Iraq Parliament Committee Rejects New Draft of Oil Law

AMMAN (Dow Jones Newswires), October 27, 2008

The Iraqi parliament's oil and gas committee has rejected a new draft of the country's controversial hydrocarbons law, a leading lawmaker said Monday.

The long-awaited law could pave the way for international oil companies to develop the nation's vast oil reserves, estimated at 115 billion barrels, the world's third largest.

"The cabinet submitted a modified version of the February 2007 draft of the law and that modification has been made by the (federal) oil ministry," head of the committee Ali Hussein Balou told Dow Jones Newswires by telephone from Baghdad. "We have rejected the new draft."

Previous drafts of the law have faced stiff opposition from the Kurdistan Regional Government. Sunni and Shiite Arab parties in the parliament are also opposing the law that would set out how Iraq's oil will be divided and administered among the nation's provinces.

However, most of the political parties and top Iraqi officials agreed on a draft of the law issued in February 2007. That draft has since been changed.

Balou, who is from the Kurdish alliance, said more than 50 articles of the draft law have been changed. "The new draft has given the (federal) oil minister more powers," he said. It also removes regions and provinces' rights to have a say on oil and gas activities, he added.

The lawmaker said they would meet Prime Minister Nouri al-Maliki to complain about the new changes and said that either the February 2007 draft should be resubmitted or the new draft should be approved by all cabinet members. Balou thought that not all ministers supported the new draft.

But a lawmaker from the National Accord Party, Usamah al-Nijaifi said the oil and gas committee had no right to accept or reject any draft bill submitted to them. "The committee's work is to prepare the draft law for debate by the parliament; it cannot accept or reject a draft law," he said.

Balou said parliament was expected to start debate on the oil and gas law in November but the new changes would delay the debate. He said Iraq's political parties want the law to be enacted as soon as possible.

The oil ministry said it wouldn't wait for the new law to be issued and that it would go ahead with its plans to sign contracts with international oil companies on the basis of the old law, which is dated back to former Iraqi president Saddam Hussein.

The ministry signed recently two multibillion contracts to develop the country's vast oil and gas reserves - one with the China National Petroleum Corp. to develop Al Ahdab oil field in central Iraq and the other with Royal Dutch Shell PLC to develop gas infrastructure in southern Iraq. Baghdad also planned to sign eight contracts mid 2009.  

Copyright (c) 2008 Dow Jones & Company, Inc.