Al-Ghad

by Fouad Al-Amir

(translation from the original Arabic with thanks to Raed Jarrar)

In the following notes, I wish to discuss the oil and gas law, dated on January 15, 2007, originally written in Arabic. My notes are based on the English draft presented by Farooq Al-Qasim, Thamir Al-Ghadhban and Tariq Shafeeq on July 2006 – which, apart from some points, could almost be considered the same as the Arabic version. The Arabic draft of January 15, 2007, refers to three annexes that are not included in the draft I have in hand. Those annexes are very important and actually part of the law. Despite the fact that all international agencies and newspapers said the Cabinet has approved the law and will pass it soon to the parliament for ratification, and that CNN said in its Arabic news bulletin, on January 28, 2007, that the Iraqi Parliament is scheduled to discuss the constitution draft on February 10, it is quite surprising to hear some of those concerned with this law claim the annexes have not been finished to this day (i.e. January 27, 2007). No one can accept the claims that they are unfinished until now. The only reasonable possibilities are either the annexes do exist but need to be approved by higher authorities inside or outside Iraq, or that they are complete and approved but those responsible would rather pass them under the table. There is also the, albeit, slim chance that the bill was passed to the national assembly without the annexes! Mind you, the English draft above had no as well. The secrecy and attempts to pass the law as if it were any other ordinary bill not only do they baffle, they also invite questions about what could be hatched in the dark and could place officials under serious and legitimate doubts.

Through a number of sources I laid my hand on a copy of the law I am discussing here. To the best of my knowledge, this bill is the final version and it is the one that will be passed to the national assembly. Once changes occur, notes will be changed accordingly.

Elaborating the notes is something more than just a word-for-word discussion of the bill’s articles. In order to guarantee an objective debate with references to my own observsations, the conditions in which the bill was penned, whether Iraq is in need of such a law now or in the near future, and what it should be like, have all been included in the debate.

My notes are as follows:

1. I think the Regional Government of Kurdistan’s take on the issue has a lot to do with the postponement of passing the bill to the national assembly. By the time the oil ministry spokesman said an agreement has been reached over the form of the bill between the central government and that of the Kurdistan region, international agencies and newspapers quoted Kurdish officials’ comments denying their approval of the bill. For instance, Mr. Ashti Hawrami, Minister of Natural Resources in the Kurdistan region (quoted in Al-Quds Al-Arabi January 1, 2007 , quoting the Financial Times), said, “No, we have not signed off on a draft of the proposed hydrocarbons law.” He also added “Several issues are not still resolved. The Ministry of Oil statement is unfortunately premature.” On January 31, 2007, Radio Sawa quoted Minister of Regions’ Affaires Mr. Muhammad Ihsan as saying, “The hydrocarbons law has not been decided yet… the differences hinge on the mechanism of signing off contracts in the Kurdistan Region and the role played by the oil ministry, the Regional Government of Kurdistan has not approved of the current bill.”

2. It is important to study the oil law draft. In the course of the notes, we will refer to it as “the Federal Law” in the light of the bill that was issued in the Kurdistan Region on September 9, 2006, which we will refer to as “the Regional Law”. It is quite important to study the Iraqi constitution and the insights of the committee drafting the “Regional Law”, particularly the articles concerned with oil and Kirkuk. Both laws had not been enacted simultaneously because there are major differences between them. Either the constitution or the two laws must be amended, especially “the Federal Law”.
Those issues might pose challenges for the provinces or the “next” federal regions if they want to have their own oil laws as is the case with the “Regional Law”. Practically speaking, this is what the permanent constitution allows for the regions or provinces. Obviously, any law enacted for provinces or regions must not contradict the “Federal Law”, otherwise tremendous chaos and production competition would ensue, and oil resources for this generation and generations to come would be wasted. A “Federal Law”, on which all the other laws depend, includes clear articles stipulating that the central government is in charge of deciding the way the hydrocarbon resources are used and has the final word on all the regionally and federally signed contracts. The question is, “is this possible in the light of the articles of the current constitution?”

