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View Diary: The Prize of Iraq - A Sensational Story (15 comments)

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  •  AP/CBS story (11+ / 0-)

    CBS/AP has a story up now with a couple of strangely honest phrases:

    The Iraqi oil legislation, which was endorsed by the cabinet last February, will open the door for the government to sign contracts for exploration and production of the country's vast untapped reserves.

    It was designed to create a fair distribution of oil profits to all Iraqis and it is perhaps the most important piece of legislation for Iraq's American patrons.

    Passage of the law, thought to have been written with heavy U.S. involvement, is one of four benchmarks the Bush administration has set for Prime Minister Nouri al-Maliki's struggling government.

    The hydrocarbon law is going to parliament next week.  The KRG (Kurdish Regional Government) is still not satisfied with aspects of the draft law which would place control of Kurd oilfields with the central government's authority.  Gulf Times story, today:

    Shahristani said he expected parliament to make no major amendments of the law. He said that all political blocs in parliament had agreed to try to pass the law before the end of May, but the Kurdish Regional Government (KRG) said yesterday it would not sign up to some aspects of the law.
    Ashti Hawrami, minister of natural resources in the semi-autonomous Kurdish region in northern Iraq told Reuters that annexes to the draft oil law that aim to wrest oilfields from regional governments and place them in the hands of a newly formed state-oil company were unconstitutional.
    "The annexes as they are written now will not be accepted by the KRG," Hawrami said. "If I don’t get the lion’s share of fields (in the region) then it’s a bad law. If the law dilutes regional control then it is unconstitutional.
    "This law has to be in harmony with the constitution and if it isn’t then it must be thrown in the trash," Hawrami said.

    Of interest there is Shahristani's seeming assurance that the draft law will be passed within a couple of months, as is, despite the KRG rejection of it.

    Part of the issue, for KRG, is that they have already signed oil contracts on their own, with oil drillers, including wildcats, and including at least one American wildcat . . . for which said American wildcat was called to the U.S. State Department and yelled at a few months ago.

    Forbes, Dec 28th, 2006:

    The dispute over hydrocarbons is very much at the heart of the civil war raging in Iraq: Sunnis, who ruled under Saddam, want their share of oil riches, which mostly lie in the Kurdish-controlled north and the Shiite south. The factions seem close to a federal law over how to distribute petro revenues--which might tamp down the violence--but are hung up on who would have final say, the feds or the regional government. Until that's settled, Uncle Sam doesn't want any oil company, American or otherwise, cutting deals with any group. The U.S. State Department said as much to Prentis B. Tomlinson, chief executive of Calibre Energy, one of Prime's partners, when it summoned him for a scolding in the fall. "My response was, 'I wish you had called me before we had made the investment,'" winks Tomlinson, 64. "Still, there's no law that precludes us from being there."

    The Kurds have been willing to at least threaten secession over this issue (same link):

    Not that this settles the matter of who owns what oilfield. Oil Minister Hussein al-Shahristani, a Shia, insists that Baghdad will not recognize any contract between foreign oil companies and the Kurdistan Regional Government (KRG). Nechirvan Barzani, prime minister of the KRG, counters that the Kurds, who compose 17% of Iraq's population, will secede if their authority over regional oilfields is eroded. "We don't believe a centralized oil policy has been successful since Iraq's inception," says Qubad Talabani, the KRG's ambassador to the U.S. and son of Iraq's president.

    Notice that Shahristani's name appears here.  He asserts that Iraq will not recognize any Kurdish contract.  The KRG is insisting that its contracts be honored.

    That is the issue Shahristani is papering-over in today's stories, wherein he confidently predicts that the hydrocarbon law will pass parliament in one to two months.

    Of further interest, as Jerome would point out, if he were here, is that no oil major is going to drill in Iraq under current conditions, or with a law or "passed" by a "government" with no stability or control over its own country.

    Sooner or later, someone is going to take control of Iraq.  It isn't altogether bad, for the U.S., strategically, for Iraq's oil to remain undrillable for a while (it keeps China out, for example), but sooner or later someone is going to claim it.

    Today's news of the size of the fields reminds us of what the stakes are.

    "Space. It seems to go on and on forever. But then you get to the end and a gorilla starts throwing barrels at you." -- Fry, Futurama

    by LithiumCola on Thu Apr 19, 2007 at 06:19:13 AM PDT

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