Iraq’s cabinet has approved a long-awaited draft oil law and has sent it to parliament for final passage.
“The draft of the oil and gas law has been approved and referred to parliament,” a cabinet statement said on Sunday.
The draft oil law was approved by cabinet in 2007 but faced opposition in parliament and was sent back to the government for amendments. In June, the Oil Ministry made some changes to the law, which were being reviewed by the cabinet’s energy committee.
The progress of the draft law is an encouraging sign that, there may at last within the executive be a sense of urgency about regularising the existing oil contracts made after the fall of Saddam Hussein and providing certainty for foreign investors in light of ambitious government production targets.
Iraq currently produces around 2.7 million barrels of oil per day (bpd), and domestic authorities are targeting a capacity of 12 million bpd by 2017, although several industry analysts and the IMF have voiced doubts over whether that target is obtainable.
The draft law may stagnate in parliament, which has drawn up its own draft, released last week. The parliamentary dispute largely centres around revenue-sharing arrangements, with Kurdistan and Basra MPs claiming the cabinet’s law does not give them their fair share and leaves too much money with Baghdad.
MPs have been keen to press ahead with their own version of the draft, but were frustrated in their efforts last month whn bringing their bill to the floor for a first reading, as a bloc loyal to Prime Minister Nouri Al Maliki walked out, leaving the session without a quorum.
Referring to the parliamentary draft, the cabinet’s statement said “any other previous drafts should be considered void and should be withdrawn. This draft is the only one presented to parliament.”
The importance of the oil law is difficult to overstate, as it will decide the revenue arrangements and legal status of current and future oil contracts, including those within the semi-autonomous Kurdish region, and either unite a country seemingly destined for federalism or create rifts to the north and south that may prove irreperable.
Even without the law, Iraq is already developing oil-fields, signing billions of dollars in contracts with international companies under legislation dating back to before Saddam Hussein was deposed.
