Kurds reject draft Iraq oil law

06 September 2011

Iraq’s proposed law will govern oil and gas sector

The semi-autonomous Kurdistan Regional Government (KRG) of northern Iraq has rejected a new proposal for an oil and gas law governing Iraq’s hydrocarbons sector recently approved by the Iraqi cabinet in Baghdad.

The KRG has called on the Iraqi parliament to reject the draft law, saying it does not take into consideration any of its proposed amendments, according to a statement issued on 5 September.

“The presidency of the Kurdistan region condemns this manoeuvre and calls on the council of ministers to withdraw the draft immediately, because it contradicts the constitution”, says the statement.

Parliament is due to resume on 6 September following the summer recess.

Iraq’s cabinet approved the new draft hydrocarbons law at the end of August and asked parliament to disregard the previously drafted version, which has languished in parliament since 2007. The previous draft had not been passed due to politicised disputes over the distribution of power between the federal and provincial governments, as well as the role of international oil companies (IOCs) (MEED 29:8:11).

The KRG passed its own oil and gas law in 2007 and has signed more than 40 production-sharing agreements with IOCs. Cables from the US embassy in Baghdad, revealed by Wikileaks, show the US State Department advised companies against investing in the Kurdish region’s oil sector due to questions over the legality of the contracts.

A September 2007 cable details the US government’s advice to Hunt Oil: “[US] policy has discouraged companies from signing oil deals with the KRG until Iraq enacts its national hydrocarbon framework law, as such regional contracts could act as an impediment to negotiations toward a comprehensive national settlement that equitably distributes Iraq’s oil wealth.”

Iraq, itself has signed 11 oilfield licences, but the parliamentary Oil & Energy Committee is seeking to hold off the signing of any further oil and gas contracts until the passing of the law.

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