Plus:
*Oil law back in Parliament
*New wells and other work to boost oil production
*However, questions remain
*Status Of Forces Agreement update
*The Turkey-U.S.-Iraq-Iraqi Kurd dance
*Iraq Press Roundup
*Much more

The U.N.-mandated auditor of Iraq’s oil revenue says, despite accounting troubles, it is ready to hand off its work to an all-Iraqi team at the end of the year, United Press International’s Ben Lando reports.

Oil revenue is estimated at 95 percent of Iraq’s total annual income. The United States and Iraq have been criticized for lax oversight and transparency of the funds. Iraq’s new government is improving but is slow in spending its entire capital budget.

The International Advisory and Monitoring Board, or IAMB, said the Iraqi Committee of Financial Experts, or COFE, had its work cut out for it. The notion was seconded by a newly released mid-year audit of Iraq’s oil revenue transparency.

The United Nations established the IAMB to watchdog the Development Fund for Iraq, where all oil proceeds are deposited, as well as the leftovers of the Oil-for-Food program and other assets. Ninety-five percent of Iraq’s oil revenue is deposited in the DFI, with 5 percent dedicated to compensation of victims of the 1991 Gulf War.

Two DFI accounts are kept at the Federal Reserve Bank of New York. One, of about $30 billion, is untouched in order to buoy the Iraqi dinar’s value. The other is where all of Iraq’s government expenditures are drawn from. …

The British-based auditors KPMG issued a scathing interim review of Iraq’s oil revenue transparency from January through June 2008. A final draft will encompass the entire year and will be released next year.

The audit said Iraqi and U.S. officials tasked with ensuring accounting and transparency of the oil revenues have:

- only partially implemented a master plan for oil metering throughout the value chain of the national oil industry, despite more than a year of planning.

- incomplete records in the DFI of Iraqi assets frozen in other countries.

- incomplete records of “contractual commitments entered into by the U.S. agencies” under the guise of the Coalition Provisional Authority.

- not kept records of oil and fuel bartered instead of sold for cash, worth an estimated $426 million.

- not accounted for the $779 million of oil revenue kept in a bank controlled by the State Oil Marketing Co. instead of the DFI.

The audit said these factors and others are hindering its ability to assure complete accounting of Iraqi revenue.

Read the entire story: Click Here. (Contact Iraq Oil Report if free UPI registration does not work.)

For the pdf of the KPMG audit: Click Here.

The Iraq Parliament’s Oil & Gas Committee has been given a newly approved version of the oil and gas law, Iraq Oil Report can confirm. This follows on Ben Lando and Alaa Majeed’s UPI report Monday that the committee had received a draft but sent it back to Prime Minister Maliki and the Council of Ministers. They complained it was improperly sent to the Parliament. A source tells Iraq Oil Report the version approved by negotiators February 2007 and amended by the Shoura Council is the version approved. While there are many opponents of the various versions of the oil law, it is likely that the Parliament wants to begin the long-awaited debate, which will surely lead to further changes of the law.

Drilling new wells and other work will increase 2009 Iraq oil production by 200,000 barrels per day, Reuters reports, Oil Minister Hussain al-Shahristani saying. He estimates Iraq will average 2.5 million to 2.7 million bpd next year.

Iraqi workers and contractors of the Ministry will continue their maintenance and enhancement work. That, plus success in the Kurdistan Regional Governments exploration and production deals (barring political entanglements) and Baghdad’s deal making could lead to Shahristani’s estimate being realized.

However, he predicted Iraq would end this year averaging 2.8 million bpd, and the most recent data on production and exports sees it as volatile as the price of oil.

Shahristani is currently meeting with International Monetary Fund officials in Amman, Jordan, Voices of Iraq reports.

A decline in oil exports and the price of oil has led Iraq to cut $10 billion to $15 billion from its nearly $80 billion budget, Suleiman al-Khalidi reports for Reuters. Oil revenue accounts for nearly 95 percent of Iraq’s income. The 2009 budget is still in draft form, awaiting government approval.

London-based Heritage Oil announced it has contracted a rig and will begin its first drilling in its Kurdistan Regional Government exploration block. A company release said it contracted a rig through the Great Wall Drilling Co., which is already in country and expected to spud before the year’s end.

SOFA Update:

The changes Iraq wants to the Status Of Forces Agreement with the United States have been made public. Sam Dagher reports for The New York Times “the amendments would ban American troops from using Iraqi territory to carry out attacks on other countries, further limit when the troops would have immunity from Iraqi laws and allow inspections of American arms shipments.” Also a major issue is whether the immunity applies to the controversial private contractors, Dan Sagalyn reports for NewsHour.

The U.N. mandate authorizing the occupation of Iraq expires Dec. 31, following numerous extensions. Without its renewal or the bilateral deal being negotiated now, the presence of occupation forces in Iraq would lose its last legs of legitimacy. Iraq President Jalal Talabani said after a meeting with U.S. Ambassador to Iraq Ryan Crocker that it was “important” and both countries would “benefit” from the SOFA, Reuters reports.

Massoud Barzani, president of the semi-autonomous northern Iraqi Kurdish region, told The Washington Post he was “doubtful” Iraqi political leaders will approve the agreement. Barzani met with Bush and other leaders during a Washington visit this week.

The White House said many Iraqi politicians have many opinions, Reuters reports, such as a prominent Iraqi lawmaker saying a post-2011 occupation is a non-starter, Voices of Iraq reports. White House Spokesperson Dana Perino also responded to a plea by Reps. Bill Delahunt (D-Mass.) and Rosa DeLauro (D-Conn.) to just get a U.N. mandate renewal: “Because we’ve gotten this far, we might as well try to continue to work on it.”

Dagher also reports of a possible renewed intra-sectarian strife in southern Iraq, where political parties and their militias are vying for control of the oil rich areas ahead of local elections early next year and national elections at the end of 2009. The Wasit provincial governor is warning of this struggle. Wasit was just given the security file from coalition forces, and is where the Ahdab oil field is located. Development of the field was recently awarded to the China National Petroleum Corp. Originally a production sharing contract signed by Saddam Hussein in the late 1990s, it was renegotiated to a service agreement.

Turkey is watching carefully negotiations between its biggest ally and it’s most volatile neighbor (and potential big ally). President Abdullah Gul sees U.S. and Turkish foreign policy as nearly identical, including in Iraq, Ben Lando reports for The Washington Times.

While Turkey opens up diplomatic routes with Iraq’s Kurdish Barzani leadership, Emrullah Uslu writes in the Eurasia Daily Monitor this could anger the Kurdish separatist PKK even further, as it sees Barzani’s aim of Kurdish leadership in competition with imprisoned PKK leader Abdullah Ocalan and an end-around Turkey’s negotiations with its own pro-Kurdish Democratic Society Party.

This could be a slick attempt by Turkey to pit its two largest Kurdish opponents against each other. Or, as Frank Hyland writes in Terrorism Focus, Turkey-Barzani rapprochement is a direct practical result of increased PKK violence.

Iraqis are now faced with nuclear contamination after buried metal from the old nuclear projects have been dug up and sold on the scrap metal market, Adel Kamal reports for Niqash.

Read what Iraqis read: the Iraq Press Roundup by UPI’s Alaa Majeed.

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