The New York Times is reporting this morning that Iraq's Oil Law is close to completion and has some info on how the law looks so far.
The draft law would also radically restructure parts of Iraq’s state-controlled and often lethargic oil industry by giving wide independence — possibly leading to eventual privatization — to the government companies that control things like oil exports, the maintenance of pipelines and the operation of the oil platforms in the Persian Gulf.
The following is a breakdown by points, restructured a bit, and primarily the words from the article:
- The draft comes down firmly on the side of central oversight, a decision that advocates for Iraq’s unity are likely to trumpet as a triumph.
- Negotiators said that the final weeks of wrangling on the draft focused on a federal committee (Federal Oil and Gas Council) that will be set up to review the oil contracts, and in its current form, the draft law avoids the word “approve” and in effect gives the committee veto power.) The federal council would simply be called upon to endorse that plan or send it back for revisions. But the committee must make its decision based on specific guidelines, like a directive to maximize profits for Iraq and to keep the contracting process transparent, Mr. Shahristani said. And there are other checks and balances written into the law.
- Regions may be able to initiate the process of tendering contracts and by drawing up an exacting set of criteria to govern the deliberations of the committee rather than simply relying on its independent discretion.
- The law would place substantial administrative authority outside Baghdad by allowing any region that produces at least 150,000 barrels of oil a day to create its own operating company. While the regions can propose their own deals, they will have to work with companies that have been “pre-qualified” in Baghdad.
- The draft law also specifies that technical experts in the oil ministry are to be included in the process at all levels. It is the ministry, for instance, that will be called upon to write a plan for which oil fields will be developed and drilled first, and which ones will follow. The oil ministry would also be closely involved in developing “model contracts” to be used as templates at all levels of Iraq’s oil industry.
In the article, and as Jerome has mentioned before:
The developments come with several additional cautions, not the least of which is that in Iraq’s chaotic wartime environment, even laws that do get passed can have little impact on the street. In one example of a document arrived at through similar negotiations, Iraq’s constitution, it remains unclear what effect, if any, many of the fastidiously negotiated clauses are having in the governance of the country.
The implications for plundering, big oil, colonialism "international companies" come last:
Having an oil law will lay out the rules of the game in Iraq and in principle make it easier to attract international companies with the resources and expertise that the country so desperately needs. Still, hovering over all the negotiations is the question of whether companies will want to come here with Iraq in its current state.
Mr. Shahristani, for one, says that because of the financial stakes, companies are already reaching out (ed. note, The Financial Times wrote recently that Oil groups dream of day they can enter Iraq ($$).)
“The international companies keep contacting me, every week, without exception,” Mr. Shahristani said. “They are all very, very keen.”