IRAQ - E&P Targets & New Oil Law.

In a study outlined during an international oil conference held in Baghdad in March 1995 (see Vol. 44, SP 57-62), it was concluded that the probable and possible oil reserves in the Cainozoic and Mesozoic formations were about 214 bn barrels of oil and 160 TCF of non-associated gas. Oil ministry speakers then said these zones will be targeted after the end of Iraq's isolation, with exploration activities to involve foreign companies under PSAs and/or SCs.

Iraqi Oil Minister Hussein al-Shahristani, in Dubai for a conference, on April 18 said parliament would approve the new petroleum law before end-May (see OMT). Around 60 Iraqi parliamentarians and experts met in Dubai and discussed the law that will give its regions rights to negotiate with global firms on developing oilfields.

Kurdish Objections: The Kurdish Regional Government (KRG) on April 18 said it would not sign up to some aspects of the law. KRG Natural Resources Minister Ashti Hawrami told Reuters annexes to the draft were unconstitutional. He said: "The annexes as they are written now will not be accepted by the KRG... If I don't get the lion's share of fields (in the KRG 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". Shahristani said the KRG should have made its objections clear before the draft law was approved by the cabinet in February, although he admitted the appendices had not been studied in detail before the law was passed.

Hawrami said: "The annexes have yet to be discussed and currently award 82% of Iraq's oil and gas law to a centralised Iraqi National Oil Co. (INOC), which has yet to be established and with no apparent accountability for maximising returns for the Iraqi people".

The KRG had signed several PSAs with firms like Norway's DNO. The deals provoked disputes with some members of the central government as they were signed long before Iraq's cabinet approved the draft law. PSAs have drawn criticism from some nationalists as they allow foreign oil firms to book reserves.

Shahristani said of the April 18-19 meeting in Dubai: "This is one of a series of technical workshops that we are holding to discuss the oil and gas law". He said the meeting was organised in Dubai because some of the technical experts lived in third countries and did not wish to travel to Iraq for security reasons.

In Baghdad, oil ministry spokesman Assem Jihad told The Associated Press the draft law would be in front of the legislature "within the coming few days if everything goes well". He said: "The draft is with the State Shura Council now to be put in a legal form after being written in technical language. We are expecting to take no more than two months to discuss it inside the parliament...between one and two months it depends on the parliament".

The law 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 US involvement, is one of four benchmarks the Bush administration has set for PM Nouri al-Maliki's struggling government.

The long-planned law will restructure the Iraq National Oil Co. (INOC) as an independent holding firm and establish a Federal Council as a forum for national oil policy.

The 85-strong Iraqi delegation was led by Deputy PM Barham Saleh, a prominent Kurd, and comprised Planning Minister Ali Baban, Oil Minister Sharistani, former oil minister Thamer Ghadhban (who now advises Shahristani as well as PM Maliki), and many MPs, as well as Iraqi oil specialists and businessmen. The meeting was chaired by Deputy Speaker of the Iraqi parliament Khaled al-Attiyah, who stood for the parliament-majority Shi'ite alliance.

Among the attendants were veteran and independent Iraqi oil experts Tareq Shafiq and Farouq al-Qassem. Both took part in drafting the petroleum law at its earlier stages but they later voiced their reservation on its final shape. They presented papers to the meeting. A similar meeting held in Jordan in March ended in disagreement over the law, which was approved by the government on Feb. 26.