Iraq Oil Report

Plus:
*Lukoil blames Shahristani for West Qurna deal
*March deadline for first bids on oil and gas fields
*December date for announcing second round
*Oil and Electricity ministries combine forces on Mussaib topping plant
* Alive in Baghdad: Baghdad Security Plan Burdens Residents
* Turkey and the PKK, SOFA and more

Recurrent violence in oil-rich parts of Nigeria may provide a sobering lesson for oil companies hoping to work in Iraq - a place that is much more dangerous despite the fact that attacks are at their lowest level in more than four years, Sebastian Abbot writes for The Associated Press.

Abbot compares violence and its effects on oil production in Nigeria to Iraq, however, the ability for international oil companies to work peacefully in Iraq is more nuanced than the Nigeria story.

If the local communities in Nigeria would have seen more of a benefit from hydrocarbon exploration and production (jobs, overall investment, no pollution, etc.), the likelihood of armed groups forming and growing is greatly reduced. Instead companies became complicit and enabling of government corruption. Thus Nigeria oil and gas taken offline.

In Iraq, however, there are many more factors to be taken into consideration – though the Nigeria experience will be a lesson learned or lost. Iraq’s domestic oil sector – though badly damaged in human and infrastructure capacity due to decades of mismanagement and war – is still a source of pride for Iraqis in general and the workers in that sector specifically. Peaceful investment in Iraq’s oil and gas sectors must account for this powerful grassroots factor.

The current facts on the ground are also important factors, namely: internal disputes over how the hydrocarbons sector should be managed (political and ethnic disputes over the future of Iraq) have delayed the first post-Saddam legal guidelines for investment; political parties, ministries and individuals of various levels have not overcome the corruption issue; militias of varying connections to political parties, individuals and black market industries are not going to be cut out of the deal without a fight.

The head of Russia’s Lukoil says Iraq Oil Minister Hussain al-Shahristani is to blame for the company being kept from a deal to develop the West Qurna oil field, Richard Mably and Robin Paxton report for Reuters. CEO Vagit Alekperov said Russia’s waving of nearly $12 billion in Saddam-era debt should have paved the road for the deal.

“We have offered our expertise and, if there are political aspects, to remove them. Unfortunately the (Iraqi) Energy Ministry has taken no steps,” said Alekperov.

Lukoil says the 1997 deal is still valid and that international sanctions forced it to be stalled in 2002. Shahristani has maintained the Iraq government line that the previous regime’s Oil Ministry canceled the deal.

Iraq has set a March 2009 deadline for companies to bid on the first round of oil and gas fields that will officially be put to tender next Monday, Mariam Karouny reports for Reuters. Details of the second round of oil and gas fields put up for international investment will take place in December.

The Ministries of Electricity and Oil have agreed to a joint project to run a refinery located at the Mussaib power plant, which will provide fuel to keep the plant generating electricity. The USAID-funded Tatweer project says the plant generates electricity to 10 percent of the country.

When the Ministry of Electricity first installed the plant in 2004, not only did it not have the proper training and personnel to operate the plant, but it irked the Ministry of Oil, under whose domain oil refineries fall. Both Ministries have been at odds over the energy situation in Iraq, with one blaming the other for not generating necessary power to operate the oil infrastructure, and the other claiming it doesn’t receive enough fuel. Now the two Ministries will cooperate on training and operation of the plant.

The Ministry of Electricity announced that the country’s need of energy is estimated at 11 thousand megawatts to reach self-sufficiency, and what is produced now in power plants over five thousand megawatts, Iraq Directory reports.

Alive in Baghdad: Baghdad Security Plan Burdens Residents

The ongoing fighting in Baghdad pushed the Iraqi and US forces to establish checkpoints all over the city to secure the roads and neighborhoods. Controlling the cars inside the city and preventing them from distributing weapons or bombs was the first aim of these checkpoints.

