Iraq has little interest in pushing oil law forward -Janabi

Julia Payne
Reuters Middle East

* Iraq further from oil law, needed as disputes deepen

* 5th licensing round delayed due to unrest

* Says Baghdad's black list counter-productive

LONDON, Feb 7 (Reuters) - Iraq is not likely to pass a

hydrocarbon law anytime soon as the government has little

interest in pushing a draft through parliament, the head of

Iraq's parliamentary oil and energy committee said in an


Oil is at the heart of a dispute between Iraq's central

government and the autonomous Kurdistan northern region, which

has been gaining more economic independence and eroding

Baghdad's claims of authority over exploration and exports.

A draft for the unified Iraqi hydrocarbon law to resolve the

issue has been under discussion in parliament since 2007, but

infighting among the country's Shi'ite, Sunni, and Kurdish

factions has so far scuttled attempts to pass the legislation.

"It is at the bottom of the government's list. The

centralists of the ruling party have no interest to sustain a

federal policy or pass a federal law," Adnan Al-Janabi, a

leading Sunni figure, said.

"Therefore the government and IOCs (independent oil

companies) will continue the risk of working in a legal vacuum."

Despite the absence of an oil law, foreign oil companies

have signed contracts throughout Iraq. But all involved in the

development of Iraq's energy sector would breathe easier if

legal guidelines were in place.

Janabi's comments reflect renewed tensions as thousands of

Sunnis take to the streets to call for Shi'ite Prime Minister

Nuri al-Maliki to step down and to protest that Sunnis are being


Janabi is a member of the Sunni-backed Iraqiya party, which

is opposed to Maliki but is also part of a fragile power-sharing

agreement that splits government posts between Shi'ite, Sunni

and ethnic Kurds.

Kurdistan, claiming constitutional rights, has further upset

the central government by signing deals directly with oil majors

such as Chevron Corp and Exxon Mobil, offering

lucrative production-sharing contracts and better operating

conditions than in the south of the country.


Iraq has been black-listing companies that enter the

northern enclave and has threatened to sue those that buy oil

directly from the Kurdish region, whose shipments it deems to be

smuggling. Such calls have shown no real results, however, as

Kurdish light oil attracts more buyers.

Despite being black-listed, Trafigura is still indirectly

supplying gasoline to Iraq through another firm.

Janabi said abandoning the black list could reinvigorate oil

majors' interests in investing in southern Iraq. In that case,

"IOCs could work to balance their investment portfolios across

the country," he said.

"The priority is to have a federal hydrocarbon law in place

to safeguard the interest of IOCs and the sustainability of the

production plans in Iraq."

Following threats to black-list Exxon Mobil, Maliki's

government appears to be changing tack. It recently offered

Exxon Chief Executive Rex Tillerson incentives to completely

abandon its Kurdish blocks and stay in the south.

Should Exxon abandon the north, the deal could set a

precedent for later licensing rounds in the south as well as

increase competition between Baghdad and Kurdistan to attract

oil investment.

A fifth Iraqi oil licensing round has been in the works but

will be delayed by the unstable political situation, Janabi


"Iraq is in the middle of political and security turmoil.

The fifth licensing round is far from possible before resolving

the current unrest."

While Exxon Mobil's decision on Iraq appears to be a few

days way, the Kurdish Regional Government is already moving

forward with negotiations to award more oil blocks.

The KRG's energy minister, Ashti Hawrami, said last week he

expected to announce new deals with major oil companies in about

a month.

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