Saturday, May 26, 2007

Maliki names cabinet replacements

"In Baghdad on Thursday, Prime Minister Nuri Kamal al-Maliki named replacements for six cabinet ministers who quit last month on the orders of the radical Shiite cleric Moktada al-Sadr. At the time, Mr. Sadr said he was taking the action to protest Mr. Maliki’s refusal to back a timeline for the departure of American forces. But the cleric may also have wanted to distance himself from the increasingly unpopular Maliki administration, which completed its first year in office this week with scant progress in curbing violence or improving Iraq’s devastated public services.
Officials in Mr. Maliki’s office described his nominees as technocrats who would bring new levels of efficiency to the ministries, which included the politically delicate portfolios of agriculture, health and transport.
But Mr. Maliki also voiced some of his strongest opposition yet to pressure for his government to meet political 'benchmarks' on bitterly contested issues like the division of oil revenues. 'How can the head of an elected government accept another country imposing restrictions or conditions on its actions?' he said Wednesday in a television interview."

source
Burns, John F. (The New York Times). Iraqi Tribal Leader Is Killed, and Mourners Are Attacked. May 25, 2007.

posted: saturday, may 26, 2007, 11:02 AM ET
update: saturday, may 26, 2007, 11:19 AM ET


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Wednesday, May 16, 2007

Oil missing

"Between 100,000 and 300,000 barrels a day of Iraq’s declared oil production over the past four years is unaccounted for and could have been siphoned off through corruption or smuggling, according to a draft American government report.
Using an average of $50 a barrel, the [Government Accountability Office] report said the discrepancy was valued at $5 million to $15 million daily.
The report does not give a final conclusion on what happened to the missing fraction of the roughly two million barrels pumped by Iraq each day, but the findings are sure to reinforce longstanding suspicions that smugglers, insurgents and corrupt officials control significant parts of the country’s oil industry.
The report also covered alternative explanations for the billions of dollars worth of discrepancies, including the possibility that Iraq has been consistently overstating its oil production.
. . . Virtually the entire economy of Iraq is dependent on oil revenues."

source
Glanz, James. (The New York Times). Billions in Oil Missing in Iraq, U.S. Study Says. May 12, 2007.

posted: wednesday, may 16, 2007, 5:49 AM ET


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Friday, May 11, 2007

Oil law by Sept, need navy-air-force, Rubaie says

"Mowaffak al-Rubaie, the national security adviser to Iraq’s prime minister, undertook on Tuesday what may have been his most challenging mission yet: trying to persuade American lawmakers who have all but run out of patience that still more patience is required.
. . . Mr. Rubaie stressed that a law distributing oil revenues would be in place by September and that a date would be set for provincial elections to be held in 2008.
Work is under way on constitutional reforms, he said, and the overhaul of the policy barring most former Baath Party members from government jobs would be completed by the end of the year.
. . . Mr. Rubaie also asserted that Iraqi government officials were involved in serious discussions with several insurgent groups, including the 1920s Revolutionary Brigade and Ansar al-Sunna — an effort to split the opposition and turn them against Al Qaeda in Mesopotamia.
. . . Mr. Rubaie stressed that Iraq was involved in a historic process to overcome the long legacy of authoritarian rule, and that the early withdrawal of American troops would lead to chaos." [1]

"Although U.S. troops could eventually redeploy to forward bases in Iraq and the region, he said, a U.S. presence will be needed until Iraq builds not just an army, but also an air force and a navy, which could take decades.
'We will need coalition forces for the foreseeable future,' he said in an interview with editors and reporters at The Washington Post. 'Building an air force to own our air and to be able to defend Iraq cannot be done overnight, or in months. It will take decades to build an air force and to build a navy.' " [2]

source
[1] Gordon, Michael R. (The New York Times). Official Takes Case to U.S., but Skeptics Don’t Budge. May 9, 2007.
[2] Wright, Robin. (The Washington Post). Iraq Seeks Time to Take Steps, but Levin Notes 'Disconnect'. May 10, 2007.
posted: friday, may 11, 2007, 2:03 PM ET
update: sunday, may 13, 2007, 10:17 AM ET


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Wednesday, May 09, 2007

More thoughts on draft oil law

If there is concern over the timely distribution of oil revenue, then the idea mentioned previously of having an outside organization do the distributing seems like a good solution. If some want the revenue distributed by the central government and others want it done by a third party, then let the ones who want it done by the central government have their revenue distributed by the central government and the ones who want it done by a third party have it done by a third party.