In the early hours of October 7, Turkish warplanes struck at suspected positions of the Kurdistan Workers Party (PKK) in northern Iraq for the third day in row as Turkey continued to reel from the October 3 PKK attack on a military outpost in the village of Aktutun on the country’s border with Iraq, Gareth Jenkins writes in the Eurasia Daily Monitor.Fears that the Turkish authorities are failing to defeat the PKK have been further fueled by photographs of the inhabitants of Aktutun carrying their belongings on their backs as they abandon the village to seek refuge with relatives in a nearby town. During the PKK’s first insurgency from 1984 to 1999, more than 3,500 villages in southeastern Turkey were abandoned. Most of their inhabitants were driven from their homes by the Turkish military as part of scorched earth policy to deny the PKK access to food and shelter. In recent years, the Turkish government has been attempting, usually unsuccessfully, to persuade people to return. On the same day as the inhabitants of Aktutun abandoned their village, Justice Minister Mehmet Ali Sahin announced that the TGS and the Gendarmerie had asked the government for an increase in their legal powers and the re-imposition of restrictions on the rights of detainees.

The US and Iraq are “very close” to a deal on US troops staying in Iraq after 2008, Iraq’s foreign minister has said after talks with a top US envoy, the BBC reports. But speaking at a joint news conference with John Negroponte, Hoshyar Zebari warned that “hectic political meetings” remained before it could be finalized.

A top Iranian military official on Tuesday urged Iraq to reject a proposed U.S.-Iraqi security deal, calling the agreement a “disgrace,” Ali Akbar Dareini reports for the AP. Gen. Masoud Jazayeri’s comments came as Iraq’s parliamentary speaker arrived in Tehran to discuss the deal and as Iraq’s foreign minister told reporters in Baghdad that Iraq and the U.S. were close to reaching an agreement, though obstacles remain. Iran, which is close to Shiite parties who dominate Iraq’s government, has repeatedly expressed its opposition to any security deal that allows American forces to remain in neighboring Iraq. Tehran contends that the American presence is the cause of instability in Iraq and the region.

The Arab League dispatched an ambassador to Baghdad on Monday, the latest sign of progress in the Iraqi and US effort to ease the country’s diplomatic isolation, Mary Beth Sheridan reports for the Financial Times. Hani Khilaf arrived a day after the first visit by an Egyptian foreign minister in 18 years. The previous envoy of the 22-member Arab League quit in January 2007, blasting Arab countries for not doing more to ease Iraqi suffering.

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Plus:
*Premier out of bidding for various, unconfirmed reasons
*Talabani, Aso discuss oil ties
*Sterling dishes KRG oil stakes to Korea, Addax
*Electricity minister explains set backs, signs deals with GM and Siemens
*Much, much more

Iraq’s Oil Ministry Oct. 13 will not only take a major step forward to bringing foreign oil companies into Iraq’s nationalized oil sector. Beyond beginning a bidding process for a handful of key oil and gas fields, the ministry will outline a second group of oil and gas fields up for grabs by International Oil Companies. Petroleum Intelligence Weekly reports the two rounds account for 94 billion barrels of Iraq’s 115 billion barrels of proven reserves.

PIW also has more, including:
- Service contracts will allow companies to book reserves
- Fields in northern areas, Diyala and Kirkuk provinces, could spark rows with the Kurdistan Regional Government
- Winners will have “lowest fees;” will pay a signing bonus based on field’s potential and taxes; pay to the IOC will be “linked to an internal rate of return, with 18 percent considered “acceptable” to Baghdad.”
- Development will mandate a Joint Venture with a state-owned oil company, though what the state will get out of that, and what control it will have, is still unknown.

Premier Oil, the U.K. explorer, has been replaced by state-owned Turkiye Petrolleri AO in the list of prequalified companies bidding for oil contracts in Iraq, Bloomberg reports. “Premier Oil is out because it is too small,” Iraq’s Oil Ministry spokesman Asim Jihad said today by phone from Baghdad. “The Turkish government company is now in the bidding round, and there are a total of 35 companies.”

The official didn’t say why Premier was excluded from the company shortlist, Hassan Hafidh reports for Dow Jones Newswires. Separately, an independent source close to the ministry said Premier was excluded because it was involved through another company in oil deals signed by the Kurdistan Regional Government, or KRG, with international oil firms.

Sinan Salaheddin reports for The Associated Press A ministry official says the company failed to submit documents required for it to compete in a bid due to start next month.

