Iraqi Cabinet Passes Oil Law, but Problems Loom According to Review in Caspian Investor

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The Iraqi government has approved a draft Oil Law. The accord does represent a major rapprochement between Baghdad and the Kurdish Regional Government. However, the initial approval may be the easy part in the process. The draft is only an outline and pressure is building to negotiate details. With additional opposition to the move developing, the prospect of finalizing legislation remains in serious doubt, according to an analysis published by Caspian Investor.

The support, however, is for a broad outline accord

The Iraqi government has approved a draft Oil Law. The accord does represent a major rapprochement between Baghdad and the Kurdish Regional Government. However, the initial approval may be the easy part in the process. The draft is only an outline and pressure is building to negotiate details. With additional opposition to the move developing, the prospect of finalizing legislation remains in serious doubt, according to an analysis published by Caspian Investor.

Caspian Investor is published by WorldTrade Executive, Inc. and provides unequaled news and analysis of energy sector developments impacting the countries of Central Asia and the Caspian Sea region. It includes extensive coverage of Iran and some details of Iraq as it impacts regional markets.

The Iraqi Cabinet approved a draft of the long-awaited Oil Law on February 27. The bill now moves to the parliament. Sources told Caspian Investor, however, that significant problems remain in securing passage.

Kurdish Support Vital

That the bill has made it this far is a result only of a last-minute decision by the Kurdistan Regional Government (KRG) to back it. "The support, however, is for a broad outline accord," one source close to the negotiations told us on February 28. "The details of actually dividing oil proceeds will present a major future obstacle."

Majority Shiite factions are supporting the initiative, at least in its present general version, with the Sunnis expressing reserved support since they remain included in the partition of revenues from sales. There had been genuine concern among the Sunnis, now a minority of the population and controlling only areas of the country without significant hydrocarbon reserves, that the accord would leave them with no oil revenues.

"That still may happen in practice," notes a Sunni member of the Oil Ministry. "The law was approved without any details." According to the draft, oil sales will comprise a single fund controlled by the central government and redistributed throughout the country based on population. The regions will have authority to negotiate and sign contracts within the contract guidelines set out in the law. Unfortunately, the government has yet to propose any of these contract specifics.

Other recent articles in Caspian Investor are:

How Serious is the Iranian Push for a Natural Gas Cartel?

Kazakhstan Enters the Russian M&A Market

An Interview with Vagit Alekperov: The president of Russian crude leader LUKOIL.

For more information on Caspian Investor or its related publication, Russian Petrolem Investor, contact Jay Stanley, +1 978 287-0301. or go to http://www.wtexecutive.com and review the energy section.

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