Another way of equitably distributing oil revenue and addressing Kurdish concerns over management could be to divide the oil fields between the various groups. The Shiites and Kurds could keep managing the fields in their regions, but the Sunnis and any other groups would get to manage fields in the Shiite and Kurdish regions proportionate to their population.

The potential for manipulation or coercion of Iraqis of all groups by those who control Iraq's oil or oil revenue is great, so care should be taken to pass a law that will ensure that these things will not occur.

posted: wednesday, may 9, 2007, 10:27 AM ET
update: wednesday, may 9, 2007, 10:33 AM ET

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Sunday, May 06, 2007

Draft oil law submitted to Parliament; Kurd issues

" Iraq's oil minister said the country's draft oil law was submitted to parliament on Wednesday, setting up potentially bitter negotiations over the creation of a framework for managing the country's vast petroleum supplies and distributing oil revenue.
. . . The prime minister of the Kurdistan Regional Government, Nechirvan Barzani, told Prime Minister Nouri al-Maliki that Kurds would not accept the oil law unless a piece of companion legislation, and accompanying annexes detailing revenue distribution, were amended. The changes would allow the Kurds greater concessions in developing oil fields in their territory, according to Mahmoud Othman, a Kurdish legislator.
. . . 'The Kurds will not accept the law to be put before the parliament as a first part and a second part -- it needs to be a package,' Othman said. 'The whole problem is because this law was made in a hurry, and the Americans were rushing everyone to do it. The details haven't been discussed, that's why there's no agreement.'
Mehdi Hafedh, a parliament member . . . said he believed that the Kurdish opposition was determined but that eventually a compromise solution would be reached." [1]

"In Iraq, the Kurds have taken issue with a new provision that was quietly packaged with the draft oil law by the Shiite-led Oil Ministry last month. The measure would essentially cede control of the management of nearly all known oil fields and related contracts to a state-run oil company to be established after passage of the law, said a spokesman for the Kurdish regional government.
The spokesman, Khalid Salih, said the provision violated a clause in the Constitution that says the central government must work with regional governments to determine management of known fields that have not been developed. The Kurds . . . have been arguing for maximum regional control over oil contracts.
The provision is part of four so-called annexes that are to be debated with the draft oil law in Parliament. Any objection to one or more of the annexes will stall passage of the law.
. . . A senior Shiite Arab legislator, Sheik Jalaladin al-Saghir, said the concerns raised by the Kurds amounted to a bargaining tactic. 'I think it’s a maneuver,' he said, adding that he believed the Kurds 'will move forward to pass the law since everybody needs it.' " [2]

sources
[1] Partlow, Joshua. (The Washington Post). Draft Oil Measure Sent to Parliament. May 3, 2007.
[2] Wong, Edward & Stolberg, Sheryl Gay. (The New York Times). Iraqi Blocs Opposed to Draft Oil Bill. May 3, 2007.

posted: sunday, may 6, 2007, 11:50 PM ET


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Saturday, April 28, 2007

Kurds want their oil fields, Sunnis want oil unity

"Politicians from the . . . Kurdish region say measures in the law that would take undeveloped oil fields away from regional governments and have a new national oil company oversee them are unconstitutional.
'Iraq, frankly, does not have the money to invest in oil fields,' said Ashti Hawrami, the Kurdish region's minister of natural resources. He added that the Kurds are disputing four annexes to the draft law that would dilute their ability to exploit oil in their territory. If the draft isn't 'watered down,' Kurdish regional authorities will not support it, he said.
The Kurds also don't trust the central government to distribute oil revenue, saying it has been behind in payments in other instances. Some have suggested that a fund be set up outside Iraq to dole out that money. 'We are asking for our fair share and guarantees that we will receive it,' Hawrami said.
Sunni Arabs and some secular Shiite politicians, however, stand firm that the central government must control oil production and revenue distribution. 'If we want to keep the unity of Iraq, the best way is to keep the oil under the authority of the central government,' said Adnan Pachachi, a secular Sunni with the Iraqi National List party of former prime minister Ayad Allawi. *
While some Kurds favor allowing agreements that would share production with foreign oil companies, many Sunnis and Shiites are against them on nationalistic grounds. They prefer service contracts."