3. What does the Iraqi constitution say in this respect?
Regarding the issue above, I would like to explain the following:

The interim constitution “Law of Administration for the State of Iraq for the Transitional Period” stated on the natural resources: Article (25) of the exclusive competence of the transitional government includes (E) which says managing natural resources is one of the “exclusive” competence of the interim government. B of Article (26) reads “Legislation issued by the federal legislative authority shall supersede any other legislation issued by any other legislative authority in the event that they contradict each other, except as provided in Article 54(B),” which pertain to the Kurdistan Region. The content of this article is crystal clear; it confirms the fact that it does not include the matters referred to in Article (25) of the excusive competence of the interim government.

The permanent constitution is totally unlike the point above, which is as follows:

4.Magnitude and Importance of Oil Resources:

The magnitude of the oil resources the “Federal Law” is referring to and the current and future conditions surrounding the oil market in the world reflect the importance of scrutinizing the law and not hastily passing it under the table or under any pressure or occupation’s influence, which will be benefiting the most off this law. Besides, Iraq has been going through dire social and security problems which does not make coming up with sound resolutions possible.

4-1) Figures the law is talking about:

Iraq’s fixed uncovered oil reserve is estimated to reach 115 billion barrels. Experts believe the actual reserves are much higher. After inspections, Iraq’s oil reserve could reach 250 billion barrels.
We are talking of 115 billion barrels in 71 oil fields, only 24 of which are currently used. The known oil reserve is in the neighbourhood of 70 percent.
The uncovered oil fields since order 80 of 1961 (which nationalized all the lands that were not used by the international companies at the time), were found by Iraqis who worked alongside contracted Russian, French and other foreign companies, who were providing technical support. Baghdad Pact, which was doomed the day it was born in the late 1960s tried to twist order 80 and involve foreign companies. The current law is doing just the same.
Below is a table that includes information about ten uncovered and unused oil fields. They will be used as an example on the oil resources for sale according to the Federal Oil Law.

The table shows the huge size of the resources in those ten oil fields alone, which have not been used and will be announced according to this law.

If the current oil price is 50 USD/barrel (which is 20 dollars less than early last year’s), the total revenues of the ten oil fields would be $3782 billion and $55.3 billion of annual revenue. If we increase the revenue to 60 USD/barrel, which is quite possible, those fields would reach $3782 billion and $66.4 billion of revenues. Common sense says that we should divide a revenue rate of 80 USD/barrel by the production life-cycle, which, at best will resume in the second decade of the 21st century. So the ten oil fields will be worth $5016 billion and $88.5 billion of annual output. Those figures are related to the 62.7 billion barrels, not the uncovered and unused reserves.

Hence, it shows that we are talking about big money that is involved in the proposed law. This should make us wary of our serious responsibility towards history, which should make us come up with the right decision over the law that will be enacted, based on the worsening political, economic and security situations in Iraq, let alone the corrupt officials, who, as acknowledged by the Integrity Commission, have penetrated into all aspects of life. Moreover, all the decisions made by all the Iraqi governments will be under the mercy and pressure of the large oil companies owned by the occupation, whose limitless capacities is capable of buying people’s conscience. Therefore we cannot let such a law pass, we must keep a watchful eye and warn against the drawbacks of this law.

4-2) All politicians, economists and specialists are aware of the fact that the world’s oil resources are running dry and they will have to cut production rates, because oil will be quite scarce by the mid 21st century. The world’s fixed oil reserve has reached 1100 billion barrels, which will do for no more than 40 years to come, if we keep the current consumption rates. The majority of the new reserves were uncovered about 30 years ago. Despite the thorough and constant investigations, the reserves that had been uncovered on a yearly basis throughout the past two decades do not even cover half the annual consumed quantity, i.e., we are using the oil that had been uncovered earlier. It is not expected to uncover more than 20 percent of the current reserve. When will oil production reach its peak is the question that has caused disputes. In other words, when will oil producers find themselves forced to reduce the daily production rate because oil fields cannot provide enough. This could last until 2010 to 2015, though some optimists believe it could last to 2020. Acting according to the global warming Kyoto Protocol, in which carbon dioxide emission could be reduced, could help us last to 2020.

