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Kurdish deal raises hopes for Iraq oil laws
26 February 2007 (Financial Times)
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Kurdish regional officials said yesterday they had
reached agreement on a draft of a law governing the oil industry, potentially ending a dispute that has for months held up the adoption of legislation deemed vital to Iraq's reconstruction.
Agreement had been reached on both the draft law and an accompanying memorandum, .[/size][/b]said Fuad Hussein, chief of staff for Massoud Barzani, president of the Kurdistan Regional Government, which is responsible for administering northern Iraq.
Assem Jihad, a spokesman for Baghdad's oil ministry, however, said that the draft would need to be reviewed by the Iraqi cabinet and then by parliament, leaving the door open for changes as well as disputes.
The progress of the oil law has seen a number of false dawns. Last month, Baghdad said a draft was ready to be presented to parliament, but the KRG responded that this was "premature".
Kurdish officials have said some issues are still unresolved, which may be a reference to annexes to the law that are not yet drafted.
However, even a preliminary agreement between the KRG and the Ministry of Oil would be a significant step towards clearing a logjam that had blocked passage of the law since last summer.
Both sides are under pressure from the US to reach an agreement.
The Kurdish announcement followed a meeting between Zalmay Khalilzad, US ambassador, Mr Barzani, and Jalal Talabani, Iraq's president and a Kurd.
Details of the final agreement were not available, although both Kurdish and federal government officials said they would shortly release comments on it.
In recent months, much of the argument has centred on the right of regional governments such as the KRG to sign contracts independently with oil companies.
Baghdad had proposed such contracts be reviewed by a committee, but the KRG has insisted it will not give the federal government veto power over the development of its local oil industry.
The Kurdistan government also reportedly wants guarantees that deals that it signed with foreign oil companies such as Norway's DNO to drill in KRG-administered territory would be honoured by Baghdad.
Outside Iraq, some watchdog groups have criticised clauses in the law that allow production-sharing agreements, which allow drilling companies to own a proportion of the oil they produce.
The Iraqi government says it should have access to as wide a range of contracts as possible to encourage the discovery of new oil resources in areas that are difficult or costly to explore.
However, once the law is referred to parliament, such contracts may encounter resistance from lawmakers who argue that they give too much away to foreigners.
Iraqi Kurdistan claimed in 2005 to have 45bn barrels in oil reserves. The country as a whole has 115bn barrels in proven reserves as of 2003, although government and independent estimates run to well over 200bn barrels.
*President Talabani, 73, flew to Jordan yesterday for a medical check-up at King Hussein Medical City, a military hospital in Amman. His office said he was suffering from exhaustion and there was "no cause for worry".
Kurdish deal raises hopes for Iraq oil laws | Iraq Updates