source
Raghavan, Sudarsan. (The Washington Post). Baghdad's Fissures and Mistrust Keep Political Goals Out of Reach. April 26, 2007.

footnote
* The main reason for some sort of centralized distribution of oil revenue, whether from the Iraqi national government or somewhere else, should be the fair distribution of these revenues. It should not be used to keep regions or provinces from achieving a more autonomous status, if that's what they want.

posted: saturday, april 28, 2007, 6:07 PM ET
update: sunday, april 29, 2007, 4:42 AM ET


related posting
Should Iraq's oil fields be nationalized? April 11, 2007.

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Saturday, April 21, 2007

Oil-autonomy increase Turkey-Kurd friction

"The prime minister on Monday warned Iraqi Kurds against interfering in southeastern Turkey, where the Kurdish majority is fighting Turkish security forces, saying 'the price for them will be very high.'
Prime Minister Recep Tayyip Erdogan was responding to Massoud Barzani, leader of the Kurdish autonomous region in Iraq, who said Iraqi Kurds would retaliate for any Turkish interference in northern Iraq by stirring up trouble in southeastern Turkey.
. . . Turkey fears that any moves toward greater independence for Kurds in northern Iraq could incite Turkey's own estimated 14 million Kurds to outright rebellion.
Turkey is especially concerned about Barzani's bid to incorporate the northern Iraqi city of Kirkuk into his semiautonomous region, fearing that Iraqi Kurds will use revenues from the city's oil wealth to fund a bid for independence.
. . . [T]he Iraqi government decided to implement a constitutional requirement to determine the status of Kirkuk . . . by the end of the year. The plan is expected to turn Kirkuk and its vast oil reserves over to Kurdish control, a step rejected by many of Iraq's Arabs and its Turkmen." [1]

"Kurdish boldness also comes at a critical time for Turkey, which is facing a growing threat in its own Kurdish region from separatist guerrillas raiding out of northern Iraq and has a presidential election coming up that could aggravate tensions between Islamist and secular Turks.
The fallout already has shaken relations between the United States and Turkey, a longtime ally increasingly frustrated that the overstretched American military in Iraq cannot crack down on Kurdish guerrillas.
That has the United States in a bind _ 'unwilling to open a new front in northern Iraq. Nor can it afford to lose its support from Iraq's Kurdish population,' said Dr. Andrew McGregor, a security analyst and Kurdish expert in Canada.
. . . [T]he opponents within al-Maliki's administration [to the Kirkuk resettlement program] caved in after the Kurds threatened to resign from the Cabinet _ a move that would have spelled the end of the fragile, U.S.-backed governing coalition.
. . . The Kurds used . . . hardball tactics . . . to win concessions granting them a major say in what companies are granted rights to exploit Iraqi oilfields in Kurdish-controlled areas." [2]

sources
[1] Fraser, Suzan. (The Associated Press). Turkey Warns Iraqi Kurds on Interference. April 9, 2007.
[2] Reid, Robert H. (The Associated Press). Ambitions of Iraqi Kurds Worry Turkey. April 17, 2007.

posted: saturday, april 21, 2007, 6:04 AM ET

update: saturday, april 21, 2007, 6:17 AM ET

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Wednesday, April 11, 2007

Should Iraq's oil fields be nationalized?

Maybe if Iraq's oil fields were nationalized, the Sunnis would feel more secure about getting their fair share of oil revenue and wouldn't object to the federalist-autonomous-region preferences of a majority of the Shiites and Kurds. *

Nationalizing the fields might also lessen some of the concerns of Turkey over the possibility of Kirkuk being annexed to Kurdistan.

