SAUDI ARABIA : Oil ministers continue their meeting in Saudi Arabia

The passing of Iraq's new federal oil law that will govern foreign company oil activity in Iraq is being held up by political differences in parliament, says Iraqi oil minister Hussain al-Shahristani. And he warns foreign oil companies that if they sign any agreements with regional authorities without federal Iraqi government approval, they will not be allowed to export any of the oil they produce in Iraq. Final approval of a long-awaited Iraqi oil law that would help usher in new investment is months away, Oil Minister Hussain al-Shahristani said on Thursday (November 15). Parliamentary approval was being delayed by political disagreements in parliament, al-Shahristani said on he sidelines of a symposium of OPEC ministers in Riyadh. "There is differences among the political groups in the parliament and it will take them some time before they solve their differences," said al-Shahristani in answer to a question on when the new law would be passed. The Iraqi oil minister also warned oil companies signing exploration, production and development conrtacts with regional authorities in Iraq that they would not be able to export any oil that they produce without first gaining federal government approval for their activities. "Unless those contracts are approved by the federal authorities in Iraq, they will not be allowed to take any of that oil out of the country," said al-Shahristani. His comments were a reference to seveal agreements signed between the Kurdish Regional Government (KRG) in the semi-autonomous north of Iraq and a number of small, independent foreign oil companies. Al-Shahristani said oil cooperation between Iraq and Iran was "going very well", adding that Iraq is laying a pipeline to supply Iran's Abadan refinery with 100,000 barrels per day (bpd) of oil from its southern oil fields. The two-day symposium of OPEC oil ministers, oil experts and analysts in Riyadh is taking place ahead of a weekend summit that will group OPEC heads of state. OPEC and the host government, Saudi Arabia, have said that the meeting will not discuss short-term market conditions and oil prices. But high oil prices are putting an unwelcome pressure on OPEC to signal some sort of supply increase that would lower prices, says Raad al-Qadiri, senior director at Washington-based energy consultancy PFC Energy. "This is a summit meeting, it's a heads of state, these aren't the guys who are normally involved in OPEC policy, in oil market policy, in oil production policy," said al-Qadiri. "What's been significant about this is it comes at a time has hit record highs and the market and consumer states are looking for signals. And so you have an ugly confluence of events as far as OPEC is concerned," he added. The message OPEC wants to put across is that there is not much it can do to ease prices because OPEC believes that they are being boosted by events outside its control, says al-Qadiri. "They're saying they are supplying the market as far as they look at supply and demand, the way they look at the fundamentals, yes there is a drawdown of stocks, but they are reluctant to bring supply on that would really lead to a price downturn, a significant price downturn they can't control," he said. "What Opec is saying is it can control the supply in terms of the supply/demand fundamentals, everything else is other people's affair, and therefore they need help in terms of bringing prices down if that is the goal." said al-Qadiri. rz/jrc

ITN Source | November 15, 2007

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