Oil will be priceless. If OPEC could survive and coordinate with the other major producers such as Russia, prices will skyrocket and even if they drop, no serious problem would loom, it will be in sync with rationing production rate and limiting the OPEC exports quota. It is key to not yield to the industrialized states, the U.S. topping the list, which will advocate increasing products in the market as Saudi Arabia used to do. Presently, Saudi Arabia does not have the capacity to flood the market; its production rate is at its peak. The only state that could do so is Iraq. Yet, if it does, it will be the first to drown, it would make prices drop, and Iraq will not earn high revenues despite the massive production rate.

5) Investments and the required production:

Granted good faith exists amongst the Iraqi officials who wish to pass the oil law, which includes Iraqi and foreign investments through “Sharing production contracts”, we will see later they base their argument on the massive need for high-tech investments to upgrade the Iraqi oil fields, something the rundown Iraqi economy is unable to provide. They also talk of the rapid expansion in production because the Iraqi economy is in a desperate need for cash to manage the Iraqi budget. Therefore, we must respond to these claims through the following notes:

5-1) In November 2004, the former Prime Minister Ayad Allawi laid down an oil policy that could be summed up like this; the present oil fields are run by the state of Iraq (The National Oil Company). The new fields will be used with the help of private local and foreign investments, without involving the State’s funds. He also laid down a production plan, in which he emphasized the need to reach a daily crude oil production rate as high as 3.5 m barrel/day, which was the case earlier. This could be done within the present fields and as quickly as 2 years from the date the policy was proposed in November 2004. Afterwards, production capacity could be increased to reach 8-6 m barrel/day within five to seven years. This policy was doomed the day it was proposed due to a majority of No votes among Iraqi political powers. Also, international companies were not in favour of investing in the light of a temporary policy with no legal guarantees.

When we talk of increasing production rate, we must dwell on the talks held before the invasion between the U.S. State Department and Iraqi and international experts. International newspapers talked about indications for U.S. plans to take over the Iraqi oil, destroy OPEC and breach OPEC’s so-called Price “Monopolizing” Policy. One of those indications is a statement made by Archie Dunham, CEO of the oil giant Conco Philips before the invasion, “we know where the best oil fields are located; we wish to lay our hands on some of them.” Shell, too expressed its intentions to be physically present in Iraq. A large number of Iraqi experts opposed the destruction of OPEC and emphasized on keeping the organization to maintain Iraqi rights and empower prices. Thus, the U.S. policy has not resorted to overt attempts to destroy OPEC. Rather it contrived to encourage Iraq to increase its production rate, which would consequently flood the market, whether by itself or alongside Saudi Arabia. Presently, the industrialized states are pressuring Saudi Arabia to raise the prices from 50 to 55 USD/barrel, regardless of other OPEC members’ disapproval, who want the price to range from 60 to 70 USD/barrel.

The oil market is still sensitive to supply and demand. OPEC’s increase or decrease of supplies to 0.5-1.5 m barrel/day could keep the prices fixed. In early 2006, oil prices have reached 75 USD/barrel. Nowadays, it has dropped to 52 USD/barrel. For long periods of time, the price kept staggering around 60 to 65 USD/barrel.

In 2006, the OPEC price limit was worth 22 to 28 USD/barrel. Owing to the fact that the organization had intervened to prevent a price downfall, which by the late 1980s reached 10 to 20 USD/barrel. In the 1990s, the average price was 15 USD/barrel, at times it dropped to 10 USD/barrel. In 2004, prices leaped to $40-50, in 2005 $60 and then to 70-75 USD/barrel. Neither Saudi Arabia nor any other oil producer was able to flood the market. By 2005, the latter reached the peak of its production capacity of 9.5-10 m barrels. Moreover, prices were on the rise due to massive and ongoing increases of imports to China and India. Also, the emergency fuel reservoirs in the industrialized states, particularly in the United States, were on the increase as well. Throughout the past three years, it has become clear that oil products have limits, whether now or in the future. Practically speaking, it is not possible to flood the market as before. Saudi Arabia has been working hard to increase its export capacity to 12 million (instead of today’s 10 million) within three years. The Gulf States are trying to have a 2 barrel/day increase. Yet those increases are not enough to cover the expanding consumption (particularly in China and India), the oil depletion in the North Sea and Alaska and the incompetence of Azerbaijan and Central Asia to expand.