Iraq's constitution already says that the country's oil belongs to all Iraqis. ** Nationalizing the fields in which that oil lays would just be another step in that same general direction.


footnotes
* In a
March 19, 2007 poll by ABC News and others, 59% of Shiites and 79% of Kurds favored either regional states with a federal government or independent states. Only 3% of Sunnis favored either of these two options, favoring a strongly centralized national government instead. (question 14)
** "Oil and gas are the ownership of all the people of Iraq in all the regions and governorates." (
Iraqi Constitution, Article 110)
*** I'm having second thoughts about this idea. Nationalization could lead to manipulation or coercion by those controlling Iraq's oil or revenue distribution. (see More thoughts on draft oil law).

posted: wednesday, april 11, 2007, 11:55 PM ET
update: tuesday, may 18, 2007, 6:38 PM ET

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Monday, April 02, 2007

Areas of uncertainty for draft oil law

"There is concern that foreign oil companies might try to get better terms by playing the provinces against one another.
But some oil experts are skeptical of the significance of the measure.
'It will not mean anything on the ground,' says A.F. Alhajji, an oil economist at Ohio Northern University in Ada. As long as Iraq suffers from political instability, major oil companies will shy away. 'The situation is so bad no one in his right mind wants to go there to be attacked or nationalized a second time.'
. . . One sensitive provision allows 'production sharing agreements' (PSAs) with foreign oil firms. In theory, Iraq would retain ownership and ultimate control of the oil in such a deal. A PSA would merely grant the firm or consortium the right to explore, develop, and sell the oil, while getting a share of the oil extracted. History, however, is full of 'unequal' PSAs highly favorable to oil companies and less favorable to oil nations.
. . . In the future, Iraqi lawyers could . . . argue that any oil deal signed while Iraq was occupied was done under duress and thus was invalid, [said Alhajii]." [1]

"The law grants regions and regional oil companies the right to draw up contracts with foreign companies for exploration and development of new oil fields. It does not specify what kinds of contracts are allowed, thus making room for production sharing agreements (PSAs).
. . . One of its first tasks could be the consideration of the five PSAs signed by the Kurdistan Regional Government and foreign companies, as well as six outstanding PSA contracts between the Saddam regime and companies.
. . . The draft law is a key precursor to international involvement in Iraq's hydrocarbons sector, and many aspects of the law will be attractive to international oil companies (IOCs). Yet, a national framework for contracts and regulation is not sufficient to attract IOCs in the near term.
. . . The per capita distribution of funds will require a politically sensitive census to be undertaken.
. . . The Ministry of Oil and INOC [Iraqi National Oil Company] will struggle to recruit skilled hydrocarbons sector technocrats." [2]

"Sen. Joseph R. Biden Jr. (Del.) . . . has been lobbying to have language included in the emergency supplemental war spending bill that will prevent 'United States control over any oil resource of Iraq.'
. . . House Speaker Nancy Pelosi (D-Calif.), though, didn't see the bill as pressuring Iraq to privatize. 'Democrats support an Iraqi oil bill that fairly distributes revenues among the Iraqi people in a way that the Iraqi people decide is best for them,' spokesman Drew Hammill said.
. . . [Antonia Juhasz of Oil Change International] said that many Democrats don't seem to understand that pushing Iraq to meet Bush's benchmarks could unwittingly hand international oil companies a victory, a charge echoed by [Congressmembers Dennis Kucinich and Lynn Woolsey].
. . . For John van Schaik, an oil industry analyst with Energy Intelligence, the law is so obscurely written that it's hard to know what to make of it.
'It's written such that it's open to interpretation,' he said. 'Iraq will never accept a law that can be read as a privatization law, no matter how the Americans try to pressure Baghdad.' " [3]

sources
[1] Francis, David R. (Christian Science Monitor). Why Iraq's new oil law won't last. March 5, 2007 (commentary).
[2] Oxford Analytica. Iraq Oil Law Necessary But Not Sufficient. March 7, 2007.
[3] Grim, Ryan. (The Politico). Some Democrats Oppose Forcing Iraq To Accept Foreign Investment in Oil. March 27, 2007.

