[Congressional Record Volume 153, Number 77 (Thursday, May 10, 2007)]
[Extensions of Remarks]
[Page E1010]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         IRAQI HYDROCARBON LAW

                                 ______
                                 

                        HON. DENNIS J. KUCINICH

                                of ohio

                    in the house of representatives

                         Thursday, May 10, 2007

  Mr. KUCINICH. Madam Speaker, I submit the following for the Record:

 Read the Iraqi Parliament's Hydrocarbon Law: The Iraqi ``Hydrocarbon 
 Law'' Contains Three Sentences on Oil Revenue Sharing and 33 Pages on 
                             Privatization

       Dear Colleague: An issue of critical importance, the Iraqi 
     ``Hydrocarbon Law'', was again broached yesterday for the 
     third time in the Democratic Caucus and I want to provide you 
     the facts and evidence to support the concerns I have 
     expressed.
       As you know, the Administration set several benchmarks for 
     the Iraqi government, including passage of the ``Hydrocarbon 
     Law'' by the Iraqi Parliament. The Administration misled 
     Congress by emphasizing only a small part of this law, the 
     ``fair'' distribution of oil revenues. Consider the fact that 
     the Iraqi ``Hydrocarbon Law'' contains a mere three sentences 
     that generally discuss the ``fair'' distribution of oil.
       Except for three scant lines, the entire 33 page 
     ``Hydrocarbon Law'' is about creating a complex legal 
     structure to facilitate the privatization of Iraqi oil. As 
     such, it is imperative that all of us carefully read the 
     Iraqi Parliament's bill because the FY07 Iraq Supplemental 
     puts Congress on the record in promoting oil privatization.
       The U.S. Troop Readiness, Veterans' Care, Katrina Recovery, 
     and Iraq Accountability Appropriations Act of 2007, released 
     yesterday, contains Sec. 1330(2)(A) requiring a report by the 
     President on ``whether the Government of Iraq has enacted a 
     broadly accepted hydro-carbon law that equitably shares oil 
     revenues among all Iraqis.'' The Iraqi ``Hydrocarbon Law'' is 
     not broadly accepted and does far more than share revenues. 
     The final 3 months of war funding are tied to the favorable 
     completion of this report and a favorable vote by Congress.
       It is also important to highlight Sec. 1311(2) of the 
     Supplemental bill, which prohibits funds ``to exercise United 
     States control over any oil resource of Iraq.'' The crucial 
     issue is not the U.S. government control of Iraqi oil 
     resources. Rather the issue is Congress passing a measure 
     that pressures Iraq to pass their ``Hydrocarbon Act'' so 
     that multinational oil corporations (many based in the 
     U.S.) will exercise control over Iraqi oil resources.
       Here are the annotated facts, according to reliable media 
     sources:


                      Foreign Oil Company Control

       ``The law, if passed, is expected to open the country's 
     billions of barrels of proven oil reserves, the world's third 
     largest, to foreign investors.''
       ``Under the new law, the Iraq National Oil Company would 
     have exclusive control of only about 17 of Iraq's 
     approximately 80 known oil fields.''
       ``The law would also allow the government to negotiate 
     different kinds of exploration and production contracts with 
     foreign oil companies, including Production Sharing 
     Agreements, or PSAs. Energy lawyers favor these because they 
     allow oil companies to secure long-term deals and book oil 
     reserves as assets on their company balance sheets.''
       ``The proposal would provide for production sharing 
     agreements that would give international firms 70 per cent of 
     the oil revenues to recover their initial investments and 
     subsequently allow them 20 per cent of the profits without 
     any tax or restrictions on the transferring of funds abroad.
       ``Energy lawyers agree. ``Pretty much all the major oil 
     companies are taking a very close interest in the future 
     potential in Iraq,'' says Mathew Kidwell, a partner in the 
     Dubai office of Fulbright & Jaworski. ``We have certainly had 
     discussions with a number of our oil industry clients about 
     the legal framework.'' ''


                    Iraqi Self Governance Threatened

       The unions were kept in the dark, as were most members of 
     Iraq's parliament, until the draft law was leaked to the 
     media. Even then it was still out of the reach of most of 
     Iraq's citizens.
       ``Iraq will not be capable of controlling the levels--the 
     limits of production, which means that Iraq cannot be a part 
     of OPEC anymore. And Iraq will have this very complicated 
     institution called the Federal Oil and Gas Council, that will 
     have representatives from the foreign oil companies on the 
     board of it, so representatives from, let's say, ExxonMobil 
     and Shell and British Petroleum will be on the federal 
     board of Iraq approving their own contracts.''
       ``Under the proposed law, foreign companies would not have 
     to invest their earnings in Iraq, hire Iraqi workers, or 
     partner with Iraqi companies.''
       ``Iraq's oil unions have threatened to shutdown production 
     if foreign companies are allowed too much control.''
       ``The Iraq National Oil Co. would restart but compete with 
     foreign oil companies, who could win contracts giving them 
     partial ownership of the respective fields.''


