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US Official: Iraq Needs Oil Law

US Official: Iraq Needs Oil Law

BAGHDAD (AP) — A top U.S. Treasury official said Tuesday that international oil companies are ready to invest in Iraq despite the dangerous security situation but are largely holding off because the nation has not passed a new oil law.

Deputy Treasury Secretary Robert Kimmitt, speaking to reporters during a trip to Iraq, said that until an oil law is enacted, both U.S. and international firms are unlikely to invest heavily in Iraq's industry.

"A lot of times people think they're not investing because the security situation is difficult," Kimmitt said. "Well, the security situation is improving, and as the oil companies will tell you, they invest in many places in the world where security is a tough factor."

In addition to a new oil law — which remains stalled in parliament — Kimmitt said companies want to see solid investment rules and regulations before pumping money into Iraq.

"What I hear from the companies who talk to me, both U.S. and international oil companies, is they come in and they want to know what the rules of the road are. With whom should I be contracting? Is that party a qualified contracting party? If there is a dispute, what is the dispute resolution mechanism?"

Iraqi authorities have drafted numerous versions of legislation to regulate the country's oil industry and share the revenues among Shiite, Sunni and Kurdish communities.

But the effort has bogged down in large part because of opposition from the Kurds, who want a greater say in managing oil fields in their self-ruled area of the north.

The Kurds have signed more than a dozen contracts with foreign companies, insisting the constitution gives them that authority. But the Iraqi Oil Ministry insists the contracts are illegal and has threatened to blacklist foreign firms who sign them.

Kimmitt told reporters that the U.S. Treasury Department was discouraging oil companies from investing in any part of Iraq's oil sector until the nation passes its oil law.

U.S. officials view the oil law as a catalyst for investment and a means of tamping down sectarian violence. Most of Iraq's oil reserves are in the Kurdish north and the largely Shiite south. The provinces where most Sunnis live have few proven reserves, leading to suspicions they'll be left out of oil profits.

Iraq is now exporting 1.9 billion barrels of oil a day, Kimmitt said, compared to 1.5 million a day earlier this year. He cited the opening of an oil export pipeline in the north in late August, adding 200,000 to 300,000 barrels per day in capacity.

In part because of the high price of oil, Iraq's budget for next year will be at $48 billion, Kimmitt said. Of that, about $9.3 billion will be devoted to security, and increase from $7.2 billion in the previous year.

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