UK’s Premier Oil was dropped for failing to provide the necessary technical and financial documents. One condition set by the ministry was that the output of a company wanting to bid should be above that of the Iraqi field it seeks to operate, International Oil Daily reports. “Premier’s qualification based on the technical and financial criteria does not allow it to participate in the first bid round, which includes mainly giant fields. However, it will be able to participate in the next rounds,” the official said.

A new detachment of Australian sailors from the Royal Australian Navy is being deployed to Iraq to secure oil installation in the Gulf, Sky News reports.

Iraq has approved a $3 billion contract awarded last week by the ministry of oil to Chinese National Petroleum Co. (CNPC) to develop and produce Adhab oil field, Eric Watkins reports for Oil & Gas Journal.

Iraqi and Japanese leaders meeting in New York discussed oil investments, the Japanese Minsitry of Foreign Affairs’ website said. “Prime Minister Aso stated that Japan is eager to develop relations with Iraq in the areas of the economy and business from a long-term perspective, given the economic and socio development of Iraq, and that he hopes that Japanese companies will move into the area of oil as well. To this, President Talabani stated that he acknowledges Japan’s advanced technologies in the area of oil, among other areas, and said that he would like to enhance relations with Japan by such means as asking Japanese experts to be dispatched to Iraq to have consultations with officials at the Ministry of Oil.”

Sterling Energy will reduce its stake in its Kurdistan region production sharing contract to 53.33 percent following a farmout of 33.33 percent to Addax Petroleum and another 20 percent assignemtn of third party interest to the Korean National Oil Corp., a Sterling release said.

Iraq has signed preliminary deals worth billions of dollars with General and Siemens for equipment to almost double electricity generation capacity, Simon Webb reports for Reuters.

Insecurity, a lack of fuel and runaway demand are the biggest challenges to Iraq’s plan to end chronic power shortages by 2012, the electricity minister said, Webb reports in a separate article for Reuters.

The Kurdistan Regional Government is looking for firms interested in investing in new and existing electricity infrastructure. According to a statement from the government, the projects include substations and transmission lines throughout all three KRG provinces.

On the heals of the Transparency International report ranking Iraq the third most corrupt country in the world, the United Nations announced a five-year plan to assist Iraq in anti-corruption efforts,

Basra Province Governor Muhammad Musbeh al-Waeli speaks with Kholoud Ramzi of Niqash about political and security developments in Basra and the importance of the province in the country. He blames political fighting for stalling services in the city and aiming at ousting him because he’s affiliated with the Fadhila Party. He also says his brother’s arrest for oil smuggling is politics as well, with no proof offered.

Basra is one of the most important southern provinces. Those who control Basra control huge potential; it has a unique commercial and strategic location and it possesses huge oil wealth which could play a role in determining the future importance of the southern region. This is the main cause of the conflict between political forces but we stand for imposing law on all parties without exception. …

The security situation is now better than ever. The imbalance was because the emergency committee handling security in Basra kept the local government aside despite its inability to impose the rule of law. The committee was the main reason behind the infiltration of militias into the city and their control over its resources. I admit that the city was about to collapse was it not for the Knights Assault Operation which saved the city and restored security.

A new decision by the Iraqi parliament leaves Iraqi minorities with no representation in the country’s provincial councils as well as the legislature, Nidhal al-Laithi reports for Azzaman. By an overwhelming majority, the parliament early this week revoked paragraph 50 from the constitution under which Iraqi minorities were assigned a set of seats in legislative and municipal councils. The revocation has sparked mass demonstrations in areas where these minorities live, particularly in the northern Province of Nineveh of which Mosul is the capital.

The Special Representative of the United Nations Secretary General for Iraq Staffan de Mistura has also raised concerns over this omission.

Many refugees who ventured to return home following reports of relative quiet in the country were forced to flee once again. The restive Province of Diyala of which Baaquba is the capital has seen most of the violence directed at returning refugees. Azzaman correspondent in the city says factional militias are active in the city and their attacks have even forced the heavily armed pro-U.S. Sunni militiamen to flee.