posted: monday, april 2, 2007, 8:41 PM ET

update: wednesday, april 4, 2007, 4:31 PM ET

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Wednesday, March 28, 2007

Khalizad met insurgents / Constitution regions bad, critics say

"The senior American envoy in Iraq, Ambassador Zalmay Khalilzad, held talks last year with men he believed represented major insurgent groups in a drive to bring militant Sunni Arabs into politics.
'There were discussions with the representatives of various groups in the aftermath of the elections, and during the formation of the government before the Samarra incident, and some discussions afterwards as well,' Mr. Khalilzad said in a farewell interview on Friday at his home inside the fortified Green Zone.
. . . An American official said it was difficult to determine whether the people Mr. Khalilzad met with really were influential representatives of insurgent groups, as they claimed.
. . . The most complex legacy of Mr. Khalilzad — and arguably the most divisive — is the Constitution, passed in a national referendum in October 2005. Sunni Arab voters overwhelmingly rejected it, but most Shiites and Kurds, who make up 80 percent of the population, supported it. That paved the way for full-term elections in December 2005.
. . . Mr. Khalilzad and his colleagues, the critics say, were so fixated on meeting the political timetable laid out by the White House that they pushed through a document that may have inflamed the Sunni-led insurgency by enshrining strong regional control. The Constitution reaffirms Sunni Arab beliefs that Shiites and Kurds want oil and territory." [1]

The new draft oil law hasn't fixed that? And what about that charge that the oil law is cheating Iraq out of much or most of its oil revenue?

source
[1] Wong, Edward. (The New York Times). U.S. Envoy Says He Had Meetings With Iraq Rebels. March 26, 2007.

related posting
Is draft oil law cheating Iraq out of revenue? March 14, 2007.

posted: thursday, march 29, 2007, 12:19 AM ET
update: thursday, march 29, 2007, 12:22 AM ET

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Wednesday, March 14, 2007

Is draft oil law cheating Iraq out of revenue?

"The [Bush] administration has highlighted the law’s revenue sharing plan, under which the central government would distribute oil revenues throughout the nation on a per capita basis. But the benefits of this excellent proposal are radically undercut by the law’s many other provisions — these allow much (if not most) of Iraq’s oil revenues to flow out of the country and into the pockets of international oil companies.
The law would transform Iraq’s oil industry . . . into a commercial industry, all-but-privatized, that is fully open to all international oil companies.
The Iraq National Oil Company would have exclusive control of just 17 of Iraq’s 80 known oil fields, leaving two-thirds of known — and all of its as yet undiscovered — fields open to foreign control.
. . . Iraqis may very well choose to use the expertise and experience of international oil companies. They are most likely to do so in a manner that best serves their own needs if they are freed from the tremendous external pressure being exercised by the Bush administration, the oil corporations — and the presence of 140,000 members of the American military."

Op-ed by Antonia Juhasz, "an analyst with Oil Change International, a watchdog group." [1]

Ms. Juhasz raises a troubling possibility. I know little about oil or business, but why would Iraq agree to be cheated out of its oil revenue? While the Bush administration's ties to the oil industry are well-known, Congress and pundits from all sides had also been pushing Iraq to pass an oil law. What was their motivation?

I read through the oil law and it seemed OK. It had provisions for transparency, competitive bidding, royalties, taxes, etc. Article 9 said that model contracts would honor "national control," "ownership of the resources," and "optimum economic return for the country." But like I said, I know little about oil or business.

I look forward to another Op-ed piece (or adjustments to the draft oil law) that will address Ms. Juhasz's concerns.

source
Juhasz, Antonia. (The New York Times). Whose Oil Is It, Anyway? March 13, 2007.

resource
Draft Iraq Oil and Gas Law. February 15, 2007. (via the Oil Change International website).

posted: thursday, march 15, 2007, 2:12 AM ET

update: thursday, march 15, 2007, 2:23 AM ET

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Tuesday, March 13, 2007

Iraq's draft oil law should get more attention

"The recent hydrocarbon law, approved after much wrangling by Iraq's council of ministers, deserves a great deal more praise than it has been receiving. For one thing, it abolishes the economic rationale for dictatorship in Iraq. For another, it was arrived at by a process of parley and bargain that, while still in its infancy, demonstrates the possibility of a cooperative future. For still another, it shames the oil policy of Iraq's neighbors and reinforces the idea that a democracy in Baghdad could still teach a few regional lessons.
To illustrate my point by contrast: Can you easily imagine the Saudi government allocating oil revenues so as to give a fair share to the ground-down and despised Shiite workers who toil, for the most part, in the oil fields of the eastern region of the country? Or picture the Shiite dictatorship in Iran giving a fair shake to the Arab-speaking area of Khuzestan, let alone to the 10 percent of Iranians who are both Sunni and Kurdish? To ask these questions is to answer them. Control over the production and distribution of oil is the decisive factor in defining who rules whom in the Middle East."

