WASHINGTON, July 6 As Iraq's oil law this week was sent to Parliament, one of its original authors fears it will be passed -- to the detriment of the country.
Tariq Shafiq, a London and Amman, Jordan-based oil consultant born and raised in Iraq, says backroom compromises will lead to the mismanagement of the country's oil sector and open it too much to foreign, private companies -- all enshrined in the oil law he originally wrote.
Shafiq and two other Iraqis wrote the draft law last summer. It was then negotiated between representatives of the central government in Baghdad and the Kurdistan Regional government until earlier this year.
This week the Council of Ministers approved the oil law suddenly, despite complaints from numerous parties.
The most contested issue is who will ultimately control Iraq's 115 billion barrels of proven reserves, the federal government or regions/governorates. It all is based on the 2005 constitution and its vague language regarding oil, spawning varied interpretations at odds in the current debate over the law.
"The constitution was drafted by a parliamentary committee but modified by the influential party heads, so called the 'matbach' (kitchen), by a process of mutual concessions, 'muhasasa,'" Shafiq told UPI.
He said those in power benefited the most, "with complete disregard to accountability or transparency, effectively paralyzing the parliamentary process." Then it was voted on, first quickly by the Parliament, then by the electorate, "without a fair period of debate given to NGOs, specialized groups or the public at large," he said.
"History seems to repeat itself where the first important law in the life of the nation after the constitution, the petroleum law, meets the same fate of infamous 'muhasasa,'" said Shafiq.
He said the draft he co-authored was intended to avoid such politics and pave the way for an oil sector that maximized profits for all Iraqis. The latest draft weakens the federal government, he said, and the local governments don't have the institutions to sustain their own oil sectors.
"The policy of the neo-conservative politicians prior to and post-invasion of Iraq has been the privatization of Iraq's oil industry," Shafiq alleges, adding international oil companies will then access the sector with production-sharing agreements, one of the most company-friendly contract models in the industry. The neo-conservatives "called for Iraq's withdrawal from OPEC and an open oil production policy to rival Saudi Arabia and break the OPEC cartel," he said.
Before the Council of Ministers' action, the Shoura Council -- a body that reviews legislation for constitutional and other legal format -- made a number of recommendations. Oil Minister Hussain al-Shahristani said only the format changes were included in the ministers' approved draft.
Shafiq, though not supporting the entire Shoura decision, said three key points should have been adopted: the constitutional changes should occur before the oil law is approved; the federal government should be the only body signing exploration, development and production deals; and the decades-old nationalization of the oil sector should not be reversed.
Iraq needs a large cash infusion to help its oil sector -- more than $25 billion by some estimates. It is outdated and hurting from mismanagement by Saddam Hussein. Shafiq says this should be done without bringing more new fields online (which he said could flood the market), instead maximizing production at 10 million barrels per day -- about Saudi levels -- which could last two decades. Iraq produces 2 million bpd now, down from 2.6 million bpd before the war.
Shafiq is not alone in his concerns, nor are they universally accepted. He was one of 61 Iraqi oil technocrats who signed a letter to Prime Minister Nouri al-Maliki in April, urging the oil law be stalled until political and security conditions in Iraq improved. More and more political parties, as well as the powerful unions, have come out against the law.
But the Kurds, living in a semi-autonomous and relatively safe region in the north, want action. They want investment. They want to continue making progress, including in developing their own oil sector, to escape the fate their countrywomen and men to the south face now and the deprivation the Kurds faced under Saddam's regime.
And, pressed by the Bush administration for some sign of success in the Iraq war, the Shiite-led government is also favoring the current oil law -- and favoring it now.
It is to be taken up by Parliament next week, though protests and boycotts may make that harder.
WASHINGTON, July 6 --