                    Persuasion by Foreign Occupiers

       ``The British Government intervened to help UK and US 
     energy giants in their attempts to secure lucrative contracts 
     to exploit Iraq's ruined oilfields.''
       ``The Foreign Office delivered a report by the 
     International Tax and Investment Center (ITIC)--a Washington-
     based think-tank backed by a host of multinationals, 
     including oil companies such as Shell and BP--to Iraqi 
     officials in Baghdad, it has emerged.''
       ``The British ambassador to Iraq formally sent the `road-
     map' study on the Iraqi oil industry to the then Iraqi 
     minister of finance, according to documents seen by The 
     Independent on Sunday. The study recommended the Iraqi 
     government sign long-term production-sharing agreements with 
     foreign oil companies.''
       ``The ITIC hosted a conference in Beirut in January 2005 to 
     give a formal presentation to Iraqi ministers. Executives 
     from BP, Shell, ChevronTexaco, the Italian oil company ENI 
     and its French rival Total attended.''
       If the above quotes are not persuasive, then I highly 
     encourage you to read the Iraqi ``Hydrocarbon Law'' yourself. 
     It is available, not because the Iraqi government released 
     it, but because the Kurds released it. This version passed 
     the Iraq Cabinet, and was referred to the Parliament. http://
web.krg.org/uploads/documents/Draft%20Iraq%20 Oil%20 and 
     %20 Gas %20 Law %20 English _2007_ 03_09_ h17m2s47.pdf
       The following highlights are the major concerns of the 
     Iraqi ``Hydrocarbon Law'':
       The legislation ensures that the ``Chief Executives of 
     important related petroleum companies'' are represented on 
     the Federal Oil and Gas Council, which approves oil and gas 
     contracts. This is akin to the foreign oil companies 
     approving their own contracts.
       The legislation ensures the Iraq National Oil Company has 
     no exclusive rights for exploration, development, production, 
     transportation, and marketing. The Iraq National Oil Company 
     must compete against foreign oil companies with rules that 
     benefit the foreign oil companies.
       The legislation gives the Iraq National Oil Company some 
     control of developed oil fields and ``rights to participate'' 
     in undeveloped oil fields in Annex I and II, but these 
     Annexes have never been made public.
       The legislation gives the Iraq National Oil Company 
     temporary control of the oil pipelines and export terminals, 
     but then directs the Federal Oil and Gas Council to turn 
     these assets over to any entity with no further instructions. 
     The opportunity for a foreign oil company to have control 
     over the Iraqi oil pipeline and export terminals would give 
     that company enormous control of the Iraqi oil market.
       The legislation demands that ``contracts must guarantee the 
     best levels of coordination'' with the Oil Ministry, Iraq 
     National Oil Company, the regions and oil companies. The 
     legislation mandates that undeveloped oil fields be developed 
     quickly and oil companies are given explicit authority to 
     ``collaborate.''
       The legislation does not require contracts to be published 
     for public review up to two months after the approval.
       The legislation contains only three sentences in regards to 
     the fair distribution of oil, but do not resolve any of the 
     issues facing this challenge. The legislation simply requires 
     that future legislation be submitted for approval. Thus, this 
     legislation does not even meet the President's benchmark.
       The legislation provides up to 35 years of exclusive 
     control over oil fields for foreign oil companies.
       The legislation provides for a preference to Iraqis for 
     jobs and services, but only if these benefits do not place 
     extra costs or inconveniences on the foreign oil companies.
       This war was about oil. We must not be party to the 
     Administration's blatant attempt to set the stage for 
     multinational oil companies to take over Iraq's oil 
     resources. The war in Iraq is a stain on American history. 
     Let us not further besmirch our nation by participating in 
     the outrageous exploitation of a nation which is in shambles 
     due to U.S. intervention.
       Please join me in seeking to remove any reference to the 
     Iraqi ``Hydrocarbon Law'' in the war spending bill.
           Sincerely,
                                               Dennis J. Kucinich,
     Member of Congress.
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