U.S.: Iraq needs time, pressure on oil law : Energy Environment

WASHINGTON, June 1 The U.S. State Department says Iraqis need time to get the oil law "right," while U.S. pressure is to ensure Baghdad keeps its eyes on the prize. A senior department official told UPI on condition of anonymity that Iraqis negotiating the law must strike a "delicate balance" between getting it right and getting it done. The law will govern Iraq's vast petroleum reserves -- the world's third-largest -- and determine regional and federal control over the oil and the extent of foreign oil company involvement. It will also decide how the revenue from oil sales is split up, among other issues.

"It's absolutely critical they get this right," the official said, adding, "It really is in their self interest to address these issues as soon as possible." But Iraqi parliamentarians and oil experts on various sides of the debate say U.S. pressure to pass the law could make matters worse by rushing the divisive issue. President Bush has called the law a "benchmark for reconciliation" and he, U.S. ambassadors to Iraq and Vice President Dick Cheney and Defense Secretary Robert Gates have expressed the desire for the law to be passed soon. Congressional Democrats have joined the chorus, including it as a benchmark for success in supplemental war funding passed last week. The official said the United States has spent the last few years "getting the investment climate right in Iraq," which, in terms of the oil law, means pushing Baghdad for "clear, transparent" legislation. The United States, via a contract with McLean, Va.-based consultant BearingPoint Inc., has provided specialized experts, like an oil lawyer, to answer questions oil law negotiators may have, the State Department official said.

Iraq produces around 2 million barrels per day, down from 2.6 million before the war. It exports about 1.6 million barrels daily, which brings in more than 93 percent of its federal budget.

"Certainly we understand the criticality of these issues, as do the Iraqis," the official said. Negotiations between the Kurdish Regional Government and central Iraqi government continue next week. But skepticism looms as the sides are far from reaching a deal that will be supported by enough members of parliament.

Ben Lando, UPI Energy Correspondent