In Iraq, a call for foreign partners

The Associated Press
Published: September 11, 2006

A top Iraqi official has called for partnerships with international companies to bolster his country's oil industry, saying Iraq's emergence as a "secure petro-democracy" could quell rampant sectarian violence.

Deputy Prime Minister Barham Saleh, a Kurd, conceded that disputes between local officials and the central government over who controls oil proceeds were one of many obstacles. But he expressed hope that oil would be a "unifying force for Iraqis rather than a resource to fight over."

He spoke of Iraq becoming a "secure petro-democracy" with the strength to put an end to the violence that threatens to tear the country apart.

"I don't underestimate the gravity of the situation in Iraq," Saleh said Sunday during a UN- and U.S.-sponsored Iraq donor conference in Abu Dhabi. "We are in a very critical situation."

Iraqi leaders are nearing agreement on a long-awaited hydrocarbon law that could usher in huge investments by foreign companies in Iraq's oil sector - and eventually rescue the country from deepening chaos, Saleh said.

The deputy prime minister said he expected Parliament to approve by the end of the year the law setting ground rules for managing Iraq's huge petroleum reserves. "This will open Iraq's oil sector for investment," Saleh said. "It takes partnerships with international oil companies."

Foreign oil companies, with their investment clout and technology, are best placed to quickly modernize Iraq's oil sector and meet the country's goal of doubling the current crude output of 2.5 million barrels a day by 2010, Saleh said.

But the absence of a legal framework governing investment and ownership of the country's oil resources has hampered investment in the sector.

Big oil companies have told the U.S. government they are willing to send crews to Iraq to explore and pump oil - regardless of the violence - as long as there are legal ground rules for their participation, said the U.S. deputy Treasury secretary, Robert Kimmitt.

"The oil companies have told us they need to know what the rules of the road are," said Kimmitt, President George W. Bush's envoy for the Iraq donor talks.

Iraq's oil output is overseen by the Ministry of Petroleum and two state- run oil companies, a centralized management system left over from the days of Saddam Hussein that Saleh said "has proven to be a disaster."

"Iraq needs to send a strong signal to the international community about investment in oil," Saleh said. "We need to push liberalization and open our markets."

Saleh, who is from the autonomous Kurdish region in northern Iraq, acknowledged that "differences remain" among those negotiating a hydrocarbon law, particularly on determining whether the resource is controlled by regional governments or Baghdad.

Kurds in the north and some Shiite Muslims in southern Iraq - the country's two chief oil regions - want regional control over oil production and revenue. But Iraq's Sunni Muslims and much of the Baghdad government want to maintain national control over petroleum resources.

Iraq's proven oil reserves stand at about 115 billion barrels, the world's third-largest, after those of Saudi Arabia and Iran.

The meeting Sunday in Abu Dhabi brought together officials from the United States, Europe, Japan, South Korea and Iraq's Arab neighbors along with the United Nations, World Bank and International Monetary Fund. The meeting discussed the Compact for Iraq, a five-year plan to ensure that Iraq's government has funds to survive and overhaul its economy.

A top Iraqi official has called for partnerships with international companies to bolster his country's oil industry, saying Iraq's emergence as a "secure petro-democracy"