By SINAN SALAHEDDIN, Associated Press WriterSun Jan 21, 11:28 AM ET
A new draft hydrocarbons law will pave the way for "transparent and fair" competition in bids to develop Iraq's oil wealth, the oil minister said Sunday as he sought to restore the confidence of foreign investors.
The new law, if approved, is expected to encourage foreign oil companies with their investment clout and technology to modernize Iraq's oil sector and meet the country's goal of doubling the current crude production of 2.5 million barrels per day by 2010.
Iraq's proven oil reserves stand at about 115 billion barrels, the world's third largest after Saudi Arabia and Iran.
The oil minister, Hussain al-Shahristani, said new oil fields will be added as bids are submitted by foreign companies.
"The competition will be transparent and fair and companies will be chosen according to their modern technological capabilities to guarantee the highest benefits for Iraqis," al-Shahristani said at a news conference. "We will not consider their nationalities and we will ignore any contract doesn't achieve the highest benefits."
Al-Shahristani refused to give a timeline for parliamentary action and did not say how the ministry would negotiate with foreign companies.
He also cautioned that attacks against oil installations and employees were increasing, with 289 people killed over the past year and 179 wounded.
"The ministry is always suffering from these terrorist attacks. I call upon all honest people to cooperate with the oil ministry in order to find those who are attacking the employees of this sector and provide us with any related information," he said.
Insurgents have frequently targeted oil facilities, pipelines and employees, disrupting exports and efforts to modernize the industry.
The oil minister stressed that all Iraqis will share in the profits amid concern by many Sunnis that they will lose out to the Shiites and Kurds who dominate the country's two chief oil regions in southern and northern Iraq. Those groups want regional control over oil production and revenues.
Iraq's Sunnis and much of the Baghdad government want to maintain national control over Iraq's petroleum resources as was the case during former leader Saddam Hussein's Sunni-dominated regime.
"The constitution states that oil and gas are for all Iraqis in all provinces and regions, and according to this conception we drafted this oil law to help promote Iraq's unity and prosperity of its people," he said.
Last Thursday, the ministry's spokesman Assem Jihad told The Associated Press the law would require that all oil revenues go to a central fund, then be distributed to Iraqis in every region and province according to population.
Jihad said the law also would stipulate that oil contracts signed by Saddam's regime or by the semiautonomous northern government of Kurdistan be reviewed and amended if needed.
On a technical matter, al-Shahristani said that a new metering system to track oil and gas flows from Iraq's southern export ports had been fixed.
Iraq's economy has been severely weakened by oil smuggling to neighboring countries, a problem that could be checked in part by the metering system. The smuggling has created a fuel crisis that leads to occasional shortages even though Iraq is one of the world's leading producers of oil.
Some experts believe that oil smuggling may be funding Iraq's insurgency.