May 25, 2011
Iraq's Draft Oil Law 'needs Overhaul'
Iraq must overhaul the draft of its long-delayed oil law but will press ahead with developing its petroleum industry while debate on the divisive legislation drags on, Deputy Prime Minister Hussain al-Shahristani said.
Investors have been waiting for approval of a hydrocarbon law to guarantee a more solid legal framework for exploration. The law has also been seen as pivotal to reconciling Iraq's political factions as the country rebuilds after years of war.
But Iraq is nevertheless already developing oilfields, signing billions of dollars in service contracts with international companies, under old legislation.
The draft oil law was approved by the cabinet in 2007 but has faced opposition, mainly from semi-autonomous Kurdistan.
"Frankly, the hydrocarbons draft approved by cabinet in 2007 is not fitting to become law. It requires major changes," Shahristani, who has special responsibility for energy, told Reuters in an interview today.
"We signed contracts with global oil majors and no one asked if there is a hydrocarbon law or not," Shahristani said.
Work began on the law in 2005 under a new constitution. It has remained stymied by differences between majority Arabs and minority Kurds over revenue-sharing and control over some fields in their region.
Besides deciding who controls the country's oil reserves and setting up a new state oil company to oversee the industry nationwide, the law aims to provide a more solid legal framework for attracting foreign investment.
Shahristani said Korea Gas (Kogas) has also agreed to sign a development contract for the Akkas gas field and the deal could be finalised next month.
Akkas, the country's largest gas field, has estimated reserves of 5.6 trillion cubic feet.
"Kogas informed us about them agreeing to come to Baghdad and sign the Akkas contract. We told them they could choose a partner to jointly develop the gas field," Sharistani said.
Iraq earlier this month had asked Kogas whether it could develop the Akkas field on its own after KazMunaiGas Exploration Production withdrew from the deal.
Shahristani said Shell and Mitsubishi had now also agreed on all technical and contractual aspects of another gas deal and expected the oil ministry to present a final draft of the accord to cabinet this month.
Iraq has been negotiating a $12 billion deal with Shell that would give the country access to more than 700 million cubic feet of gas associated with oil production at three oilfields that could be used for power generation.
Shahristani said Iraq has set its future production targets of 12 million barrels per day based on his expectation that world oil demand would increase by 20 million bpd over the next 20 years and Iraq would be key to meeting new demand.
Iraq's Draft Oil Law 'needs Overhaul'
Iraq must overhaul the draft of its long-delayed oil law but will press ahead with developing its petroleum industry while debate on the divisive legislation drags on, Deputy Prime Minister Hussain al-Shahristani said.
Investors have been waiting for approval of a hydrocarbon law to guarantee a more solid legal framework for exploration. The law has also been seen as pivotal to reconciling Iraq's political factions as the country rebuilds after years of war.
But Iraq is nevertheless already developing oilfields, signing billions of dollars in service contracts with international companies, under old legislation.
The draft oil law was approved by the cabinet in 2007 but has faced opposition, mainly from semi-autonomous Kurdistan.
"Frankly, the hydrocarbons draft approved by cabinet in 2007 is not fitting to become law. It requires major changes," Shahristani, who has special responsibility for energy, told Reuters in an interview today.
"We signed contracts with global oil majors and no one asked if there is a hydrocarbon law or not," Shahristani said.
Work began on the law in 2005 under a new constitution. It has remained stymied by differences between majority Arabs and minority Kurds over revenue-sharing and control over some fields in their region.
Besides deciding who controls the country's oil reserves and setting up a new state oil company to oversee the industry nationwide, the law aims to provide a more solid legal framework for attracting foreign investment.
Shahristani said Korea Gas (Kogas) has also agreed to sign a development contract for the Akkas gas field and the deal could be finalised next month.
Akkas, the country's largest gas field, has estimated reserves of 5.6 trillion cubic feet.
"Kogas informed us about them agreeing to come to Baghdad and sign the Akkas contract. We told them they could choose a partner to jointly develop the gas field," Sharistani said.
Iraq earlier this month had asked Kogas whether it could develop the Akkas field on its own after KazMunaiGas Exploration Production withdrew from the deal.
Shahristani said Shell and Mitsubishi had now also agreed on all technical and contractual aspects of another gas deal and expected the oil ministry to present a final draft of the accord to cabinet this month.
Iraq has been negotiating a $12 billion deal with Shell that would give the country access to more than 700 million cubic feet of gas associated with oil production at three oilfields that could be used for power generation.
Shahristani said Iraq has set its future production targets of 12 million barrels per day based on his expectation that world oil demand would increase by 20 million bpd over the next 20 years and Iraq would be key to meeting new demand.
http://www.iraqenergy.org/news/?detailof=2589&content=Iraq's-Draft-Oil-Law-'needs-Overhaul'-
