BAGHDAD, Feb 26 (Reuters) - The following is a text of statements made to Reuters by Iraqi Deputy Prime Minister Barham Salih on a draft oil law approved by the cabinet on Monday. Salih, who heads the committee that drafted the law, told Reuters it would now be sent to parliament for approval. The legislation aims to optimise Iraq's oil and gas exploitation and assures equitable distribution of revenues among all Iraqis. The law ends decades of excessive centralised control over the industry which was often the impediment to development for the sector. This delineates responsibilities and authorities between the national institutions of the oil ministry and INOC (Iraqi National Oil Company) and the regional oil companies and establishes the Federal Council of Oil and Gas that will become the forum through which national oil policy will be decided. The decision making process has built in checks and balances to enhance transparency and fight corruption. Iraq is home to one of the largest petroleum resource bases in the world with potential oil reserves in excess of 200 billion barrels and proven reserves in the region of 115 billion barrels. Moreover its exploration and development costs are among the lowest in the Middle East. The law is hoped to enable Iraq to achieve its potential and utilise its revenues for the benefit of all Iraqi people. The cabinet endorsement of the legislation represents a major breakthrough for Iraq's political and economic transition. The law establishes the basis of the political economy of a federal, democratic, unified Iraq. The council of ministers in an extraordinary meeting today approved the draft of the national hydrocarbon law. The draft law prepared by the oil and gas sub-committee of cabinet comes in the wake of nearly six months of intense deliberation involving industry experts and the political leadership of the country. The law aims to provide for a conducive investment environment. It encourages private enterprise and welcomes international oil companies to invest in the development of the Iraqi oil sector. The international oil companies have a recognised role to play in the transfer of up-to-date, state of the art technology, technical and managerial training of Iraqis and in providing investment capital. The law stipulates restructuring INOC so that it will be an independent holding company with affiliated regional operating companies. The oil ministry will become the regulator for the sector. The existing contracts signed by the KRG (Kurdish Regional Government) will be reviewed by the KRG to be made consistent with the premise of the law. A commission of independent experts will ratify consistency in case of contention. Negotiations can be conducted by the regional authority in accordance with procedures and guidelines established by the Federal Council of Oil and Gas. The negotiations and contracts will have to be based on the main criteria of maximising revenues for Iraqi people. The political leadership have committed to have the law and other associated laws and regulations be implemented by the end of May 2007 -- admittedly tough, and a gruelling schedule, but economic and political imperatives of the country require all of us to rise to the challenge.
