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Context of 'May 23, 2006: Iraq’s New Oil Minister Says Country Needs an Oil Law to Guarantee Rights of Foreign Companies'

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The Oil and Energy Working Group, one of 17 such groups working under the US State Department’s “Future of Iraq” project (see April 2002-March 2003), meets to discuss plans for the oil industry in a post-Saddam Hussein Iraq. The only known member of the 15-member group is Ibrahim Bahr al-Ulum, who will become Iraq’s oil minister after the invasion. Other people likely involved include Ahmed Chalabi of the Iraqi National Congress, Sharif Ali Bin al Hussein of the Iraqi National Congress; recently defected personnel from Iraq’s Ministry of Petroleum; the former Iraqi head of military intelligence; Sheikh Yamani, the former Oil Minister of Saudi Arabia; and unnamed representatives from the US Energy Department. The responsibilities of this working group include: (1) developing plans for restoring the petroleum sector in order to increase oil exports to partially pay for a possible US military occupation government. (2) reconsidering Iraq’s continued membership in the Organization of Petroleum Exporting Countries (OPEC) and “whether it should be allowed to produce as much as possible or be limited by an OPEC quota.” (3) “consider[ing] whether to honor contracts made between the Hussein government and foreign oil companies, including the US $3.5 billion project to be carried out by Russian interests to redevelop Iraq’s oilfields.”] [Oil and Gas International, 10/30/2002; Observer, 11/3/2002; US Department of State, 12/19/2002; Financial Times, 4/7/2003; Financial Times, 9/5/2003; Muttitt, 2005] By April 2003, the working group will have met a total of four times. One of the policies they agree on is that Iraq “should be opened to international oil companies as quickly as possible after the war” and that development of Iraq’s oil fields should be done through the use of Production Sharing Agreements (PSAs). Under a typical PSA, oil ownership remains with the state, while exploration and production are contracted to the private companies under highly favorable terms. [Muttitt, 2005; Los Angeles Times, 12/8/2006]

Entity Tags: Ahmed Chalabi, Sheikh Yamani

Timeline Tags: Events Leading to Iraq Invasion

Iraqi oil minister Ibrahim Bahr al-Ulum tells the Financial Times that Iraq is preparing plans for the privatization of the country’s oil sector. He says he supports the “full privatization of downstream installations, such as refineries, but [says] he would back production-sharing contracts upstream,” the newspaper reports. He adds that US, possibly European, oil companies will be given priority. But he also says the decision will not be made until Iraq has an elected government. “The new elected government at the end of the transitional period will decide this issue,” he tells the Times. “The Iraqi oil sector needs privatization, but it’s a cultural issue,” he explains. “People lived for the last 30 to 40 years with this idea of nationalism.” Al-Ulum—a US-trained petroleum engineer who lived in London from 1992 until the overthrow of Hussein—was part of a working group organized by the State Department’s Future of Iraq Project before the invasion (see December 20-21, 2002). [Financial Times, 9/5/2003]

Entity Tags: Ibrahim Bahr al-Ulum

Timeline Tags: Events Leading to Iraq Invasion, Iraq under US Occupation

Iraq’s new oil minister, Hussein al-Shahristani, says that Iraq will need international assistance and billions of dollars in investment to develop its oil sector. “There is need to pass an oil and gas law to guarantee the right conditions for international companies to help develop the Iraqi oil sector,” he says. [Dow Jones Newswires, 5/23/2006]

Entity Tags: Hussein al-Shahristani

Timeline Tags: Iraq under US Occupation

US Energy Secretary Samuel Bodman, on a visit to Baghdad, refers to the drafting of a new oil that is underway and says it is important that the Iraqi Parliament—which apparently is not involved in the drafting process—pass it soon. [Time, 2/28/2007] Iraq needs to “pass a new law, a new hydrocarbon law under which international companies will be able to make investments in Iraq,” he says. Opening up Iraq’s oil industry will help Iraq realize “its very considerable potential with the benefit of investments from the international community.” He adds that Prime Minister Nuri al-Maliki, along with the oil and electricity ministers, are “optimistic of passing that law by the parliament and they hope to pass such a law by end of this calendar year.” He says that US oil companies won’t consider investing in Iraq’s oil sector until “first there is security and second there is a hydrocarbon law that will delineate the rules of the road.” [Agence France-Presse, 7/18/2006]

Entity Tags: Nouri al-Maliki, Samuel W. Bodman

Timeline Tags: Iraq under US Occupation

Iraqi Oil Minister Hussein al-Shahristani tells the Financial Times that the drafting of a new oil law is underway and that Iraq’s parliament will hopefully pass it “by the end of the year.” He says the law “will open the door for the international companies to come and work in Iraq, and develop our new fields…. We have many, many fields that are waiting for development, (and) some of them are giant fields.” [Financial Times, 7/27/2007] Iraq’s legislators are apparently not involved in the drafting of the law. [Time, 2/28/2007]

Entity Tags: Hussein al-Shahristani

Timeline Tags: Iraq under US Occupation

The Iraqi Centre for Strategic Studies hosts a conference in Amman, Jordan attended by prominent Iraqi parliamentarians, politicians, ex-ministers, and oil technocrats. At the conference, attendees urge Iraqi legislators to reject the proposed oil law (see February 15, 2007), saying that it will only further divide the country. Mohammed Bashar al-Faidhi, spokesman of the Association of Muslim’ Scholars, says: “We call on members of the parliament to reject this law. This critical draft law would revive foreign companies’ control on Iraqi oil wealth that Iraq had gotten rid of years ago.” Saleh al-Mutlak, head of the National Dialogue party, similarly states: “Iraqis are suspicious that if the law is passed at this critical time that Iraq is passing through, they would think it would be passed in order to serve the interest of foreign companies. This law would also further divide the Iraqi people because most of them would oppose it.” Issam al-Chalabi, former Iraqi oil minister during the government of Saddam Hussein, notes that prominent Iraqi oil experts were not permitted participate in the drafting of the law and that it has never been reported on by the media so Iraqis are unaware of its implications. “Enough time should be given to draft the law before submitting it to the parliament for approval,” al-Chalabi says. [Dow Jones Newswires, 3/10/2007]

Entity Tags: Saleh al-Mutlak, Issam al-Chalabi, Mohammed Bashar al-Faidhi, Iraqi Centre for Strategic Studies

Timeline Tags: Iraq under US Occupation

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