source
Hitchens, Christopher. (Slate). Blood and Oil. March 12, 2007.

posted: tuesday, march 13, 2007, 8:09 PM ET


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Sunday, March 04, 2007

Draft oil law details

"· Reaffirms that oil and gas resources are owned by all the people of Iraq and contains a firm commitment to revenue-sharing among regions and provinces on the basis of population.
· Establishes a predictable framework and processes for federal-regional cooperation that demonstrate the government's commitment to democracy and federalism.
· Creates a principal policymaking body for energy -- the Federal Council on Oil and Gas -- that will have representatives from all of Iraq's regions and oil-producing provinces.
· Ensures that all revenue from oil sales will go into a single national account and that provinces will receive direct shares of revenue, thereby significantly increasing local control of financial resources.
· Establishes international standards for transparency and mandates public disclosure of contracts and associated revenue and payments. This is essential to build confidence in the new political order and to counter corruption.
. . . It also requires best practices in environmental protection and field management and development."

Op-ed by Zalmay Khalilzad, U.S. ambassador to Iraq.

source
Khalilzad, Zalmay. (The Washington Post). A Shared Stake in Iraq's Future. March 3, 2007.

posted: sunday, march 4, 2007, 9:12 PM ET

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Tuesday, February 27, 2007

Draft oil law approved by Iraq cabinet

"Iraq's cabinet approved draft legislation Monday that would enable the government to manage the country's vast oil resources and distribute revenue throughout the country, a step toward meeting a U.S. demand that the country's parliament pass such a law.
. . . The draft oil law, approved by Iraq's cabinet after months of intense negotiations, must still be approved by parliament. Ministers agreed to a goal of enacting the legislation by May, a senior Iraqi official said on condition of anonymity.
'If this law is enacted, it is truly an important breakthrough to establishing the political economy of what we want to see: an Iraq that is democratic, federal and united,' Barham Salih, one of Iraq's two deputy prime ministers, said in an interview.
The draft law calls for oil revenue throughout the country to be deposited in a federal government account and redistributed to Iraq's 18 provinces, most likely on a per capita basis, said Salih, the chairman of the negotiating committee working on the legislation. A secondary piece of legislation will address in more detail the mechanisms of revenue distribution, he added." [1]

"Distributing revenue by population is not guaranteed to placate the feuding parties because no accurate census exists.
. . . The minority Sunni Arabs, who ruled Iraq for decades before the toppling of Saddam Hussein and are now leading the insurgency, have chafed at rule by the Shiites and Kurds partly because they fear that those two groups might hoard oil wealth for themselves. Sunni Arab leaders have resisted attempts by the Kurds and some Shiite politicians to create laws allowing for greater regional autonomy.
The draft law says that all revenues from current and future oil fields will be collected by the central government and redistributed to regional or provincial governments by population, in theory ensuring an equitable distribution of profits. That method could help assuage Sunni Arabs hostile to Kurdish and Shiite autonomy.
The attitudes of Sunni Arabs could also soften if more oil exploration is done on their land. Iraqi officials recently increased their estimates of the amount of oil and natural gas deposits in Sunni Arab territory." [2]

sources
[1] Partlow, Joshua & Londono, Ernesto. (The Washington Post). Iraq's Cabinet Backs Contentious Oil Measure. February 27, 2007.
[2] Wong, Edward. (The New York Times). Iraqis Reach an Accord on Oil Revenues. February 27, 2007.

posted: tuesday, february 27, 2007, 11:58 AM ET


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Tuesday, February 20, 2007

Draft oil law to Cabinet; Oil, gas found in Sunni area

"A draft version of the long-awaited law that would govern the development of Iraqi oil fields and the distribution of oil revenues has been submitted to Iraq’s cabinet, the first step toward approving the legislation, two members of a senior negotiating committee said this weekend.
. . . If the cabinet approves the draft law, it would then be sent to Parliament for ratification. Parliament for the most part automatically passes laws that have been approved by leaders of the main political parties, which run along ethnic and sectarian lines." [1]

