08/09/2011 08:10 BST | Updated 06/11/2011 05:12 GMT

Kurds Could Bring Down Al-Maliki Over Hydrocarbon Law

Kurdistan region slammed the Iraqi central government on its handling of the newly proposed oil and gas law and accused Baghdad of dirty manoeuvring. The Kurdistan region presidency office condemned the tactics used and called on the Council of Ministers to withdraw the government's version of the draft law immediately, saying the draft contradicts the Iraqi constitution. "We call on the Speaker (parliament) to discard the draft law submitted by the Cabinet and to continue the current parliamentary course (debating the Energy Committee version of the Law), taking into account any proposed amendments by all parties", said The KRG on Monday in presidential office statement.

In August, the second oil draft surfaced, introduced by the Parliamentary Energy Committee and backed by the Iraqiya List (headed by Ayad Alawi) and the Kurd. And last week, the Iraqi Cabinet has approved its own amended version of the oil and gas law and has forwarded it to the house of representative for its first reading.

Incumbent MPs walked out of the first reading for the Energy Committee version of the law for not been consulted and citing that lawmakers cannot introduce new legislations but can only debate, amend and approve new laws. This argument is supported by a case law from the Iraqi Supreme Court, which has annulled a previous attempt by MPs to introduce new laws. Nevertheless, the Iraqi Cabinet was spurred into action to speed up its version of the hydrocarbon in an effort to try to supersede the version already in parliament.

The oil and gas law was first introduced by the previous Iraqi government in 2007 and since, the law has stalled due to disagreement between Baghdad and Erbil over the legality of the Kurdish PSCs(Production Sharing Contract) and oil revenue sharing among other things. Kurdistan region has passed its own Hydrocarbon law since and awarded a dozen more PSCs. in the absence of a clear winner in 2010 Iraqi elections, a deal was reached and the Kurdish block agreed to support Al-Maliki, enabling him to form the current Iraqi government. Part of the deal was to make amendments to the Hydrocarbon law and resolve the outstanding issues between Baghdad and Erbil. However, the KRG on Monday accused the government of dirty tricks for not honouring the deal and failing to consult the Kurdish bloc when approving the new draft. In the statement, the KRG has also called on the council of Ministers to withdraw the draft law immediately. The KRG has pointed out that the law does not reflect Erbil deal and the points agreed upon to form the current Iraqi coalition.

Iraq's much awaited Hydrocarbon law is the main focus of investors as the Kurdish PSCs awarded by the KRG have been dispute between the central government and the KRG. Iraqi government has declared the contract unconstitutional but the KRG deems the contracts awarded constitutional and insistent on keeping control over its natural resources. Moreover, many companies entering Kurdish PSCs have been black listed and prevented from taking part in the fourth licensing round for Iraqi oil and gas contracts.

The KRG has made it clear in the statement that they are willing to accept any law that will serve all Iraqis. Nevertheless disagree with the way ministers handled this new draft law and called on parliament to debate the Energy Committee's hydrocarbon draft allowing all interested party to discuss the law and propose amendments accordingly.

The recent statement by the KRG is the strongest rebuff yet of the Iraqi government and its ambitious plan for centralising power and the oil and gas industry in particular. The KRG reference to the power sharing agreements made when entering the coalition in the latest statement is a clear indication that the Kurdish Bloc is willing to use the nuclear option and pull out of the coalition bring down AL-Maliki's beleaguered government.