Top Iraqi in U.S.: Oil law progress a must

WASHINGTON, Feb. 5 (UPI) -- Iraq's ambassador to the United States is optimistic political factions will strike a deal on a controversial oil law, despite oil sector advances without it.

"The oil law is still in the pipeline," Samir Sumaida'ie told reporters Tuesday. "When is it going to be actually finished depends on certain roadblocks to be removed. That is part of the discussions that are taking place."

Iraq's Kurdistan Regional Government and the central government are at odds over which entity should have control over the broad oil strategy, as well as the extent and mechanism for international oil company involvement. Iraq's oil reserves -- the world's third largest -- are controlled by state oil companies, not privatized.

This dispute has held up the law for more than a year. The KRG, frustrated with Baghdad, passed its own regional oil law and has signed dozens of exploration and production deals with international oil firms. The national government calls them illegal.

The Oil Ministry in Baghdad is intent on boosting production by half a million barrels daily this year, and is in the process of negotiating oil deals directly with Big Oil companies as well as prepping for a round of bidding on oil deals later this year.

Despite Sumaida'ie's optimism, the oil law appears to be forced to the back burner. "There are differences between the parliamentary blocks and we don't expect them to be resolved very shortly," Oil Minister Hussain al-Shahristani told the Middle East Economic Survey.

A delegation from the KRG has held a series of meetings in Baghdad with the national government's oil negotiators, but no deal has been reached.

"This is still a work in progress," Sumaida'ie said. "We have to reach an agreement sooner or later."

He said Iraq's mid-term goal of boosting production to 6 million barrels per day from the current 2.3 million bpd will require investment from the world's largest oil firms.

"Most of the companies that are capable of helping us with that are unlikely to jump in unless they find themselves on firm legal grounds," Sumaida'ie said. "That's why it is very important both for the Kurdish Regional Government and for Iraq."

And though the two sides appear to be charting separate courses -- the KRG issued a statement that an international legal expert backed their oil moves while the national Oil Ministry has been meeting with Big Oil officials -- Sumaida'ie doesn't see the scenario of "two parts of Iraq going their way. That's not going to work."

He said Iraq's top officials realize "something has to be done to remedy the current state of impasse in the government." He added that upcoming reforms to the government include reshuffling the Ministry and Cabinet leadership, including decreasing the numbers and allocated key posts "based on competence and performance."

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Ben Lando, UPI Energy Editor

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(e-mail: blando@upi.com)