Will Iraq honour deals with oil majors ? : here is the answer

Will Iraq honour deals with oil majors ?

By Suadad al-Salhy and Ahmed Rasheed

BAGHDAD, Dec 10 (Reuters) - Iraq will on Friday begin a hotly anticipated auction of contracts to develop 10 oilfields, some of the world's most promising and easily accessible, but will the deals be honoured after a March general election?

Iraq's politicians are deeply divided along sectarian and ethnic lines, and the cabinet and lawmakers are at loggerheads over whether parliament should have a say over oil deals. Modern hydrocarbon laws governing Iraqi oil have not yet been passed, and the independent-minded oil minister has many enemies.

After a previous contract auction in June, Iraq's government has already ratified one deal for BP (BP.L) and China's CNPC to develop the Rumaila supergiant oilfield, and has initial agreements with groups led by Italy ENI (ENI.MI) and Exxon Mobil (XOM.N) for two other fields.

WHAT DO OIL-SAVVY POLITICIANS SAY?

Opinions are largely split between allies and non-allies of Prime Minister Nuri al-Maliki, although even some traditional government critics stand behind the deals.

"According to Iraqi law these contracts will be illegal if they were passed without parliament approval. To solve this problem, we need to pass the hydrocarbon law, which could provide a better legal framework for all future contracts," said Ali Hussain Balou, head of parliament's oil and gas committee.

The Oil Ministry, which has Maliki's backing, insists parliamentary approval is not necessary.

"The deals are perfect in terms of developing our damaged oil industry with lowest costs. An elected government endorsed these deals and all decisions made must be respected by the next one," said Abdul-Hadi al-Hasani, deputy head of parliament's oil and gas committee and a Maliki ally.

WHAT DO MAIN ELECTION COMPETITORS SAY?

Maliki's State of Law coalition, one of the main contenders in the March polls, will surely honour the oil deals should it hold onto the clout it currently enjoys.

Some political groups say they will respect the contracts, but that could change in political wrangling during the formation of a new government after the March election.

The Supreme Islamic Iraqi Council (ISCI), which heads the Iraqi National Alliance, a coalition likely to be Maliki's main challenger at the ballot box, will also stand by the contracts, said Jalal al-Din al-Sagheer, a senior ISCI member.

"Of course it will be obligatory for the next government to honour these deals, regardless of reservations of any political entities right now. For that reason we advise that these contracts should be shown to parliament (before they are signed) so there is political consensus to ward off future problems."

Salim al-Jubouri, a senior member of the Iraqi Islamic Party, an important Sunni Muslim political group and frequent critic of Maliki's Shi'ite-led government, agrees.

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