5-2) What is the proper policy for production plans?
In my view, the proper annual production and exported quantities are quite sufficient now to provide annual cash, only when the Iraqi government spends the money on upgrading the industry, development plans and covering the Iraqi budget.
For instance, with a 3 million barrels/day exporting capacity, if the revenues are 50 USD/barrel, the annual sum the Iraqi government receives would be $54.75 billion. If the price is 60 USD/barrel, which is exactly what the OPEC should do (particularly Venezuela, Iran and Libya) the annual revenues are estimated to reach $65.7 billion. As far as I am aware , Iraq’s expenditure will not exceed this figure within the next five years based on the fact that the defence budget, which receives more than half the State’s budget, will be dwindling. Furthermore, when security is restored and foreign investors are allowed to do business in the oil industry, like refineries, oil products marketing, petrochemicals and chemical fertilizers (which are exempted in the Federal Law, but included in the Regional Law as will be explained later), there will be high-priced foreign and local investments alongside the aforementioned figures.

After developing new fields, if the exporting capacity is 5 million barrel/day, which are expected to start producing five years from now with a slight average of 60 USD/barrel in revenues, since in five years’ time, the annual revenues are estimated to worth $110 billion or $153 billion if the price is 70 USD/barrel. Yet, if we follow the former Prime Minister Ayad Allawi’s plan, which is exactly what the occupation and international companies have in mind, the annual revenue could reach as high as $175 and $204 billion U.S. Dollars. With the foreign investments at hand, the Iraqi State cannot spend such large amounts of money. Though this could lead to a massive monetary reserve, which means spending trends could emerge. As was the case during the Baathist reign the military and security agencies could be allotted large sums of money. More could be squandered on unnecessary services. Creditors could rush to get hold of their alleged debts. Most importantly the imperialist superpowers will start new wars and drag Iraq into them, which would fleece the state to undermine it just like what happened to the Gulf States.

The drafting committee which had penned the Federal Law could argue that “we are expanding the exports” and at the very same time an article of this law stipulates the production of foreign investments must be rationed according to the needs and plans of the State of Iraq. Which is pretty funny; why should we expand production and indulge foreign capital in this vital industry and run the risks of high debts? And then we do not make use of this exporting capacity, which, once used, the world’s oil prices will drop and we will earn less revenues, which we could easily get with the production rationed. Besides, we will have problems with international companies, which entail other problems with their governments, who will oppose cutting production rate. Of course there will be political, economic and military pressures, lavish bribes will be paid, corruption will prevail to make the Iraqi government and officials turn a blind eye on totally or partially rationing production.

This proves the fact that expanding production is against the interests of Iraq. The optimum solution is to gradually increase the production capacity according to a timetable set by reasonable spending, taking into account the encouragement of foreign investments (with Iraqi public or private contributions) in the oil non-production-related industries and others like manufacturing and developing agriculture and services. Russia is an eye-opening example. During Yeltsin’s rule, the Russian government permitted oil investment. At the time, corruption prevailed and mafias controlled the government’s decisions, which impoverished the Russian people. Putin’s government tried to correct these mistakes by renationalizing the oil production lines. He even said, “We will allow foreign investments in all sectors except oil production and gold digging.”

We deduce from the above that the Iraqi government must return to its old production state. Within the three coming years, exports could be gradually increased from 1.9 to 3.4 million barrel/day. The uncovered and undeveloped fields could be upgraded with the exports revenues, without having to involve foreign or Iraqi private sector companies in order to climb up to 6 million barrel/day. Coordination could be made with OPEC to act according to the Iraqi quota and talk the organization into increasing the quota on the expense of the other members because of the different situation Iraq has been going through. If extra money is needed, which is unlikely, borrowing can be made from banks or states that are in a bad need for a guaranteed source of oil such as China, India, Asian States or even Europe in return for oil exports.

5-3) Problems of the required investments:

To reach an exporting capacity of $3.4 billion divided on two or three years we need less than $4 billion. In other words, our annual need ranges from $1.5 to $2 billion. This could be made available from Iraq’s current revenues. During this time, other fields will be gradually upgraded by the National Oil Company. According to the aforementioned table, we will need $20.6 billion to increase production to another 3 million barrel/day. It could also reach 25 billion falling into five or six years, i.e. an average of 5billion USD/year. Money could be obtained from the increasing export rate, on the assumption that the international market is not flooded or it could be taken from loans borrowed from states that wish to have a guaranteed oil supply.

