The chairman of the oil and energy committee in the Iraqi parliament, Adnan al-Janabi, spells out his plans to speed up the legislation of the pending oil sector laws and the role of his committee in resolving the conflict between the KRG and the federal government, in an interview with Ruba Husari in his office in Baghdad Feb.19.
Q: What role do you see for the oil and energy committee in the current parliament?
A: our system is a parliamentary system, but it seems that the last council of representatives and the last oil and gas committee more or less relinquished their role of supervision, accountability and legislation. Hardly any legislation has been passed. There was a quarrel with the minister of oil, no attempt to solve the problems and what I found out now is that for four years or more, parliament has not been playing its role in the oil and gas sector. They were living between two walls. The executive which should have been supervised by parliament was left alone.
Q: What should they have done which you think this committee should do now?
A: It should do what the constitution and its internal rules and regulations say it should so. We are a parliamentary system, we should investigate, supervise, coordinate, and if there is divergence between what the people we represent think and what is being done, then we force change. We are able to do so. But I don’t think we have to reach that point. First we need to start by finding out what plans the government has and what plans the ministers have, whether oil or electricity. If they match what the people want, we will help them and coordinate. One of the biggest problems has been the stalemate between the federal government and the region of Kurdistan. This has to be resolved very early on. There is a political agreement between the various segments of the power players, basically the Iraqi National Alliance led by State of Law, Iraqia and the Kurdish Alliance. They have more or less agreed on resolving some of the outstanding issues. We, the committee and myself, intend to find out the intentions of the ministers. I have been talking to all parties, we have more or less agreed in principle to continue understanding each other. We are starting an initiative, as parliamentary committee, to coordinate between the regional government of Kurdistan and the federal ministries, especially oil.
Q: What role can you play in resolving the conflict between the federal government and the KRG?
A: We are the legislature. The constitution authorizes us with regard to Kurdistan to carry out the will of the writers of the constitution, that there should be coordination between the two and we are determined to play that role. Practically speaking, I have been talking to [the minister of national resources in Kurdistan] Ashti Hawrami, and to the ministers of finance [Rafe al-Issawi] and oil [Karim al-Luaybi] and they all agree we should coordinate. Discussions have been going on for a year and a half between the various political parties, before and after the elections, to resolve some of these issues. So we have a role to play on two fronts; one is coordination and trying to harmonize the relationship between the federal government and the region of Kurdistan and the other is the issue of long term planning for the oil sector.
Q: Judging by PM Nouri al-Maliki’s recent statements, it seems the executive has already taken steps to resolve the issues with Kurdistan.
A: I’m not sure the details are worked out. The agreement only talks about how to pay for the increased production from Kurdistan, but this doesn’t resolve the issues of the contracts signed by the Kurdish region. So the details are not there.
Q: What’s your understanding of the agreement on payments to companies working in the KRG – Mr Maliki seems to be fudging the issues in his statements?
A: There is an agreement between the minister of oil in his previous capacity as deputy minister and another agreement in his current capacity as minister of oil, with the concurrence of the minister of finance, that they have to pay the companies as an interim solution for pumping oil into the pipeline for export. That doesn’t resolve much. This is the only agreement to my knowledge. There has been talk about how to resolve the other issues. I hope there is the will from all parties to do so. My first impression is that there is a great deal of good will especially with the current political momentum.
Q: What’s your personal view on how the oil conflict between the KRG and the federal government should be resolved?
A: My view, and I started working on it, is that we need a committee of three elements; the ministry of oil, the ministry of natural resources in Kurdistan and the oil and energy committee in parliament, represented maybe by myself, to look into all the contracts signed by Kurdistan and probably even to review some of the elements in contracts signed by the federal government, and to take all these issues out of the oil and gas law so that we can move faster on it on non-controversial issues.
Q: So how would you deal with the contracts signed by the KRG?
A: This committee should discuss what to do with these contracts. There has to be the intention to cooperate on all those issues.
