Iraq delays Rumaila oil field court decision to end of April

01 April 2010

Case challenges legality of Rumaila contract

Iraq’s Federal Supreme Court will not make a final decision on the legality of an oil field services contract awarded in June 2009 until at least the end of April, a source at the Ministry of Oil tells MEED.

A final decision on the case was originally scheduled for 30 March, when the ministry presented its response to claims that the contract, awarded to the UK’s BP and China National Petroleum Corpotation (CNPC), was not legal under the country’s constitution.

The final decision will now be made at the end of April after a delay to allow more time for lawyers representing Sheda Musawi, the politician who brought the case against the Ministry of Oil, to prepare their own reply.

Musawi is an outgoing member of parliament who did not run in the 7 March general elections.

The Rumaila oil services contract was awarded to the BP and CNPC in Iraq’s first post-war oilfield bid round in June 2009 and was officially signed by the Ministry of Oil in November.

Musawi claims that the contract violates Iraq’s constitution as it does not have the approval of parliament and that the provincial government in Basrah was not involved in the contract negotiation process.

Iraq’s Ministry of Oil presented a response to a seven-point technical challenge presented by Musawi for the 30 March hearing. Musawi’s lawyers asked for more time to prepare their response, says the Ministry of Oil source.  

The case is largely the result of the absence of an Iraqi hydrocarbons law, which has been stalled in parliament for three years. The passage of the law will be among the priorities of the new Iraqi government formed after the March elections.

The Rumaila deal was the first of 10 contracts awarded to international oil companies (IOCs) to develop the country’s oil and gas resources. An eleventh field at Missan near Iraq’s border with Iran has been initially awarded, but so far has not received confirmation from the government.

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