It is worth noting that we are against involving any foreign or local private capital in the oil industry. Foreign investments though could be used in post-production processes or in small uncovered fields or potentially oil-rich lands. Economy-wise, when it comes to comparing offers and signing off contracts for oil-rich areas, it is better to do business with state-owned companies of Asian or European origin that are in a desperate need for oil. Steering clear of American companies is advisable given the fact that they could cause non-stop problems for Iraq. The oil companies lobby in the United States is so influential that could mobilize governments against any demands made by a democratic Iraqi government to make changes to contracts that could serve the Iraqi interests. With such conditions, Iraq will always have problems with the US, undergo threats of war, boycotts or rifts, because we are living in the epicenter of the restive Middle East. Reading Daniel Yergin’s book “The Prize” gives an idea of what U.S. oil companies could do. They actually run after the giant oil fields that we think should be run by the Iraqi government. They will do whatever it takes to make sure the foreign investment law applies to giant oil fields. The U.S. administration is so weak and constantly tries to avoid any accusations over oil as their only motivation for waging the war in Iraq. Some could argue that Saddam had given giant fields to foreigners, like Majnoon to France, Western Gurna to Russia and Al-Ahdab to China and so on. It was wrong as well, but Iraq had reasons at the time, the Iraqi government thought that by doing so it could influence the Security Council to end the sanctions. It was more like bribes on a governmental level. By and large, these contracts have not done the trick.

This paragraph is an attempt to bring to an end my comments on the need for investments and the too much talk about how it could upgrade Iraq’s oil fields and how difficult it is to borrow money to carry out such projects. I already referred, in passing, to several solutions but I will elaborate on the most reasonable of the lot, in my view, which could be of use to both oil managers and the Iraqi State. It is pure and simple and based on the assumption of a dire need and vested interests between the borrower and the lender, as in the following hypothetical example:

Suppose, ‘A’ (Iraq) owns a very important substance which is very much in demand particularly in the near future (oil). ‘A’ does not have enough money to produce oil; once he starts producing and exporting he will have plenty of money. Meantime, another one in the world ‘B’ (China) has a surplus of cash that is worth much more than the local and international investment opportunities. China has to buy massive amounts of oil (it is currently consuming 7 percent of the world consumer rate). China’s consumption of oil will be on the increase. Once B gets into a luxurious era, the needs to buy cars, transports and energy and build a strategic reservoir would emerge. It has limited resources and has to rely on exports. It is now buying oil at international rates. Sometimes it exerts tremendous efforts to get hold of it, even if it has to pay a bit more than the usual prices. B is aware of the fact that it might need to cover its future needs by buying at prices much higher than the international ones because of political and economic factors that are in favour of its opponent the U.S. therefore it needs oil to flow now and in the future and to be sold at international rates. Moreover, when it gives the loans to Iraq, B needs to make sure it will get its money back with interests, just like the case with international banks and guarantee Iraq’s oil.

Thus, we see how the borrowing equation works between China and Iraq. Both governments could sign treaties, according to which Iraq asks China for a loan, and China works on developing one of the finest oil fields (like Al-Ahdab, which had been given to it earlier). The loan is to be returned with interest as well as a small premium percentage (1-1.5 percent). The treaty includes a regular contract for providing technical services (i.e. Iraq buys material and services from China) which could be an encouragement for the latter. The treaty also stipulates that after the termination of the works, debts are paid off in the form of oil. It could be for the best of Iraq’s interests to increase the exports in order to accelerate the payback. Even when the entire debt is paid, the treaty guarantees an Iraqi oil flow to China at international rates (Iraq’s standard prices) for ten to 12 years to come. This way Iraq’s problem is solved. It will start working directly, preserve the nationalized oil and steer clear of sharing contracts. Rather the contracts will all be based on providing regular technical support. Selecting China or any other similar state could make sure none of the international companies would stick their noses in Iraq’s domestic affaires. By the same token, it could also keep China rest assured for the fact that it is doing business with a small country like Iraq instead of the international companies. China is currently working on developing such treaties with Iran, Saudi Arabia, Venezuela and India. It is also looking for oil in Africa. Though China has been looking all over the world for oil sources, it will not find a place better than Iraq, given the fact that there will be a huge uncovered field like Al-Ahdab. Similarly, Iraq will find several funding resources in Asia and Western Europe, but China would be the best of the lot. The Iraqi government and the oil ministry did want to develop the fields without signing off sharing contracts. All they need is look for such funding resources and make them a success. Consequently, Iraq’s oil fields would be maintained and the nationalization law is kept unscathed.