Q: What should be the objective of the discussion? Is it to harmonize those contracts?
A: We have 2 objectives: first to take this controversial issue [the contracts] outside of the oil and gas law. We need to get Iraq National Oil Co (INOC) law enacted and we need to have a ministry that is a regulatory body. This has been stalled particularly because of the differences on how to deal with the Kurdish contracts. If we take these contracts out, and promulgate a law which talks about whatever comes after the date of promulgation, then we would have removed all the past problems outside of the main issues at hand while the committee – and probably other subcommittees- work on resolving the conflict regarding the contracts. Then it can be taken up by the federal oil and gas council, which presumably will be enacted by the oil and gas law by then. Those issues have to be resolved in time.
Q: Do you have a solution in mind? Deputy PM Hussein al-Shahristani talked about converting the KRG contracts into service contracts. Is that feasible or realistic?
A: I’m not in a position to pre-judge what the various parties will agree. Al-Shahristani is part of the problem not part of the solution with this presumption. Also, Ashti Hawrami is probably part of the problem not the solution. We need to have all parties talking about the solution, a compromise, and move forward. But in all cases, we should not allow these differences to stall two things: to promulgate the oil and gas law and to get oil [from Kurdistan] produced and exported for the benefit of the Iraqi people. The investments have been made, people want their money, it’s a waste of…everything, to have it locked in after we have done all this. The controversy should be taken out and separated. There are different points of view and the purpose of this committee if it is agreed to – and I don’t see why not- is to reach an agreement. We have a previous experience with this issue during the Allawi government [in 2004]. At the time, I talked to the companies which had signed agreements with Kurdistan then – there were 3 at the time – and we said we need to resolve some of these issues to bring in harmony between the purpose and spirit of the constitution and what is best for the people of Iraq, Kurdistan included. I found out it was not impossible to get the companies to agree to some framework that allows them to move forward. They have invested a lot, have taken a lot of risk, and have a lot of profit to make. I think they want to move forward. Moving forward is to the best interest of the KRG, the federal government and the people of Iraq as well as the best interest of the companies.
Q: As chairman of the oil and energy committee, what’s your plan regarding the legislation of laws?
A: Once we get agreement to start talking about the contracts, I think we can move very fast on two things; one which is the least controversial, and that is the INOC law, and one which is controversial but hopefully less so when we move out the signed contracts and that is the oil and gas law. I hope both laws can be promulgated this year. The KRG also wants the revenue sharing law promulgated soon. We have started a debate on this two weeks ago, a non-partisan debate, involving the UN and some experts. We will have another discussion with a wider group, non-controversial and non-political, on how to proceed on that. Then we will take it up in the oil and energy committee and try to get it passed once we have disentangled some of the differences.
Q: Some will object to the creation of INOC as they see it damaging to their interests?
A: Whose interest? I’m not aware of anyone whose interests will be damaged by INOC law except the position of the oil minister.
Q: When INOC law was approved by the cabinet in 2009, some in the oil ministry were not very enthusiastic because it would take a lot of the powers of the ministry. Do you think you can get it through this time?
A: We don’t have to get the oil ministry to agree unanimously on the INOC law. We have to look into the whole framework. Setting up INOC is part of the oil and gas law. The rationalizing of the sector means that the oil ministry will ultimately have to be a regulatory body. If the minister has other views, we may listen to him but he’s not the only player when it comes to what happens in the oil sector in Iraq.
Q: Do you expect the oil and gas law to be passed this year? Or is it too optimistic?
A: I am fairly optimistic for two reasons: first there has been a lot of political discussions and concurrence on resolving those issues between the main players, especially Maliki, Barzani and Allawi. Other parties talked to the Kurds as well and they promised to get things moving on all issues including all those related to oil and gas. The second reason is that I think the present parliament has a mind of its own and if parliament thinks we should move forward on rationalizing the oil sector, we don’t need to have to continue with this chaos which ended up with oil production decreasing in 2009-2010.
