Active US role in Iraq oil sector urged

The high-level expert group set up to advise US President George W Bush on a new policy direction in Iraq has delivered recommendations…

The high-level expert group set up to advise US President George W Bush on a new policy direction in Iraq has delivered recommendations specific to Iraq's oil industry.

Iraq Study Group advocated a strong US role in influencing Iraq's oil industry though international co-operation would also be desirable.

It said longer term measures should include encouraging international firms to invest in Iraq's oil industry and assistance from the US in reorganising industry as an efficient commercial enterprise.

The report said: "To combat corruption, the US government should urge the Iraqi government to post all oil contracts, volumes, and prices on the Web so that Iraqis and outside observers can track exports and export revenues.

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"The United States should support the World Bank's efforts to ensure that best practices are used in contracting. This support involves providing Iraqi officials with contracting templates and training them in contracting, auditing and reviewing audits."

"Oil revenues should accrue to the central government and be shared on the basis of population. No formula that gives control over revenues from future fields to the regions or gives control of oil fields to the regions is compatible with national reconciliation."

It also proposed short-term measures which included providing US assistance to the Iraqi administration to prepare legislation defining the rights of regional and local governments and creating a fiscal and legal framework for investment.

"The US government should encourage the Iraqi government to accelerate contracting for the comprehensive well work-overs in the southern fields needed to increase production, but the United States should no longer fund such infrastructure projects," it said.

It also recommended the US military retain an active role in protecting oil fields, installations and workers in co-operation with the Iraqi military and private security forces.

"These measures should include a program to improve pipeline security by paying local tribes solely on the basis of throughput [rather than fixed amounts]."