6) The Oil and Gas law no. /2007

In the course of this paragraph, we will try to explain the Federal Law and dwell on the Regional Law when necessary.

6-1) It is worth noting that political and economic incentives were behind accelerating the law, which emphasizes involving foreign investors in the oil industry, which is not stipulated in the laws at play. Oil has been nationalized and all oil-related processes are run by the public sector. Controlling oil is the reason behind the occupation and the U.S. presence in the region. The United States of America cannot consider Iraq an official colony so that it can go right ahead with investing. That is why it wanted Iraqis to come up with a law that could abolish all the previous nationalizing laws, which had not been enacted without counter imperialism deadly struggles. Since the early days of the invasion to this day, America has not been able to lull Iraqis, even their staunchest allies who were in favour of privatizing the oil sector, into doing so. In September 2003, a Foreign Investment Law was drafted. It was passed under the table during the reign of the former Governing Council, in which the oil sector was exempted. Article 6A says, “Foreign investment may take place with respect to all economic sectors in Iraq, except that foreign direct and indirect ownership of the natural resources sector involving primary extraction and initial processing remains prohibited.” Despite the exclusion, this law was doomed; Iraqis voiced their resentment to it through articles, seminars and local newspapers, let alone the fact that it does not have legal grounds, for it was passed through an unelected “Iraqi” authority, which is deemed illegitimate. Furthermore, the bad security situation makes it impossible for investments, even those who claim the legality of this law agree on that. Then the former Prime Minister Ayad Allawi (who has been so close to the Americans) in November 2004 came up with what he called “Outlines for Iraq’s new oil policy”. According to his policy, Allawi tried to begin with signing contracts with foreign companies. Claiming that this was included in the powers bestowed upon his government, he insisted on going ahead with the plan despite the public disapproval. Even the companies in question greeted it with dismay, for it was nothing but a dead letter, given the fact that the government lacked legitimacy. During the reign of the elected government in late 2006, resolutions permitting foreign investments, except the oil sector, were taken by the Kurdistan Parliament and the Federal Parliament. Typically, the foreign investment law was passed to the Federal Parliament without submitting it to public scrutiny. The bill was announced only after the final voting on it, and so it was passed under the table. Dubious plans to pass the oil bill are underway and shrouded with secrecy.

One thing begs the question; why the rush when it comes to enacting the oil law and setting a deadline for the need to have it done? Had it been a matter of just increasing the export capacity, it is possible to work on the currently functioning fields to get back to the old 3.5 million barrel/day capacity without having to come up with a law or involve foreign investment. Had it been the need for new refineries, which goes without saying, it is possible to do that without drafting such a law, or through the foreign investment law, with the consensus of the Iraqi people. The only clear answer comes from recent American officials’ statements. In January 2005, the international Monetary Fund stated that the IMF staff emphasizes the need for pressures towards structural monetary reform, which include urgently drafting a new oil law. In July 2006, U.S. Secretary of Energy Sam Bodman confirmed that Iraqis need to enact a new hydrocarbon law, according to which foreign companies could invest. Condoleezza Rice too said, in October 2006, that what Iraqis need is the hydrocarbon law because petrol is the largest resource of income to this government and that all Iraqis must believe that oil will be used for their own interests, not for the interests of the sectarian parties! It seems Condi does not have the faintest idea about Iraqis’ concerns. Concurring with her is the U.S. Ambassador to Iraq Zalmay Khalilzad, who in November 2006 claimed that they were helping Iraqi leaders to complete their pact and that the basic political powers need to make tough decisions within the coming weeks…enacting the oil law could make Iraqis share the revenues in a way that could unify the country, which is extremely important. The Americans have tirelessly tried to impose the oil law, David Satterfield, Senior Advisor to the Secretary of State and Coordinator for Iraq emphasized, in November 2006, that Iraq must enact a national law for hydrocarbons, which will guarantee equitable distribution of the national resources amongst Iraqis, which could ensure large-scale investment in this sector. The Baker (Republican) -Hamilton (Democrat) Commission, which represents the institutional side of the American government, had not forgotten to touch on this issue. Their December 2006 report says, “The U.S. government should provide technical assistance to the Iraqi government to prepare a draft oil law that defines the rights of regional and local governments and creates a fiscal and legal framework for investment. Legal clarity is essential to attract investment.” It also says, “The United States should encourage investment in Iraq’s oil sector by the international community and by international energy companies.” It also asks President
Bush to make public statements that reject the notion that the United States seeks to control Iraq’s oil.

