The Iraqi Cabinet has approved a plan to revive a national oil company to help the war-torn nation upgrade its dilapidated oil industry, an official said Wednesday.
The Iraqi National Oil Co. was established in 1964 but Saddam Hussein dissolved it in 1987, as the Iraq-Iran war that was under way curtailed oil-related activities nationwide.
Thamir al-Ghadhban, an energy adviser to Prime Minister Nouri al-Maliki, said the law would give the INOC wide authority to explore for new fields, run producing oil fields, develop discovered but undeveloped fields, issue bonds and ask for loans.
In a statement issued late Tuesday, government spokesman Ali al-Dabbagh said the bill was approved by the Cabinet and had been sent to parliament for approval, but gave no details. Iraq's parliament is in recess until September.
The bill joins three others on oil issues, including a law that has been stalled in parliament over disputes about who has the final say in developing the wealth in their regions.
The yet-to-be established company will act as a holding company for the three existing regional state-run oil companies: the Basra-based South Oil Co., the Kirkuk-based North Oil Co. and Maysan Oil Co. in Maysan province.
According to the bill, the company would have its own budget and would be run by a board of directors headed by a chairman with ministerial powers, al-Ghadhban told The Associated Press in phone interview. It would be linked to the Cabinet, he added.
In February 2007, Iraq's Cabinet endorsed an oil and gas law to set the rules for foreign investment in Iraq's oil industry. Disputes later emerged between the Kurds and central government, mainly over who has the final say in managing oil and gas fields.
The Kurds, a key element in the Arab-led central government, have signed nearly two dozen oil deals with international oil companies since the 2003 U.S.-led invasion. But the central government maintains the deals are illegal since they were not approved in Baghdad.
Although Iraq sits on the world's third-largest oil reserve, with at least 115 billion barrels, the country is producing and exporting far below its potential because of decades of war, lack of investment, UN sanctions, a brain drain and insurgent attacks.
Its daily production ranges between 2.3 to 2.4 million barrels a day. Exports in the second quarter of this year jumped to an average 1.885 million barrels a day, from about 1.8 million barrels in the first quarter.
Revenues in the first half of this year stood at about $16.14 billion.
The country hopes to add 300,000 to 500,000 barrels per day by the end of 2010 through an emergency plan started early this year to drill new wells and install production surface plants in a number of its oil fields in southern Iraq. It also plans to produce 4.5 million barrels a day by 2013 and up to 6 million barrels a day by 2015.
The overall fall of oil prices since last year has forced the government to slash spending plans for this year from $79 billion to $58.6 billion. The oil sector represents about 65 percent of gross domestic product and its revenues account for 95 percent of Iraq's earnings.
Iraq wants to revive its national oil company - Source
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