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RR RUEHBC RUEHDA RUEHDE RUEHDH RUEHIHL RUEHKUK
DE RUEHGB #2037 2110330
ZNR UUUUU ZZH
R 300330Z JUL 09
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 4122
INFO RUCNRAQ/IRAQ COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/USDOE WASHDC
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UNCLAS BAGHDAD 002037 
 
SIPDIS 
 
SENSITIVE 
 
DOE FOR GEORGE PERSON; STATE ALSO FOR EEB AND NEA/I 
 
E.O. 12958: N/A 
TAGS: EPET ENRG EINV ECON IZ
SUBJECT: Iraq: Cabinet Approves Formation of National Oil Company 
 
Sensitive but unclassified; please protect accordingly. 
 
¶1. (SBU) The Iraqi Council of Ministers (the Cabinet) on Tuesday, 
July 28 approved draft legislation to re-establish the Iraq National 
Oil Company (INOC).  That proposal will now be transmitted to the 
Council of Representatives (COR, the Iraqi Parliament) for 
consideration.  Vice Chairman of the COR Oil and Gas Committee Dr. 
Abdul-Hadi Al-Hassani told ECONOFF on July 29 that while he was 
aware of the bill, his committee has not yet received a copy of the 
draft legislation.  The COR concluded its most recent session on 
July 28 and is expected to be in recess for the next six weeks 
during the Muslim period of Ramadan.  The COR has announced its 
intention to focus on electoral reforms upon its return, which could 
further delay consideration of the INOC law. 
 
¶2. (SBU) Comment:  The INOC legislation is one of four key pieces of 
pending oil sector reform laws.  The others are the Hydrocarbons 
Framework Law, the Ministry of Oil reform law, and the Revenue 
Sharing Law.  The INOC legislation would re-establish the national 
oil company (disbanded in 1987), and also begin the process (jointly 
with the Ministry of Oil reform law) of separating oil production 
from regulation of the oil sector, both of which are currently 
conducted under the aegis of the MoO.  The INOC bill is a necessary 
and welcome step towards modernization of the Iraqi petroleum sector 
- one the Embassy has long supported.  Also of note are comments 
attributed to Thamir al-Ghadhban, head of Prime Minister Nouri 
al-Maliki's council of advisors, who said that the draft legislation 
does not specify which oil fields will be produced by INOC.  He said 
that the Federal Oil and Gas Committee would determine the 
disposition of the fields.  The lack of field allocation to INOC 
could become an important bridging measure between the central 
government and the KRG on the annexes in the Hydrocarbon Framework 
Law.  The KRG has consistently maintained that no fields should be 
allocated directly to INOC and that fields should be auctioned off. 
Under the draft legislation, the proposed Federal Oil and Gas 
Committee (the experts charged with creating the overall strategy 
for hydrocarbons in Iraq) would determine disposition of the fields. 
Such an approach could remove KRG complaints against the annexes, 
potentially easing passage of the Hydrocarbons Framework Law.  End 
comment. 
 
FORD