IRBIL, Iraq, (AP), Aug 07, 2007 (Dow Jones Commodities News)
Iraq's autonomous Kurdish government approved a regional oil law Tuesday, officials said, paving the way for foreign investment in their northern oil and gas fields while U.S.-backed federal legislation remained stalled.
The measure gives the regional government the right to administer its oil wealth in the three northern governates - Irbil, Sulaimaniyah and Dahuk - as well as what it called "disputed territories," referring to Kirkuk, one of Iraq's largest crude production hubs.
Kurdish Prime Minister Nechirvan Barzani signed the law Tuesday, calling it a "historic moment," a day after it was adopted by the regional parliament.
"This is the first time in Iraq's history that we have a say regarding our natural resources within the frame of the Iraqi constitution," he said at a news conference in Irbil, a city in the Kurdish-controlled north 350 kilometers north of Baghdad.
The Kurdish law is separate from the federal equivalent, which aims for a fair division of Iraq's oil wealth among Sunnis, Shiites, Kurds and other Iraqi groups but has been bogged down due to wide differences between Sunnis and Kurds on local control of oil fields.
The Iraqi parliament has adjourned for a month-long vacation and so won't take up the issue until at least September.
Sunni Arabs, who are centered in regions of Iraq without proven oil reserves, are pressing for to maintain central control of the industry, fearing Kurds and Shiites in the oil-rich north and south will monopolize control of oil contracts and hoard the profits.
Kurds and Shiites are eager for control of the resources they were largely deprived of under Saddam Hussein's Sunni-dominated rule. The Kurds also want to ensure they run development of lucrative future oil discoveries in their autonomous region.
Underscoring the divisions, the hard-line Sunni Association of Muslim Scholars issued an Internet statement rejecting the Kurdish oil law and called on foreign firms not to invest in the area. It said Kurdish leaders were part of the U.S.-led "occupation" in Iraq and therefore had "no right to handle the oil resources of Iraqis," warning foreign firms could face compensation demands in the future.
The national oil bill is one of the so-called benchmarks being closely watched by the U.S. amid a debate over calls to begin withdrawing U.S. forces if Iraqi political leaders can't make progress toward national unity.
In the latest draft, Shiite, Sunni and Kurdish officials agreed on the distribution of revenues, with the northern Kurdish autonomous region getting 17% of net revenues each month, after deducting federal government expenditures.
Barzani insisted the Kurds were "committed to a democratic, united Iraq."
"The oil revenues whether from Kurdistan or Basra will be put in one Iraqi account," Barzani said. "Until a census is carried out, our share is 17% of Iraq's oil revenues.
"This is the deal we have right now," Barzani said. "Such revenues will be used to make life better in Kurdistan where we have many problems and needs."
In June, the Kurdish regional government said it was planning to offer 40 new oil blocks to foreign companies.
Kurdistan's Natural Resource Minister Ashti Hawrami said at the time these oil blocks would be formally opened to competitive bidding once the Kurds' own petroleum law is approved by the parliament.
"The Kurdish oil law addresses the needs of all Iraqis," Hawrami added. "We (the Kurds) want to set an example for all of Iraq."
Copyright (c) 2007 Dow Jones & Company, Inc.
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