Iraq Minister: No oil deals before oil law

WASHINGTON, July 5 (UPI) -- Iraq's oil minister says a Saddam-era oil deal with China has not been finalized and no oil deals will be until an oil law is passed by Parliament.

Iraqi President Jalal Talabani led a delegation earlier this month to China to discuss a number of issues, including economic cooperation. At the top of the agenda was a $1.2 billion deal the China National Petroleum Corp. signed with Saddam Hussein in 1997 to develop the 80,000 barrel per day al-Ahdab oil field.

That deal, along with those signed with Vietnamese, Indian and Indonesian firms, and those the Kurdistan Regional Government has signed since 2003, must be brought in line with the pending federal oil law before they are legit, said Oil Minister Hussain al-Shahristani, who was in the China delegation.

"No oil deal, regardless, specifically those that are signed in the Kurdish region, will be valid until they are approved by the federal council (on oil and gas) after the oil and gas law is passed and the federal council is formed," Shahristani told United Press International from Baghdad during a telephone interview.

"There is an article in the law that specifically states that all contracts that were made under the previous regime and by the KRG have to be reviewed in the light of the new oil and gas law by the federal council," he said.

Progress was made on the federal law lately, though its success in the Parliament is unsure. The council of ministers approved it suddenly Tuesday, but numerous parties have boycotted the council and the Parliament -- threatening quorum -- and are against the law. The Kurds, the law's biggest proponents, said they may be against changes that were made to it in the council.

Iraq's 115 billion barrels of proven reserves -- the third largest in the world -- are struggling to produce 2 million barrels per day. The operating fields need investment, while most of the oil isn't being pumped.

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Ben Lando, UPI Energy Correspondent