The commander of the Sunni-led Awakening movement in Baghdad says that attacks by the Iraqi government and government-allied militiamen against Awakening leaders and rank-and-file members are likely to spark a new Sunni resistance movement. That resistance force will conduct attacks against American troops and Iraqi army and police forces, he says. “Look around,” he says. “It has already come back. It is getting stronger. Look at what is happening in Baghdad,” Robert Dreyfuss reports for The Nation. The commander, Abu Azzam, laid out a scenario for a new explosion in Iraq, one that would shatter the complacent American notion that the 2007-08 “surge” of American troops in Iraq has stabilized that war-torn country. Although the greater US force succeeded in putting down some of the most violent sectarian clashes, it was the emergence of the Awakening movement in 2006 that crushed Al Qaeda in Iraq and brought order to Anbar and Baghdad.

The US presidential candidates are not the only ones scrambling to put together a credible interpretation of the situation in Iraq these days.The Pentagon released its latest report to the US Congress, entitled “Measuring Stability and Security in Iraq,” Reidar Visser writes in historiae.org. There are two very basic problems in the report. The first concerns “the fundamental nature of the conflict in Iraq”. On p. viii the report bombastically asserts, “while security has improved dramatically, the fundamental character of the conflict in Iraq remains unchanged – a communal struggle for power and resources”. That is a about as wrong as one can be in describing the political dynamics of the past year. … The second main problem in the report has to do with the Pentagon’s take on Iranian influences in Iraq. The Department of Defense simply refuses do deal open-mindedly with the possibility of pro-Iranian influences inside the current Iraqi government. … When these basic questions are not addressed in a nuanced way, it is very hard to ascribe much significance to the predictable succession of graphs and statistics and acronyms that take up the subsequent pages of the Pentagon report. These things all collapse if the underlying assumptions about the “fundamental nature of the conflict in Iraq” and Iran’s channels of influence are inaccurate.

An Iranian firm based in the United Arab Emirates has won a deal to construct a cement factory in the southern Province of Dihqar, a senior official said, Azzaman reports. Mohammed al-Hindawi, the head of reconstruction and investment bureau in the province, said the factory is designed to produce 3,000 tons of cement per day. He said the provincial authorities have allocated a lot of land as a site for the company. However, he declined to give details on the value of the contract.

Kurdistan’s press pays for tackling corruption, Anna Fifield reports for The Financial Times.

Municipal authorities in the southern city of Basra have mounted a campaign to clean up the Jewish cemetery there, Azzaman reports. The cemetery is seen as one of Basra’s ‘cultural landmarks’ and the authorities want to keep it clean and tidy, said Ahmad al-Yasseri who heads the cleaning-up campaign. There are no Jews left in the city which used to house a sizeable Jewish community of tens of thousands before the creation of Israel in 1948.

The Baathist Supreme Command for Jihad and Liberation (SCJL) has announced that it is preparing to launch the “Battle of Baghdad.” The SCJL is a coalition of at least twenty-two insurgent groups headed by Izzat al-Douri, the leader of the banned Iraqi Baath Party, Pascale Combelles Siegel writes in The Jamestown Foundation’s Terrorism Monitor. The August 9 statement is the third in a series since July from the group’s “Sharia fatwa-issuing commission.” In these documents, the SCJL looks beyond a U.S. withdrawal from Iraq and promises a final showdown with the Iraqi government that will lead to the “liberation” of Iraq and the establishment of a new political system.

Biden and Obama: both wrong on Iraq. Reidar Visser, editor of the Iraq-focused website historiae.org and research fellow at the Norwegian Institute of International Affairs, analyzed the Democratic Party candidates’ Iraq assertions during both the presidential and vice presidential debates.

Shiites and Sunnis have coexisted in Iraq since they crystallised as two distinctive religious communities in Baghdad in the tenth century AD, when the struggle for power between various factions of the Islamic caliphate that had been going on since the seventh century became transformed into a theological one with the (Shiite) doctrine of the imamate. In the subsequent centuries, there was certainly tension between these two communities at times (not least because the rivalling ruling elements of the caliphates chose to cultivate links with particular communities to further their own power struggles), but outbreaks of violence on a large scale were extremely rare. In fact, not more than three cases stand out before the late twentieth century, and these were all related to invasion by foreign forces rather than to internal sectarian struggles between the Iraqis.

