Iraq's Oil Law Gives International Oil Companies Too Much -VP

DEAD SEA, Jordan May 21, 2007 (Dow Jones Newswires)

Iraq's Vice President Tariq Al Hashimi said Sunday he opposes a draft oil law that is crucial to Iraq's future because it gives too many concessions to international oil companies and the country's regions.

"We disagree with the production sharing agreement," Al Hashimi told Dow Jones. "We want foreign oil companies but not with big privileges."

Iraq's government is locked in debate over the draft oil law that must be approved by the country's parliament. Parliament in Baghdad could take two months before to approve the legislation, Al Hashimi said.

International oil companies such as Royal Dutch Shell Plc, BP Plc and ConocoPhillips are awaiting the legislation that will set a framework for licensing access to Iraq's vast oil reserves, estimated to be the world's third biggest.

Disagreements between the Kurds in northern Iraq and the central government in Baghdad revolve around who controls rights to oil exploration and how revenues from the oil rich areas of the North will be divided.

Kurds want their share of the earnings from the export of oil to be given to them directly, bypassing the central government's finance ministry.

"We are against giving regions extensive powers," Al Hashimi said. "We need to review these extensive powers given by the Iraqi constitution to the regions at the expense of the center."

Iraq's main sectarian Muslim groups of Shiites, Sunnis and Kurds are jostling for a share of the nation's oil wealth. The Kurds, with a population of around 5 million, dominate the country's north while the Shiites populate the South, where most of Iraq's oil exports are shipped.

The Sunnis, which reside largely in central Iraq, feel they may be squeezed out of their share of revenues from Iraq's oil wealth. Al Hashimi, leader of the Islamic party, is the senior Sunni politician in Iraq's government.

Iraq has the world's third-biggest proven oil reserves after Saudi Arabia and Iran, but only about 10% of the country has been explored, according to the U.S. Energy Information Administration.

Copyright (c) 2007 Dow Jones & Company, Inc.

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