IRAQ - Focusing On The Non-Oil Sector - Part 13 - Iraq's Petroleum Law.

Iraq's Council of Representatives (parliament) is expected to consider a draft law for the petroleum sector approved on Feb. 26 by the cabinet. But nationalist Iraqi politicians and ex-ministers are against the draft, fearing the country's petroleum resources will be controlled by foreign companies. The cabinet has set the end of May as the target for parliamentary approval of the draft.

The daft law, if passed by parliament, will enable foreign companies to invest in the country's petroleum industry. Nationalist politicians and ex-ministers, still influenced by Saddam's Sunni/Ba'thist dictatorship, are concerned about possible foreign involvement and they have fully supported Saddam's nationalisation of the petroleum sector back in 1972.

Iraq's petroleum sector is badly in need of foreign investment and technology. The sector has been poorly managed before and after the April 2003 fall of Saddam's dictatorship. Traditionally, the Oil Ministry in Iraq has been controlled by a nationalist bureaucracy generally suspicious of international oil companies (IOCs).

Even before the US invasion of Iraq in March 2003, nationalists in the Arab world have been suspicious of the American motive. They have been arguing that America was after Iraq's petroleum resources. Iraq, where the cost of oil E&P has been the lowest in the world, has lost many opportunities for IOCs to fix its petroleum sector. Veteran IOC geologists who have had long experience in the Middle East have been stressing for years that this country's recoverable oil reserves could potentially match, if not overtake, those of Saudi Arabia.

One estimate by a Western E&P expert from an IOC once put Iraq's ultimate potential to produce crude oil at 25m b/d, with emphasis on the Greater Rumaila Triangle in the southern part of the country which stretches over an area bigger than Saudi Arabia's Ghawar axis of oilfields. To compare, at present Iraq is struggling to produce 2m b/d - unable to restore a pre-war output level of 2.5m b/d - with its petroleum infrastructure having been the target of predominantly Ba'thist saboteurs stubbornly trying to prevent this sector from being rehabilitated.