While there is sectarian violence right now, it stems more from the lack of an immediate reconciliation process following the overthrow of the equal-opportunity but Sunni identified oppressor Saddam Hussein, coupled with the U.S.-orchestrated governance process in immediate post-Saddam Iraq that brought in partisans largely living outside of Iraq in recent decades and then the evolution into an electoral process that segregated by religious sect. The U.S. managers of post-Saddam Iraq where so misinformed they worried foremost about sectarian fighting, they didn’t realize the extent of inter-sectarian relationships (neighbors, marriages, friendships).

While there have been incidents of violence between Sunni and Shiite, like instances of violence between different groups within cultures and societies, it is nothing short of ignorance and racism – and not very presidential – to assert that these two groups must fight each other.

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Media reports from Seoul say a Korea National Oil Corp.-led consortium has signed oil contracts with Iraq’s Kurdistan Regional Government.

The contracts were not verified by the KRG, which typically issues announcements when oil contracts are signed, Ben Lando reports for United Press International.

It has signed more than 20 production-sharing contracts since 2004, despite criticism from the central government in Baghdad, which claims regional and other local governments have no right to sign deals in the oil and gas sector. SK Energy, South Korea’s largest refiner and partner in a 2007 oil exploration and development deal signed between KRG and a KNOC-led consortium, was cut off from oil supplies by Baghdad in retaliation.

Security and Insecurity

The city of Najaf is being transformed from a city of death and cemeteries to a city of visitors and hotels in the wake of more peaceful times, Faris Harram reports for Niqash.

The people of Diyala are expressing fear that their towns will once again fall under the control of al-Qaeda following a government announcement that it plans to withdraw troops by October following the completion of operation Bashaer al-Khair (Promise of Good), Muhammed Abdullah reports for Niqash. Fears have been stoked by the recent explosion of a suicide bomber at an Iftar banquet in the town of Balad Ruz. And on Wednesday an ambush southwest of Diyala killed 35 police officers and Awakening Council members according to the Diyala governate.

The improved freedom and security in Iraq do not extend to the homosexual population, who are subject to a sexual cleansing campaign, evidence shows, UPI reports.

Thousands of chickens were culled in parts of Iraq as a strain of bird flu tears through the country’s poultry industry, officials said Thursday, UPI reports.

Allegations of embezzlement and mismanagement have virtually paralyzed the Iraqi Red Crescent, Iraq’s leading humanitarian group, officials say, UPI reports.

Read what Iraqi’s read: the Iraq Press Roundup by UPI’s Alaa Majeed.

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Plus:
*A needed debrief of the Shell gas project
*Iraq oil exports drop
*U.S. loses $13 billion in Iraq reconstruction funds
*KRG inks power deal, puts wind and hydro to tender
*Night lights in Baghdad neighborhood
*Parliament Elections: Sunni tribal elders, Moqtada Sadr to run
*Iraq Press Roundup
*Much more

Hits and Misses of Shell-Iraq gas project

The Shell-Iraq gas deal is not a production sharing contract – heck, it’s not even a deal. It’s a signing of an agreement that the two sides will conduct due diligence and then perhaps make a deal to set up a joint venture company between the international oil giant and Iraq’s South Gas Co., as Ben Lando reports for United Press International. (NOTE: UPI requires registration to read stories now, though it remains free.)

There are plenty of news stories that mislabel the Shell announcement as PSCs and other models. To be sure, however, there is little in the way of transparency both of how we got to this stage, and what’s to come in the future in terms of deal details.

Leila Fadel, McClatchy Newspapers’ Baghdad Bureau chief reports on another big move for shell: “Today I inaugurated the Baghdad office,” said Linda Cook, an executive director with Royal Dutch Shell PLC. “It’s a milestone for Shell.” Shell officials wouldn’t disclose where the office is, but said the company would continue to expand its presence in Iraq.

More Oil, Power and Reconstruction News

Iraq oil exports last month dropped to 1.75 million barrels per day, The Associated Press reports. Export totals are usually updated on the Oil Ministry website, though July is the most recent month of export data. Iraq had been nearing a steady 1.9 million bpd.

