Economic event : papers week long cultural V : Critical Reading of the new draft bill oil (2 - 2)
22.05.07
The National Oil Company
According to Article (6) of Chapter II founding the National Oil Company to be a holding company owned by the Iraqi government to work contains the following :
1-management and operation fields current production
2-development and management of the discovered fields and other developed their
3-implementation of exploration and production in new areas outside its area of operations in accordance with this law, through applying for licenses exploration and production in new areas on a competitive basis
This means cancellation of the law No. (80) of 1961 through the delivery of special unexploited oil fields to foreign companies respectively in accordance with long-term contracts instead of national development through support of the national oil corporations which own experiences accumulated oil,
The new exploration contracts would devolve exclusively to the national oil company, but to enter in unequal competition with the oil companies originally global capabilities and technological, administrative capital of the world for winning any new holding exploratory, This in turn lead to foreign domination almost exclusively on all areas and Iraqi oil fields
Contracts for exploration and production
There are clear in the draft law to the exploration and production contracts while the legislator did not mention the name of the participation of production contracts, while clearly understood law on the contracts for exploration and production is the same concept contracts known worldwide and unwanted in the petroleum industry Kingdom fully to the public sector, especially in the discovered fields, such as the giant West Qurna and crazy and east of Baghdad and elsewhere, and if there is a difference between the concepts of exploration contracts and participation ought to clarify the law, and it appears that the oil in Kurdistan was more transparent than the federal law as an expression used decades participation production.
Notes in Article (13) of Chapter III of the time granted to the foreign investor for the completion of exploration and implementation of the development plan extending up to (37) years on each stage, This means that foreign investors will be the true owner of the oil reserves, which makes control of Iraq to control its oil resources merely legal, not actual.
They participate in the contracts in the pre-axis basis the new law, the property of the government when it is in the reservoir, as well as government-owned production company formality but the foreign share at the time of extraction, this contrasts with the article (111) of the Iraqi Constitution, which stipulates that the oil and gas belongs to the Iraqi people.
In contracts, or close to it is the foreign company spending on the investigation and exploration, drilling, completing the infrastructure for Oilfield ready for production, export and retreive disbursements from the company through share the company agreed to oil production and called Naft cost and internationally accepted ratio is 40% of the company and 60% the government, and when the company recover its expenses, the remaining oil called Oil profit, which is about 10% of the company and the rest of the government, but the foreign company often resort to the use of complex accounting methods related to the costs allowed downloading of total profit, and how to deal with the capital, which represents large sums paid in the years of the initial investment, The more complicated the tax system increased chance of foreign companies for tax evasion through the use of well-accounting techniques which suggested therefore to increase the share of foreign companies from the oil producer to half or so. It is strange that the draft law did not mention quotas to be granted to foreign companies for oil cost and profit and perhaps left it to the Iraqi negotiator, and, if so, there will be oil contracts vary quotas to be obtained by foreign companies.
With regard to conflict resolution have pointed article (41) of Chapter VIII, that is the arbitration proceedings between the Iraqi government and foreign investors according to regulations and arbitration procedures for the International Chamber of Commerce in Paris and Geneva is unrepayable infringement of state sovereignty over its resources and investments.
everything that the worst contracts that many of them contain so-called proven paragraph under which prevents the laws and tax policies to address the future of the project the contract, Homayani inability of any future government to impose stricter laws or to change the tax rates.
The imposition of the law for investors to rent parts of the oil product development, production and at 5 and 12% of the total production of all types of mineral while should impose varying proportions of rent depending on the type of oil products, light, medium and heavy.
On the other hand, the draft law did not specify the amount of tax paid by the foreign investor income tax note that the new investment law in Iraq, which exempts foreign investors from paying taxes on income investments for a period of up to (15) years.
Given the draft law Territory Awalmhafezh producing the right to negotiate with foreign companies to invest in oil fields, which weakens the bargaining power to the Iraqi side, and therefore Eshettha heartbreaking national oil industry, which needs to negotiate in the central control and surveillance, especially foreign companies themselves Matemtelk of enormous resources they merge and letting certain to get Vimapinha more oil reserves in the world, and the fragmentation of the Iraqi negotiating capacity will be reflected later in oil deals puny Party and the Iraqi significant gains for foreign companies,
Therefore, the task should be undertaken by national oil company to negotiate exclusively, especially as the state's general revenue, including oil revenues will be distributed according to the draft equitable distribution to the Iraqi people in accordance with the provisions of the Constitution
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