Wednesday, July 4, 2007

Iraq’s draft oil law heads for parliament after cabinet nod

Published: Wednesday, 4 July, 2007, 02:14 AM Doha Time

AMMAN/DUBAI: The Iraqi cabinet yesterday approved an amended version of the controversial draft oil and gas law and will submit the document to parliament for final approval, an Iraqi government official said.
“The cabinet has endorsed the draft oil and gas law and it will submit it to parliament,” Oil Ministry spokesman Assem Jihad told Dow Jones Newswires.
The Iraqi cabinet will send the controversial to parliament today, top oil and gas adviser to Prime Minister Nouri al-Maliki said.
“The cabinet has approved the draft oil and gas law and it will send it to parliament for approval Wednesday,” Thamer al-Ghadhban told Dow Jones Newswires.
It isn’t known, however, if the cabinet has endorsed only one part of the law which deals with the distribution of oil revenues among Iraqi regions and governorates or the whole bill.
Al-Ghadhban said last week that negotiations on other disputed clauses of the law would take two months before they could be settled and after that the law would go to parliament.
The draft law was first approved by al-Maliki’s cabinet in February but new disputes then emerged between the central government in Baghdad and the northern Kurdistan Regional Government that have delayed it.
The law is meant to bring in international oil companies to invest in Iraq’s potentially lucrative oil fields whose estimated proven oil reserves could reach 115bn barrels.
The US Administration has been urging Iraqi leaders to speed up the enactment of the hydrocarbon law along with other laws that it says are crucial to national reconciliation.
Iraqi oil officials couldn’t be reached to comment on the new amendments made to the draft law.
Officials of the Kurdistan Regional Government had been in dispute with their counterparts in the federal government in Baghdad over who should control untapped oil fields.
An old version of the draft law proposed that most of these oil fields are to be controlled by a yet-to-be-established national oil company.
The Kurds rejected that provision of the law.
But both sides reached last month an agreement on the distribution of oil revenues, under which the Kurds would get up to 17% of these revenues on monthly basis after deducting federal government expenditure.
Meanwhile, the International Monetary Fund said Iraq is accumulating foreign currency reserves through oil sales hasn’t drawn on cash available through the Fund, even as fighting devastates much of the country.
“The economy hasn’t really got going, but at the same time, oil prices have helped them a lot, so they have been generating quite large surpluses,” Mohsin Khan, the IMF’s director for the Middle East and Central Asia, said in a telephone interview from Washington on Monday.
The accumulation of reserves will help defend the value of the dinar and slow inflation, which accelerated to 65% last year, according to the Central Bank of Iraq.
The central bank raised its benchmark interest rate to 20% in January from 16%, and consumer prices rose 2.3% from December to May, central bank data shows.
Iraq has had a standby programme with the IMF since the beginning of 2006, and will maintain it until the end of 2008, as a condition for a debt relief programme negotiated with the so- called Paris Club.
The country has foreign reserves of about $23bn, $18bn of which is held by the Central Bank of Iraq, and the remainder by the Development Fund for Iraq, Khan said on Monday. – Dow Jones Newswires, Bloomberg

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