Iraq, Kurds take step toward oil law compromise

BAGHDAD, Oct 27 (Reuters) - Iraq and the semi-autonomous northern Kurdish region have agreed to work on amendments to a draft hydrocarbons law and reach an accord by year-end, potentially defusing a major row, Iraqi officials said on Thursday.

Kurdish officials have harshly criticised a draft law approved by Iraq's cabinet in August that would have given the Arab-dominated central government in Baghdad more control over the nation's oil reserves, the world's fourth largest.

Adoption of a new oil and gas law has long been considered critical to the success of Iraq's rapidly developing oil sector, although Baghdad has signed multibillion-dollar contracts with global oil majors despite antiquated legal safeguards.

Iraqi Prime Minister Nuri al-Maliki and Prime Minister Barham Salih of the Kurdistan Regional Government agreed during talks in Baghdad this week that by Dec. 31, they will either amend a 2007 hydrocarbons law as agreed by all political factions or adopt the 2007 law as is, officials said.

"It has been agreed by the end of the year to finish a draft which is agreed on; either by making a new draft or to go back to the old draft," central government spokesman Ali al-Dabbagh said. "It depends on what will be agreed."

Investors have been waiting for years for Iraq to pass modern laws as it tries to lure billions of dollars in foreign investment to rebuild after decades of war and international sanctions.

The Maliki-Salih agreement to agree appeared to sideline the controversial draft law approved by the cabinet in late August, which looked set to provoke a political fight in Maliki's fragile coalition government. Kurds, who hold 56 seats in the Iraqi parliament, said the draft violated the constitution.

That draft would have centralised power over oil and gas resources, giving Baghdad added control over currently producing fields and over auctions for undeveloped fields.

The 2007 version agreed among the political blocs gave regional powers partial authority over their reserves.

Thamir Ghadhban, Maliki's top energy adviser, said the leaders would prefer to adopt the old version without any amendments because time is running short.

"The version of (2007)... has been agreed. There is a preference not to add amendments in order not to waste time," Ghadhban told Reuters.

Kurdish officials were not immediately available to comment.


Yahya Kubaisi, an analyst at Iraq's Institute for Strategic Studies, said the dispute over the oil law is so profound it cannot be resolved in two months.

"There are objections or disputes on the philosophy that controls the oil and gas. Consequently I believe it (Maliki-Salih accord) is political propaganda," Kubaisi said.

"For a law to be passed in this way is very difficult because the disputes are not about a word, (but) about the philosophy or the idea of who owns the oil and gas," he said.

Political analyst Ibrahim al-Sumaidaie said Maliki, a Shi'ite, reached accord with the Kurds after his main political rival, the Sunni-backed Iraqiya bloc, tried to recruit Kurdish lawmakers to bring down Maliki's frail governing coalition.

Iraqiya and the Kurdish bloc are partners in the coalition agreed last December that gave Maliki the premiership.

"Whenever Iraqiya leaders come near the Kurds ... (who are) Maliki's partners in the coalition, to blackmail Maliki, Maliki goes and presents a concession to his partners,"