Q: But it’s the executive who is supposed to take the initiative and propose the laws to be legislated.
A: We have the laws and we can move on them.
Q: The old drafts need to be amended to take into consideration developments since they were voted by previous the council of ministers.
A: They don’t have to be amended by the executive as far as we are concerned. We will talk to the executive.
Q: You mean they were not withdrawn from parliament after they were sent to it at the time?
A: No. as far as I can see from the documents of the committee, they were sent to the committee and they were stalled here as the result of political differences within the committee, within parliament and within the executive. There were differences everywhere. But I don’t see the same problems arising now. So we can move them from here. Of course we will talk to the executive, if they have any new ideas. And of course I will talk to the minister of oil on INOC law if he has any new ideas. But like what’s going on with the budget at the moment, parliament has a mind of its own. Ultimately it represents the people and it has its own will. If it doesn’t like the executive, it has to throw the executive out. But it has just voted the government in and I think the government understands that parliament will cooperate as long as parliament is convinced that what it’s doing is in the best national interest and the interest of the Iraqi people. So we are not talking about getting unanimity between the executive and parliament or getting the absolute concurrence of the minister of oil on everything we do. We are talking about cooperating and the political basis for that cooperation has already been set in the discussions before, during and after the elections.
Q: Do you think parliament has to have a say, even retroactively, on the contracts already signed by the ministry of oil?
A: I think we will have to review that process very quickly. I don’t think parliament is very happy that it has been bypassed, whether by the KRG or by the federal government. But that’s not the main problem. We need to have an overall plan for the sector which is framed in the oil and gas law. It has a council that represents various stakeholders and parliament continues to supervise. If that functions properly, I don’t think parliament wants to poke its finger into everything.
Q: Once the federal oil and gas council is established, do you think it should look back at what has already been signed?
A: No, I think looking back should be taken out of the oil and gas law, just like the Kurdish contracts, and the tripartite committee I mentioned earlier should review everything. Once the federal council is set up, the committee will hand over its findings and solutions to the council.
Q: You were part of the vision that was articulated in 2004 by the interim Allawi government. Do you think any of that vision is still applicable today?
A: Yes definitely. The basic parts of that vision were to get the oil sector rationalized, to get the upstream handed over to INOC in order to carry on what we have done so far in the sector, and to cooperate with IOCs to develop what remains in Iraq, including Kurdistan. The oil and gas law takes it up from where we ended at the time in that vision. That vision also sees utilizing gas mostly for the domestic economy and for power. Nothing has been done on that. The Shell gas agreement has been so far stalled. No serious work is being done on other sources of gas, including the associated gas. Even the second bid round contracts don’t detail what happens to the gas and how the operators are to deal with it. We should rationalize that too. Our vision was, and still is, to get the private sector involved in the downstream sector; in refining and distribution and to some extent gas. Some elements have not moved at all, for example the refining and distribution. It’s ridiculous to have the government run gas stations. Our vision was also to have a gas operator or operators acting between the producers and the various users, whether in relation to export or domestic usage. That structure is missing. We probably need several actors in the mid-stream, like what is being discussed with Shell currently – but the most important thing is to have more than one operator. When we talk about gas and the private sector, we mean after the midstream operators. Once the gas, whether dry gas or associated, is produced, the mid-stream can be done by either the government or joint ventures – preferably joint ventures from our point of view- then after that it should be the private sector handling it whether in the petrochemicals sector or whatever other domestic use. The government should not be involved beyond the mid-stream.
Q: The oil and gas committee in the previous parliament made it its main task to grill the oil minister. Would the current oil and energy committee have a different approach?
