Analsyis of Oil Law by Munir Chalabi

UK-based Iraqi political analyst Munir Chalabi has written a political analysis of the oil law. which he says “seems to be no less than the old concessionary model in a new guise.” He notes that a key part of the draft have not yet been released: “The three appendices, which will specify which parts of the already discovered giant oil fields will be counted as “existing producing fields” and which will be counted as “not yet developed fields” that are partially or not yet producing oil. This judgment will decide which oil fields will be allocated to the Iraqi National Oil Company (INOC) and which of the existing fields will be allocated to the IOCs (from 10% to up to 80%).

He also notes that “This is the wrong timing for introducing such a strategic oil law. As several articles of the Iraqi constitution, including articles 112,113, and 115, are under review and there is the possibility that some of these articles will be changed within the coming months, it would be unwise to base such an important law on unknown constitutional articles. It is likely that the new oil law will contradict the new articles of the constitution. On the other hand, if articles 112 and 115 are altered as expected, it will possibly remove the fears of some experts regarding the tendency within the law to lead to sectarian and regional agendas.”

He recommends that a full oil law should only be developed after the occupation ends. But suggest that “It will be in the Iraqi people’s interest to have a “provisional oil law” which re-establishes INOC and gives it full decision-making powers similar to what was stated within Iraqi laws 123 and 130 of 1967, until such time comes when Iraq is no longer under occupation. Furthermore the provisional oil law should permit only a short-term contract between INOC and the international oil companies so as to provide technical help to develop the existing oil fields.”

On a historican note, he says the Ba’ath regime made moves to privatise Iraq’s oil but were inhibited from doing so fully because of sanctions: “The first step which was taken by the Baathist government was in 1987 when they dissolved INOC… Two PSA agreements were signed with the Russians. This includes the 1997 twenty three year agreement with the Russian oil company, Lukoil, for the development of the West Qurna-2 giant oil field. The third PSA agreement was signed in 2000 with the Chinese National Oil Company.”