Iraqi Oil Wealth Stays Locked Up

Foreign technology and capital are seen as vital to restoring Iraq’s crumbling oil industry. But as a draft petroleum law inches its way toward the Iraqi parliament, fresh opposition to the legislation is emerging, underscoring the difficulty that may still lie ahead for any move to invite in international oil companies.

A petroleum law could provide a significant political boost for Iraq’s shaky government, by setting down how money from newly developed fields would be shared among the country’s three dominant ethnic regions — the mostly Kurdish north, the Sunni center and the Shiite south. Reaching agreement on sharing Iraq’s energy resources, by far the nation’s major source of wealth, will be critical to achieving long-term peace in the war-torn country.

U.S. officials and petroleum experts have been advising Iraqi politicians almost from the start of the American occupation nearly four years ago about how to build a legal framework that would enable foreign oil-field development. International majors have been reluctant to venture into the country until violence subsides and before politicians endorse a law spelling out legal rights and financial terms for foreign firms.

In recent months, Iraqi politicians have made some progress. In its current form, the legislation envisions the re-creation of an Iraqi state oil company, and it gives broad latitude to officials from the country’s various regions to encourage foreign investment and development. Kurdish officials had balked at earlier provisions calling for specific federal approval of development deals between regional governments and foreign firms.

Rigzone