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Iraq Sunni VP to boycott oil round

Iraq Sunni VP to boycott oil round

Iraq's Sunni vice president said Monday he would not attend the country's first international oil licensing round, becoming the highest ranking official to express opposition a day before the country opens some of its vast oil and gas reserves to international companies for the first time in over 30 years.
More than 30 international oil companies are to compete Tuesday to secure a stake in developing six oil and two gas fields. Iraq is counting on the foreign firms' participation to revive its struggling oil sector and boost production of a resource that accounts for 90 percent of the government's budget.
But some lawmakers have objected to the bidding round, complaining that the oil ministry is seeking to circumvent parliament by having the contracts approved solely by the cabinet of ministers. Critics say that could render the contracts invalid _ or declared unconstitutional _ once another government is elected in Iraq.
In a statement posted on his Web site, Tariq al-Hashimi, one of Iraq's two vice presidents, said he would boycott the televised bidding ceremony and urged the oil ministry to "give the people's representatives at the parliament enough time to study these deals from the legal, economic and technical aspects," before awarding them.
The push to delay the licensing round has been cloaked in a constitutional argument. But the dispute largely boils down to Iraq's volatile mix of ethnic and sectarian politics, with the various groups looking for a slice of the country' vast oil wealth. Iraq has about 115 billion barrels of crude reserves, some of the world's largest.
Further complicating the situation is the lack of a national oil law. Analysts say this could make some companies wary of committing quickly to Iraq for fear that their contracts will be deemed unconstitutional by a later government.
Oil Minister Hussain al-Shahristani has been the focus of much of the complaints, with some pointing to the country's inability to reach prewar production levels as evidence of his failures at the helm. But al-Shahristani has pressed ahead, arguing that the licensing round will be transparent and will ensure that Iraq's best interests are served.
In the bidding round, companies are vying for 20-year service contracts that would pay them a fixed per barrel price based on production in excess of a baseline output level for each field. At about $50 per barrel, Iraqi officials have estimated that could net the various companies a total of $16 billion while bringing in over $1.7 trillion for Iraq.
Iraq hopes the foreign participation will boost production to about 4 million barrels per day, up from the current levels of about 2.4 million barrels per day. The increase is crucial for the country, which is starved for cash and is struggling to rebuild after the 2003 U.S.-led invasion to topple Saddam Hussein.
In another milestone, Tuesday marks the deadline for U.S. troops to fully withdraw from Iraqi cities, a departure that will test the ability of Iraqi security forces to assert control in a country that was mired in sectarian fighting for years.
Concerns about an uptick in violence, in tandem with the political uncertainties stemming from opposition to the contracts, could prompt some companies to stall their commitments until after the January 2010 parliamentary elections, analysts say.
Samuel Ciszuk, Middle East energy analyst with London-based IHS Global Insight, wrote in a research report Tuesday that international oil companies "are likely to be able to hide a lot of their procrastination behind consortia-building negotiations at their different projects, while the voices critical to the contracts are likely to want to give themselves a clearer profile before the elections, keeping the oil ministry busy on their side."


Updated : 2021-04-21 11:26 GMT+08:00