A former Iraqi official estimated yesterday that more than $13 billion meant for reconstruction projects in Iraq was wasted or stolen through elaborate fraud schemes, Dana Hedgpeth reports for The Washington Post. Salam Adhoob, a former chief investigator for Iraq’s Commission on Public Integrity, was one of three Iraqi men who testified before the Senate Democratic Policy Committee yesterday. Abbas S. Mehdi, a former Iraqi official who held a cabinet-level post, told of widespread corruption. And an Iraqi American who for five years has been a senior adviser to Defense and State department officials in Iraq testified in silhouette by video from an undisclosed location because, he said, he feared for his safety. In a modified voice, he said Iraqi government officials worked with al-Qaeda terrorists at the Baiji refinery to steal oil to sell on the black market. Adhoob said some of the investigations conducted by his agency and others uncovered “ghost projects” that never existed or instances in which Iraqi and U.S. contractors did poor-quality work. In one case, $24.4 million was spent on an electricity project in Nineveh province but an oversight agency found that it “existed only on paper.”

Iraq’s Kurdish government awarded U.S. company Symbion a power project deal intended to connect all three northern provinces to the power grid, UPI reports. The Kurdistan Regional Government’s Electricity Ministry will pay the Washington, D.C.-based company $33 million for the 132 kilovolt electrical transmission and distribution project that links Aqra, in Dohuk province, to Khabat, in Erbil province. This is an extension of the Aqra-Dohuk substation project. The company said in a statement that when it’s completed, “the network through all KRG governorates will be complete.”

Iraq’s Kurdistan Regional Government is looking to wind and hydropower to meet its electricity needs, UPI reports. The KRG Electricity Ministry wants wind farm feasibility studies in all three of its northern Iraq provinces and three hydropower plant feasibility studies. It announced the invitation to tender on its Web site Tuesday, with an Oct. 20 deadline for bidders.

Jordan has received its first shipment of Iraqi crude oil under a deal that offers the kingdom 10,000 barrels per day with preferential price terms, the energy minister said on Tuesday, Reuters reports.

The Iraqi Ministry of Planning’s Strategic Authority for Reconstruction approved projects of over $62 million, Voices of Iraq reports. The funds will be dedicated to food and dairy, veterinary and water projects.

In neighborhoods across northwest Baghdad, specifically Ghazaliyah, a new solar-powered lighting system is being placed along streets, in neighborhoods and in popular areas to bring a bit of normalcy back to these areas, allowing people to continue life after the sun goes down,a U.S. military publication reports. “The logic behind it was getting lights out on the streets at night,” said Maj. Tom Nelson, engineering officer for the 2nd Brigade Combat Team, 101st Airborne Division (Air Assault), Multi-National Division – Baghdad.

New violence on more peaceful Baghdad streets involve members of the Sunni Awakening, which could be a sign of bad things to come, Erica Goode reports for The New York Times.

Iraqi insurgents forced underground, but even in hiding, Al Qaeda in Iraq can carry out high-profile attacks and has infiltrated security forces, Tom A. Peter reports for The Christian Science Monitor.

Crucial Elections

The next round of Iraqi elections in 2009 will have a greater impact on the emerging Iraqi state and its identity than any other, the foreign minister said, UPI reports.

The Sunni tribal elders in the western Iraqi province of Anbar will form an electoral bloc to run in the provincial elections, a top official said, UPI reports.

Firebrand Iraqi Shiite cleric Moqtada Sadr announced Tuesday he will not run for political office under his own party, opting instead for an independent slate, UPI reports.

Iraq’s President Jalal Talabani who underwent a critical surgery in the United States a few weeks ago is slated to return to Baghdad soon but senior government leaders are apparently in readiness should his health take a turn for the worse and there is need for a replacement, Basil Adas reports for Gulf News.

The Kurdistan Regional Government announced it would provide refugees who have settled in the Kurdish territories of Iraq a monthly remuneration, UPI reports. Kurdish Minister of Extra-regional Affairs Mohammad Ihsan announced the decision as part of an effort to help internally displaced refugees who fled to northern Iraq, the KRG said in a press statement Monday.

Iraq’s largely autonomous northern Kurdistan region has passed a modified media law aimed at protecting journalists’ rights, abolishing jail terms for offences such as defamation, parliamentary deputies said, Shamal Aqrawi reports for Reuters. An earlier version of the law passed by parliament last December carried tough sanctions for journalists including imprisonment, fines of up to 10 million Iraqi dinar ($8,400) and the closure of publications.

