IRAQ - Kurds Offer Oil 40 E&P Blocks.

The KRG is not waiting for Baghdad to pass the petroleum law, which it says could take several months. Instead, it is preparing to offer 40 new oil E&P blocks in the north on the basis of a PSA model it has already applied for several blocks in its region (see survey of Iraq in omt19IraqFieldsMay7-07).

KRG promotion plans will include conferences for investors in Erbil, London and perhaps in Houston to discuss bidding procedures. Minister Hawrami says priority will be given to IOCs which can organise themselves quickly. He says in this way the Kurds will make a significant contribution to the shared Iraqi revenues and thus help the process of reconciliation and the unity of Iraq.

Kurdish officials earlier in July reached an agreement with the central government on equitable sharing of oil income for Iraq, an important part of the new law. The project, vital for planning how to share the petroleum wealth among sectarian and ethnic groups, got the approval of the cabinet in February, but faced strong opposition from the Kurds who felt it did not give them a fair share. The majority of proven oil reserves are located in Iraq's Kurdish north and Shi'ite south.

There are still important parts of the draft law lacking serious discussion including annexes which Kurds say are unconstitutional as they take away oilfields from provincial governments and put them under the supervision of a federal oil firm - the Iraq National Oil Co. (INOC). Talks concerning INOC were resumed earlier in July, and last week Harami said: "We are confident that this will be agreed upon shortly". The Kurds want to increase oil production in their region to 1m b/d from about 200,000 b/d, within five years.

KGR Prime Minister Nechirvan Barzani recently urged Baghdad to move quickly and take the agreed draft Revenue Sharing Law and agreed draft Oil and Gas Law to the Council of Representatives (federal parliament). He said: "The sooner the agreed drafts are enacted into law, the better for all Iraqi peoples. While this law is vital for Iraqis, it is also important that we demonstrate to the international community that we are capable of bringing this law into action. We are concerned that the agreed drafts have been bogged down in an obscure committee in Baghdad - called the 'Shura Council', which has made unauthorised material changes to the agreed drafts, apparently in consultation with unnamed oil ministry officials in Baghdad. This is not acceptable. It is a delaying tactic that must be swept aside. The agreed drafts must be reinstated and put to the [federal] parliament".

Barzani, a nephew of Kurdistan President Mas'oud Barzani who leads the Kurdistan Democratic Party (KDP), added: "The Kurdistan Alliance members in the federal parliament are anxious to move forward on the texts to which the KRG and the federal government agreed. We encourage other political blocs who care about the viability of a federal Iraq to take a similar attitude, so that these two important laws can be enacted as soon as possible".

The draft Revenue Sharing Law will, when enacted, provide for the sharing of all petroleum revenue, wherever derived, to be shared on a per capita basis throughout Iraq, with a guaranteed allocation for Kurdistan. The draft Oil and Gas Law will establish the basis for co-operative petroleum management throughout Iraq, with the KRG voluntarily delegating some of its constitutional petroleum powers to a Federal Oil and Gas Council.

The draft Revenue Sharing Law was agreed between the KRG and Baghdad on June 20. The draft Oil and Gas Law was agreed between the KRG and the federal government, and approved by the Iraq Council of Ministers in February.

Intra-Kurdish Fight Over Oil Law: Members of Iraqi President Jalal Talabani's Patriotic Union of Kurdistan (PUK) on July 24 left an extraordinary regional parliamentary session over debate on KRG's draft petroleum law. They forced the session to adjourn, having demanded at the beginning to postpone discussing the draft pending a regular meeting. The PUK and the KDP are the largest blocs in the KRG's 111-member parliament in the north.

That was a special session called to tackle various issues despite a July through August recess. The issue of the regional petroleum law came at a time when the federal government was having its own parliamentary crisis.

The parliament in Baghdad is to take August off. But PM Maliki and the Bush administration want it to work through August, especially to make progress on the federal petroleum law. The PUK has leadership roles in the central government, including the presidency, and is urging that the federal law be passed first. The KDP has the weightiest positions in the north and is viewing the stalling in Baghdad - both in terms of legislation and security - with waning hope.

Tackling The Turkish Threat: Gulf News last week quoted Kurdish Parliament Speaker Adnan al-Mufti as confirming the US will preserve Iraq's sovereignty against any Turkish threat in view of current Turkish military escalation on the border. He said: "The United States will not take the side of Turkey on the issue. The American policy tends towards tranquilising the situation and creating an atmosphere of understanding and dialogue between Baghdad and Ankara".

The Iraqi Foreign Ministry is co-ordinating with the US to expedite a tripartite conference of Iraqi, Turkish and American security commissions to address the border crisis and counter any Turkish threat. Preparations are on for PM Maliki's visit to Ankara, which may help end the crisis and dispel Turkish anxiety concerning rebel activities on its border.

Gulf News quoted a Peshmerga leader in Erbil as saying: "The...government in Kurdistan and the central government in Baghdad are about to agree on sending Kurdish troops to bolster security in Kirkuk". The development comes as armed operations are on the rise in Kirkuk months before a referendum in the oil-rich city which is inhabited by Kurds, Turkmens, Arabs and Christians. Mufti stressed that the KRG was not escalating the situation and sent the file to the federal government to resolve the problem through diplomatic channels.

Turkey has built up military forces at the Iraqi border near Erbil and Dohuk. More than 200,000 Turkish soldiers are ready to tackle the fighters of the Kurdistan Workers' Party (PKK), a Turkish rebel group. The moves raised fears among villagers near the border, leading some Iraqi Kurdish families to flee to more secure regions.

The Iraqi army commander in Kirkuk, Gen. Anwar Muhammad Ameen, said al-Qaeda and Saddamist insurgents were planning further terrorist attacks to disrupt implementation of Article 140 of the Iraqi constitution concerning Kirkuk's self-determination. Ameen told Gulf News: "There are intensive moves by al-Qaeda and Saddam's supporters to convulse the security situation in Kirkuk. They aim to disrupt the referendum process and [build up] sedition between Kurds and Arabs in the city".