17-07-04

Iraq announced the formation of a Higher Oil and Gas Council to oversee strategy as the country seeks foreign investment into the sector.

"The council will draw up general policies to manage the hydrocarbon resources and exploit them as best as possible," a statement from the oil ministry said.

The council will also approve and devise marketing policies, energy plans, prices, projects, oil ministry employment rules, investments and agreements with foreign companies, and allocation of oil proceeds. A number of these powers were the prerogative of the oil ministry and the State Oil Marketing Organisation.

Prime Minister Iyad Allawi, who is firming his grip on the interim administration ahead of elections due to be held by January, has appointed himself to head the council. Iraq had an oil council headed by Saddam Hussein before the invasion and Gulf countries have similar systems.
Allawi and Oil Minister Thamir Ghadhaban are authorised to make proposals to the council, whose membershipincludes the finance and justice ministers. Running the day-to-day oil affairs will be left to Ghadhaban, who will remain the key official responsible for the industry, an oil official said.

"They will meet once every few weeks, but will not go into detail such which projects go to whom," he said. "The council will have a major role if Iraq starts awarding its prize fields for development to the oil majors, but this is not expected before elections."

The prime minister was under pressure to form the council after a report by US accountants criticised the way Iraqi oil revenue was managed under the US-led occupation, the official said. The report said the accounting the United States used raised the potential for fraud.

Iraq's interim government is expected to focus on repairing its oil industry in the period before the election and refrain from striking foreign investment deals to develop Iraq's reserves, which are second only to Saudi Arabia's.

Source: Gulf Daily News