Senators bemoan lack of Iraq oil law progress

U.S. senators on Thursday grilled U.S. Secretary of State Condoleezza Rice over a yet-unpublished Iraqi oil law that is expected to set terms for investment and revenue-sharing in the war-torn nation's battered hydrocarbon sector.

Testifying before the Senate Foreign Relations Committee on U.S. President George W. Bush's plan to send more troops to Iraq, Rice tried to assure impatient U.S. lawmakers that Iraqi officials are making progress on the hydrocarbon law.

"You referred to the oil law as a remarkable law," Sen. John Sununu (news, bio, voting record), New Hampshire Republican, told Rice. "Well, it's the most remarkable law that no one has ever really seen."

The Bush administration had hoped that Iraq's vast oil reserves of 115 billion barrels, the third-largest on the globe, would fund rebuilding efforts.

But the OPEC member's oil sector has been crippled by sabotage attacks, corruption, and years of neglect under sanctions before the U.S.-led invasion of March 2003.

Iraq's government is hammering out an oil law to regulate foreign investment. But it has been held up by disagreements over how revenues will be divided between provinces and the central government, and over who will have authority to sign contracts with foreign companies.

Sununu said he had been briefed on the oil law recently by members of the White House National Security Council, and had received a top-secret briefing from individuals he did not identify.

"What we can gain is that there has been some agreement on investment issues, and even ownership, but not on distribution," Sununu said. "And from where I sit, it's distribution that really matters."

"Distribution has actually been less of a problem than the question of who gets to sign contracts," Rice said. "That's frankly been the one that they've been hung up on."

Sununu bemoaned a lack of clear information from the White House on oil law progress.

"Senior National Security Council staff was able to tell me and others in the room nothing about distribution methodology," he said.

Fellow Republican Sen. Norm Coleman (news, bio, voting record) of Minnesota asked Rice why the administration has not set a deadline for publishing the oil law.

"Why wouldn't it be wiser to hold the Iraqis to certain benchmarks, to tell them, 'You have X number of months to pass an oil law?"' Coleman asked Rice.

The contract issue is vital to Iraq's future as a solution favoring the regions would devolve power over its most valuable resource to the majority Shi'ites and the Kurds whose regions are home to the country's most coveted oil fields.

Minority Sunni Arabs, dominant under Saddam Hussein before the U.S.-led invasion in 2003, fear regional devolution will leave them with nothing.

Ethnic Kurds whose region includes the country's northern oil fields including the giant Kirkuk field have signed some contracts with foreign oil companies, spurring confusion over who has the authority to ink contracts.

Rice said the oil law would not give the Kurds such authority.

"Even though the Kurds might have been expected ... to insist that they will simply control all the resources themselves, that's not what the oil law does," Rice said.