War News Radio: Bread and Butter Issues:

Explore the current food crises gripping Iraq. A talk about the state of agriculture in Iraq and why food production is coming up short. Chat with Robin Lodge from the World Food Program in Iraq. As food prices rise around the globe, how and how much is Iraq affected? Finally, three Iraqis from Kurdistan tell us about the day-to-day problems they face when buying and selling food.
Read what Iraqis are reading: the Iraq Press Roundup by UPI’s Alaa Majeed.

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Plus:
*Oil Minister Shahristani blames KRG oil deals for oil law delay
*Top two on Parliament energy committee dispute oil issues
*Former South Oil Co. head made official ministry adviser
*Parliament sends electricity crisis to special committee
*Kurdish MPs want Iraq-U.S. draft deal altered, fearing attack
*Elections law debate postponed
*Ethnic tensions expanded, explained
*Much more

An Iraqi oil trust fund proposed by Sens. Hillary Clinton and John Ensign may derail Iraqi government negotiations on already divisive oil and revenue-sharing laws, a State Department official said, Ben Lando reports for United Press International. (NOTE: Registration is free but now required to read UPI.)

Legislation recently introduced by Clinton, D-N.Y., and Ensign, R-Nev., requires the U.S. State Department to present to the Iraqi government an “oil trust plan” or lose a portion of Iraq reconstruction and economic funding.

The Clinton-Ensign bill “could have a negative impact on reaching a political compromise on pending oil-related legislation, including the Revenue Sharing Law,” a State Department official, speaking on background, told United Press International, “by interfering with the ongoing negotiations on the package of four laws.”

“The United States government, other countries and international organizations have broached the topic of the establishment of an oil trust fund with the Iraqi government for several years,” the State Department official said. The oil trust fund models of Norway, Canada, Venezuela and the state of Alaska, among others, have been presented to and discussed with Iraqi leaders.

Some models wouldn’t work in Iraq, and others couldn’t be implemented while Iraq is a war zone and the financial institutions are still developing.

“The decision to create such a fund is squarely an Iraqi one. The United States government cannot impose a durable solution,” the official said. “We would hope the Iraqi government will focus resolving issues on establishing a framework on federal and regional authorities in the administration of the oil and gas sector, create an equitable revenue-sharing system with the governorates, reconstitute the Iraq National Oil Co., and restructure the federal Oil Ministry before creating an oil trust fund.”

Read the entire story: Click Here.

Here’s the story by Lando on Wednesday explaining the Clinton-Ensign bill.

A series of contracts awarded by Kurdish leaders is blocking the passage of a national oil law, prompting Baghdad to use Saddam Hussein era rules for new deals, Oil Minister Hussein al-Shahristani said, Agence France-Presse reports.

Shahristani said some Parliamentarians are balking at the need for a new law and others want it to ban the types of deals the Kurdistan Regional Government has signed. He also said his plans to develop oil fields with international oil companies are allowed by the Saddam-ear law and would be allowed according to the draft of the new oil law. He said all of the discovered oil and gas fields will be up for bid.

In the refining sector, Shahristani said current refineries would be expanded and new facilities are planned for Nasiriyah, Karbala, Kirkuk and Maysan.

The Kurdish party head of Parliament’s oil and gas committee and a United Shiite Alliance MP, the committee’s deputy, differ on what’s preventing an oil law and oil exports from the Kurdistan region, Aiyob Mawloodi reports for The Kurdish Globe.

Heritage Oil, the firm with assets in Iraqi Kurdistan, may be up for sale, Robert Cookson reports for the Financial Times. “The Company confirms that it is in highly preliminary discussions with a third party regarding a possible disposal of certain of its assets. These discussions may or may not ultimately lead to an offer for the Company,” the company said in a statement.

Four months after the Oil Ministry reshuffled Jabbar al-Laibi from his position as head of the powerful South Oil Co., the details of his new duties have been finalized. His new title is ministerial adviser, he will report to Oil Minister Hussain al-Shahristani, and his purview will cover oil and gas production capacity, increasing capacity and contracts to develop oil and gas fields in Basra and Maysan provinces, Ben Lando reports in UPI’s Iraq Energy Roundup.

