State Dept.: Iraq not ready for oil deals

WASHINGTON, Oct. 26 (UPI) -- A top U.S. State Department official said he’s telling oil companies to stay out of Iraq until there’s a national oil law, and urges Baghdad to move quicker on it.

“We continue to advise companies from outside of Iraq that they incur significant political and legal risk in signing any contracts with any party inside of Iraq before a national (oil) law package is passed by the Iraq parliament,” said Lawrence Butler, deputy assistant secretary in the Bureau of Near Eastern Affairs.

A handful of companies have signed deals with the Kurdistan Regional Government, which has passed its own regional oil law, moves that has bolstered the wedge between it and the central government. Hunt Oil Corp. was the first U.S. firm to sign a deal, which created additional tension in Washington.

“These contracts have needlessly elevated tensions between the KRG and the central government who share a common interest in passage of a national hydrocarbons framework and revenue sharing laws,” Butler, who oversees U.S. policy in Iraq, told an annual conference of U.S. and Arab policymakers.

A national law governing Iraq’s vast oil and gas sector is before the Parliament’s energy committee. It has been in there since the summer, and spent a year prior to that being negotiated.

It’s stuck on disagreements between the Kurds, the central government and other parties and factions over the role of the national vs. regional/provincial governments in setting and executing oil policy, as well as the extent the oil sector should be privatized.

The oil framework law is accompanied by a revenue sharing law and laws reorganizing the role of the Ministry of Oil and reconstituting the Iraqi National Oil Company as part of the “package” Butler mentioned. Those three laws are further behind in the legislative process than the oil law.

The Bush administration insists the law will lead to national reconciliation, and is using legislative progress as a measure of the government’s success.

The oil and natural gas reserves have international oil companies ready to jump at contracts.

“There are frustrations amongst many companies I deal with,” Butler said, “with the pace of deliberations of the framework law and are concerned that the Kurdish regional government passed its own regional law in August and has signed a number of contracts before coming to an agreement with the central government on the framework of the national oil law.”

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Ben Lando, UPI Energy Editor

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(e-mail: blando@upi.com)