Monday, May 21, 2007


KRG to block oil law over INOC's proposed share

KRG, Oil,
(Arabian Business) - The Kurdistan Regional Government (KRG) will block the draft hydrocarbons law in parliament, raising the stakes in a row with the Baghdad government over control of Iraq's oil reserves. Ashti Hawrami, the KRG's minister of natural resources, criticised the Federal Government for attempting to give an ‘unaccountable' Iraq national oil company, INOC, almost 93% of Iraq's proven reserves. He said the annexes, which form part of the law, would wrest oilfields from regional powers.
"This will deter foreign oil companies from investing in the country's oil sector," said Eamad Mazouri, the KRG's general representative in the UAE. "Iraq has agreed on a federal state. You cannot have a federal government, while issuing centralised powers." The threat to fight the bill in national parliament comes just days after the country's oil ministry warned regions against signing contracts until the law is passed. But the KRG said it will continue to negotiate production-sharing agreements with international investors.
"The oil industry does not fall under the exclusive powers of the federal government," added Mazouri. "We believe Baghdad is acting unreasonably in this regard." The draft law, which the US sees as a key step towards reconciling Iraq's sectarian violence, is vital to boosting output and rebuilding its infrastructure. But the law cannot be passed without the KRG's support, which Baghdad will not have until the Constitution of Iraq is honoured.
At a recent conference in Dubai, officials from the Federal Government said that none of the oil fields to be given to INOC will be open to investment from outside Iraq. "Iraq does not have the resources, expertise or technology to establish a national oil company," said Mazouri. "It will take years to build the company and Iraq needs oil revenues immediately to reinstate infrastructure and provide basic services to its people. The country needs foreign participation to move forward."

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