"Huge petroleum deposits have long been known in Iraq’s Kurdish north and Shiite south. But now, Iraq has substantially increased its estimates of the amount of oil and natural gas in deposits on Sunni lands after quietly paying foreign oil companies tens of millions of dollars over the past two years to re-examine old seismic data across the country and retrain Iraqi petroleum engineers.
The development is likely to have significant political effects: the lack of natural resources in the central and western regions where Sunnis hold sway has fed their disenchantment with the nation they once ruled. And it has driven their insistence on a strong central government, one that would collect oil revenues and spread them equitably among the country’s factions, rather than any division of the country along sectarian regional boundaries." [2]

sources
[1] Glanz, James. (The New York Times). Draft Law on Oil Money Moves to Iraqi Cabinet. February 19, 2007.
[2] Glanz, James. (The New York Times). Iraqi Sunni Lands Show New Oil and Gas Promise. February 19, 2007.

posted: tuesday, february 20, 2007, 6:03 PM ET


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Friday, January 26, 2007

Iraq could triple oil output, analyst says

"[Fadel Gheit, an oil analyst at Oppenheimer & Co] estimated that Iraq could easily produce 6 million barrels a day, more than three times its current output and enough to help keep a lid on world prices.
. . . [Iraq's proposed oil law] has taken on significance beyond oil. While Iraq and foreign oil companies are eager to tap new revenue, the Bush administration and many Iraqis also hope that the law can be a model for resolving disputes and can bind Iraq's warring factions together.
. . . [James A. Placke, an expert at Cambridge Energy Research Associates] estimated that 200,000 barrels a day is siphoned from the main export line through southern Iraq. . . . What's left after discounts and bribes goes to militias or insurgent groups, he said.
In the south, some local Shia militia, clan or clerical groups are trying to claim the rights to some Iraqi fields and a voice in negotiating access for foreign companies. . . . Some experts worry that, as in Sudan, oil could contribute more to tearing the country apart than to uniting it.
. . . The national petroleum law remains a touchy subject in part because of widespread suspicion that the U.S. invasion in 2003 was motivated by designs on Iraq's oil riches."

source
The Washington Post. Iraq Struggles to Finish Oil Law. January 24, 2007.

posted: friday, january 26, 2007, 12:25 PM ET

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Thursday, December 14, 2006

Iraq Study Group on federalism / responses / oil law nearing deal

"One core issue is federalism. The Iraqi Constitution, which created a largely autonomous Kurdistan region, allows other such regions to be established later, perhaps including a 'Shi’astan' comprising nine southern provinces. This highly decentralized structure is favored by the Kurds and many Shia (particularly supporters of Abdul Aziz al-Hakim), but it is anathema to Sunnis. First, Sunni Arabs are generally Iraqi nationalists, albeit within the context of an Iraq they believe they should govern. Second, because Iraq’s energy resources are in the Kurdish and Shia regions, there is no economically feasible 'Sunni region.' Particularly contentious is a provision in the constitution that shares revenues nationally from current oil reserves, while allowing revenues from reserves discovered in the future to go to the regions. *
. . . Iraq’s leaders often claim that they do not want a division of the country, but we found that key Shia and Kurdish leaders have little commitment to national reconciliation. One prominent Shia leader told us pointedly that the current government has the support of 80 percent of the population, notably excluding Sunni Arabs. Kurds have fought for independence for decades, and when our Study Group visited Iraq, the leader of the Kurdish region ordered the lowering of Iraqi flags and the raising of Kurdish flags. One senior American general commented that the Iraqis 'still do not know what kind of country they want to have.' Yet many of Iraq’s most powerful and well-positioned leaders are not working toward a united Iraq." [1]

