.
More at the link.

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