The U.S. policy has failed in Iraq. Though they succeeded in destroying Iraq and driving a wedge between its countrymen, their power was not strong enough to apply their imperialistic schemes. Now they found themselves forced to find an “honourable” exist strategy from Iraq that could “save their face”. The U.S. Administration believes that it is the right time to pass the oil bill. They do not have enough time to wait, particularly with the domestic U.S. pressures, whether the Democrats win the mid term elections (only because of Iraq) or because a lot of Republicans abandoned the Bush policy, which has tarnished America’s reputation. The situation in Iraq has taken its toll on Iraqis, who have repeatedly voiced their indignation (even those who once welcomed the occupation). As far as the Americans are concerned, this dismal situation could help pass this law, particularly if the process is shrouded in secrecy. Unfortunately, the Iraqi government and some political powers have linked their future and that of Iraq with the American occupation, which they want to appease and support. They are ready to compromise key issues that could be solved later as they have been lead to believe. In addition to that, the international economic institutions linked to the United States and the pro-globalization institutions (immoral capitalism) like the IMF, the World Bank and the U.S. Treasury, all those are working on incorporating openness into the Iraqi economy during this dismal situation. They have threatened to not write off Iraqi debts and not offer help. Mind you, Iraq’s biggest debt comes from the war compensations to Kuwait, which have not been written off despite the ongoing bloodletting and the difficult living standards we have been facing. Iraqi laymen wonder when they will be compensated for damages caused by the occupation.
Bush wants to achieve a strategic victory through passing a law that could lead to the end that brought him to Iraq regardless of the reasons he declared. Despite his military and political defeats, he will get oil. Enacting the oil law and translating it into signed contracts must be a fact before the termination of his term in office. The contracts may not get into force now, but the law ensures the implementation later. This is why the duration articles in the Federal Law were made lengthy and flexible so that they could be extended. Besides, the law must be passed through the current government and parliament. The Americans might need to replace the government, if the crackdown fails, which is quite expected. When the chips are down, a national salvation government will be declared. It will abolish the constitution, declare two-year martial laws, and dismantle the parliament, just like Ayad Allawi said on American TV. When that happens, there will not be a legal cover to pass the law. Bush and the American oil companies, which are responsible for bringing him to office, said they wanted the oil drilling processes, in particular. They are after “THE PRIZE” This reminds us of a Sunday Star Times editorial, which said, “For the international oil companies, Iraq is the uncaught gem on the Middle Eastern crown.” We think Bush and the American oil companies will not be able to get THE PRIZE or the GEM. The law they want to pass under such conditions would harm Iraq’s interests and Iraqi’s oil processes-related expertise. Passing the law cannot be done at a time Iraqis cannot decide their own and the next generations’ fate under the rule of the occupation, with insecurity, poverty and corruption spreading like wildfire. Therefore, Iraqis will work hard on abolishing it regardless of all the criminal disputes the occupation has hatched.

6-2) Forms of oil fields development contracts:

In order to understand the articles of the law, we need to briefly dwell on the methods in which oil fields development projects could be implemented. By and large, the methods fall into three types. Within these, we find sub-types that we will touch on without getting into details.

6-3) Texts of oil law under discussion:

Despite the fact that I already said there is no need or ability to enact the oil law under the current conditions in Iraq, I will comment on the proposed bill.
My notes are as follows:

The above proves that enacting a federal oil and gas law now is not necessary for Iraq; it is pressured to serve some foreign agenda. A Federal Law must be enacted once all the problems above are solved and under normal circumstances, when Iraqis are security-wise and psychologically able to make sound decisions.

Fouad Qasim Al-Ameer