"Devolution to Three Regions
The costs associated with devolving Iraq into three semiautonomous regions with loose central control would be too high. Because Iraq’s population is not neatly separated, regional boundaries cannot be easily drawn. All eighteen Iraqi provinces have mixed populations, as do Baghdad and most other major cities in Iraq. A rapid devolution could result in mass population movements, collapse of the Iraqi security forces, strengthening of militias, ethnic cleansing, destabilization of neighboring states, or attempts by neighboring states to dominate Iraqi regions. Iraqis, particularly Sunni Arabs, told us that such a division would confirm wider fears across the Arab world that the United States invaded Iraq to weaken a strong Arab state.
While such devolution is a possible consequence of continued instability in Iraq, we do not believe the United States should support this course as a policy goal or impose this outcome on the Iraqi state. If events were to move irreversibly in this direction, the United States should manage the situation to ameliorate humanitarian consequences, contain the spread of violence, and minimize regional instability. The United States should support as much as - possible central control by governmental authorities in Baghdad, particularly on the question of oil revenues." [1] *

"We have not recommended a division of Iraq into three autonomous regions, based on ethnic or sectarian identities, but with a weak central government. As a practical matter, such a devolution in our view could not be managed in an orderly -- on an orderly basis. And because Iraq's major cities are peopled by a mixture of warring groups, a disorderly devolution would likely result in a humanitarian disaster or a broad-based civil war." [2]

"This broader context made [Abdul Aziz al-] Hakim's soft words on Iraq's harsh realities the most important suggestions the president heard last week. As offered by the black-turbaned cleric in a series of public appearances in Washington and as supplemented by his aides, his view goes like this:
U.S. forces and the feeble central government do too little to protect Shiites. We can do that job ourselves if your troops get out of the way. That will clear the way for U.S. withdrawals while leading to the informal division of Iraq into three distinct autonomous regions. That is the only acceptable alternative to a strong central government controlled by the Shiites, which may no longer be in reach.
The Baker-Hamilton study group ruled out partition in any form. But the report trails events on the ground, as Bush is likely to have heard in his third high-level meeting on Iraq when he hosted British Prime Minister Tony Blair on Thursday.
In recent weeks British commanders have reported to London that Hakim's Shiite political party, the Supreme Council for the Islamic Revolution in Iraq, or SCIRI, has completed a gradual takeover of Iraq's south." [3]

"For all its deftness and honesty, the Iraq Study Group report flees the hardest choices and leaves us without a credible strategy. . . . The group’s gloomy assessment of the situation should have led it to a clear strategy aimed at limiting damage:
First, try for a federal or decentralized Iraq with oil-revenue sharing, as its Constitution provides. Only federalism can prevent partition, though everything’s a long shot now.
Second, provide means, protection and funds for Iraqis wanting to relocate for safety. It’s the only way to stop ethnic cleansing.
Third, make common cause with Iraqi Sunni Baathists, Saudis and others to crush the terrorists in central Iraq. Once our troops start to leave, we can establish this clear common interest, and the Baathists will do a better job than we.
Fourth, ally diplomatically and economically with Iraqi Shiites, who are, after all, Iraqis and Arabs, not Iranians and Persians, and who don’t want to be ruled from Teheran." [4]

footnote
* "Iraqi officials are near agreement on a national oil law that would give the central government the power to distribute current and future oil revenues to the provinces or regions, based on their population, Iraqi and American officials say.

. . . The major remaining stumbling block, officials said, concerns the issuing of contracts for developing future oil fields. The Kurds are insisting that the regions reserve final approval over such contracts, fearing that if that power were given to a Shiite-dominated central government, it could ignore proposed contracts in the Kurdish north while permitting them in the Shiite south, American and Iraqi officials said.
. . . The Kurds recently discovered two new oil fields after signing exploration contracts with a Turkish company and a Norwegian company." [5]

sources
[1] The Iraq Study Group Report. James A. Baker, III, and Lee H. Hamilton, Co-Chairs. December 6, 2006. (U.S. Institute of Peace). pp. 19, 31.
[2] Iraq Study Group Press Conference Transcript. December 6, 2006. (U.S. Institute of Peace). p. 8.
[3] The Washington Post. Meanwhile, Reality In Iraq. December 10, 2006. (Jim Hoagland).
[4] The New York Times. Find New Allies. December 10, 2006. (Leslie H. Gelb).
[5] The New York Times. Iraqis Near Deal on Distribution of Oil Revenues. December 9, 2006.

posted: thursday, december 14, 2006, 9:52 AM ET
update: thursday, december 14, 2006, 10:01 AM ET

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