A: we don’t intend to grill anyone before we investigate and we try to find points of agreement and coordinate. We will try to get things going. If that’s impossible, we will remove the minister who doesn’t fit. The role of parliament is not to investigate, interrogate and punish. The role of parliament is to promulgate laws, supervise and see if things are totally blocked with the executive, then to remove it. We don’t want to start by antagonizing everybody. The interrogations came on the background of the sharp differences between some people in parliament and the executive, not just with the minister of oil but other ministers as well. Maybe that’s one of the things that parliament should do but I don’t think we should start by assuming that people whom we put in the executive are not fit. We put them there and voted on them. We should at least give them the chance to prove that they can cooperate and do a good job and we should try to help them if they work in that direction. If they block the will of the people, that’s a different course.
Q: What’s on the agenda of the oil and energy committee for the next few weeks and months?
A: We are meeting with [deputy PM Hussein] al-Shahristani next week and we are talking to the ministers of oil and electricity about meeting with them the following week. We want them to brief us on what they are doing, what they intend to do and how they intend to do it. We need to try to understand them and help them if they are on the right path, and tell them what we think if there are differences between what we think. We appointed them very recently. So we should listen to them first. In the meantime we have issues that are outstanding, which are past differences which we need to approach differently by talking to these people, especially the ministers of oil in the federal government and the KRG. There are some issues where we not only want to understand what’s going on, but we want to see the details such as the urgent needs in the electricity sector. We also want to discuss the problems that are faced by the IOCs which signed contracts with Iraq. We know they have problems, not only with the ministry of oil, but with other sectors in government, like with the issue of visas for example. We want to see if the legislature can solve them or facilitate them. There are problems with local governments which we can help with. We have a supervisory role on the local councils. The legislature has a lot to do, ultimately to appoint and disband governments. So it’s not a small feat. If we are serious about implementing the constitution, it’s the will of the people that should be our concern.
Q: Does the National Council for Strategic Policies (NCSP) has any role to play as far as the oil policy is concerned?
A: We have just been talking about problems that could arise with some ministers. It is there – if the legislature has no direct role to play – that some of these problems are resolved. We can bring those problems to the NCSP or it can ask the government or get involved itself to review some of those issues. So with the burden – which you think is too heavy for this committee to carry because of the politics – this is the body that will be established to resolve those issues. When there are political blocks and some of the things are being hampered by political differences, it is in the NCSP that they should be resolved. But the details are either with executive or the legislative. We then take it up from there. We are not in contradiction with our leaders, but we want to see structures that work. The NCSP can resolve general issues and some of the major political differences, but the executive and legislative have to carry on these agreements.
Q: You see its role mostly as a problem-solver?
A: Yes, we have a political structure which didn’t work during the last term of parliament because the differences were immense and some elements, especially the office of the PM, more or less usurped the role of parliament and the role of other bodies. Even the presidency council which we assumed will have a supervisory role during the interim is gone. So we need another body that can deal more seriously with issues of political conflict. Everybody is represented in this council. Parliament and its committees are not the best places to resolve some of the bigger political problems but we can carry out some of the agreements that are agreed and discussed. For example, there are agreements that were reached before the formation of the government. Where are they going to be supervised, followed and implemented? We have 10 major agreements, including the agreement to create the NCSP which is not yet carried out. There is also the issue of de-bathification and the political reform which was passed by the last parliament but never implemented. Political reform was passed with the SOFA (Status of Forces Agreement) and it was one of two issues that were conditional on the SOFA, the other one is a referendum which was never carried out. The document on political reform was brought up again after the elections and before the formation of the government and it was considered one of the documents to be carried out during this term. The NCSP has to follow up. There is also an agreement on the reform of the judiciary, and one on national reconciliation…etc. we have 10 agreed documents, of which six are detailed, signed and agreed but none implemented until now. The NCSP will have to find a way to implement them.
Q: Can the NCSP define policy?
A: Yes, there is no limitation on what it does. There is limitation on where it becomes compulsory which is either unanimity or an 80% vote of the body. Then, they become compulsory on all, including the executive, the legislative and others.