Iraq’s parliament on Thursday referred the power crisis to a specialist committee after the main Shiite bloc called on the electricity minister to resign, Voices of Iraq reports.“The ministry set 600 mega watts as consumption cap, yet the power demands increased, aggravating the crisis,” Minister Karim Wahid explained. He called for “forming an investigating committee on causes of cancelling Korean firms contracts to boost electricity infrastructures”.

Iraqi Prime Minister Nouri al-Maliki expressed his readiness to accept an official invitation from the British government to participate in a London-based economic summit on energy, Voices of Iraq reports. Maliki “accepted an official invitation from the British prime minister to attend an energy summit that will be held in the British capital,” read the statement, providing no information about the scheduled date of the summit.

An agreement to extend the American military mandate in Iraq beyond this year — near completion only a month ago — has stalled over objections by Iraqi leaders and could be in danger of falling apart, according to Iraqi and Bush administration officials, Steven Lee Myers and Sam Dagher report for The New York Times. The major remaining point of contention involves immunity, with the United States maintaining that American troops and military contractors should have the same protections they have in other countries where they are based and Iraq insisting that they be subject to the country’s criminal justice system for any crime committed outside of a military operation, the officials said. Mr. Maliki also, for the first time, raised the possibility of seeking an extension to the United Nations mandate at the Security Council, saying that had become complicated because of American and Russian tensions over the conflict in Georgia. “Even if we ask for an extension, then we will ask for it according to our terms and we will attach conditions and the U.S. side will refuse,” he said in an interview on Wednesday with the directors of Iraqi satellite television channels. “U.S. forces would be without legal cover and will have no choice but to pull out from Iraq or stay and be in contravention of international law.”

Kurdish politicians are demanding the draft security pact omit a section allowing Iraq to sign similar deals with neighboring countries, Qassim Khidhir reports for The Kurdish Globe.MP Mahmud Othman of the KC agreed that any security or political agreement with neighboring countries does not suit the best interests of Kurdish people. He said that in the past, whenever neighboring countries signed agreements with Iraq, they always considered Kurds a threat.

The head of Parliament’s legal committee said it was agreed to postpone presenting the special report on the provincial council elections law until next week, Voices of Iraq reports. “The committee formed by the legal and the provinces committees decided today to adjourn the presentation of the special report on the elections law until next Sunday,” Bahaa al-Aaraji said.

Kuwait had promised Iraq to study a proposal submitted by Baghdad recently, provides for reducing the damage deductions from 5 percent to 1 percent, Iraq Directory reports. A parliamentary source revealed that to “Al Sabah”, noting that Finance Minister Jabr Al-Zubaidi offered this proposal during his visit to Kuwait recently.

As tensions rise between Iraqi Kurds, Arab Sunnis, and Arab Shiites in ethnically mixed Diyala Province during a massive and ongoing military operation by the Iraqi Army, a bombing in the disputed city of Khanaqin threatens to launch the region into new convulsions of violence, Ramzy Mardini writes for Terrorism Focus. Unlike past political disputes, the Khanaqin crisis provides the first incident in which the new Iraq has adopted a formalized military response towards the Kurds. This provocation reinforces Kurdish fears of past attitudes, reactivating the anti-State narrative as Barzani points to a “chauvinist Baathist approach” practiced by some in Baghdad (Al-Sharq al-Awsat, September 1). The rapid deterioration in trust resulting from developments in Diyala increases the risk that the unfolding security dilemma could lead to open conflict and decrease the prospect of disputes being resolved at the political level. As provincial elections approach and pressures to implement Article 140 intensify, the concurrent shift of American forces to secondary responsibilities and the deteriorating situation in Khanaqin may leave Iraq in a vulnerable security position.

The wave of optimism spreading through the U.S. foreign policy community in regard to Iraq is premature, a Turkish foreign policy chief said Friday, UPI reports. He blamed the U.S. policy of defining the strategy in Iraq along ethnic and sectarian lines, with Shiite militias, Sunni paramilitary forces and the Kurdish Peshmerga exemplifying the lack of national identity.

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