Iraq experts say draft oil industry law fraught with problems

[cal04]

Some Iraqi oil experts and politicians are aghast over their government's approval of a bill that many fear will deliver the country's oil wealth to international firms on a platter.

(snip)
The multi-party government of Prime Minister Nuri al-Maliki sees the legislation as a key plank in moves to reunite a country torn apart by sectarian violence, and hopes that parliament will ratify the bill in May.

But former Iraqi oil industry officials, experts and lawmakers gathered in Jordan to debate the bill have warned that the timing is wrong, and expressed strong concerns that Iraq would lose control of its own "black gold."

(snip)
Issam Chalabi, an oil minister under executed Iraqi dictator Saddam Hussein, said the bill did not take "into account our greater national interests."

It was adopted "to satisfy US President George W. Bush," who called on the newly installed Maliki government last June to restore electricity in Iraq, adopt a new investment law and restructure the oil industry, he said.

http://news.yahoo.com/s/afp/20070318/ts_afp/iraqenergyoilpolitics_070318034607

[leftchick]

1. well the US wrote the law

what did they expect?

http://www.zmag.org/content/Showarticle.cfm?sectionID=15&itemID=12342

<snip>

The key parts of the draft which have not yet been released are:



· The three appendices, which will specify which parts of the already discovered giant oil fields will be counted as "existing producing fields" and which will be counted as "not yet developed fields" that are partially or not yet producing oil. This judgment will decide which oil fields will be allocated to the Iraqi National Oil Company (INOC) and which of the existing fields will be allocated to the IOCs. The appendices will determine if 10% or possibly up to 80% of these major oil fields will be given to the IOCs.



· The law does not give any indication of the conditions and roles acceptable under the "Exploration Risk contracts (ERC)" or "Exploration and Production contracts (EPC)" it refers to. It is very likely that this is an attempt to exclude these key elements from this law.





Several Iraqi and international oil experts and analysts have in the past few weeks written a number of articles and studies on this draft of the oil law, emphasizing the major shortfall of the new draft which can be short-listed in general as follows:



1. The main templates for models of contracts which will be granted to the IOCs under article 9/5 of the draft -- specifically the "Exploration Risk Contract" (ERC) and the "Exploration and Production Contract" (EPC) -- are not dissimilar in practice from the famous contract model known as the "Production Sharing Contract" (PSC), which is the favored model for the IOCs.



2. The law provides the IOCs exclusive control of what may be the major discovered giant oil fields for up to 35 years and guarantees them billions of dollars of profits for between 20 and 25 years -- profits that should go to the Iraqi people.