* Iraq's oil auction begins on Friday
* Will deals hold past March election?
By Suadad al-Salhy and Ahmed Rasheed
BAGHDAD, Dec 10 Iraq will on Friday begin a
hotly anticipated auction of contracts to develop 10 oilfields,
some of the world's most promising and easily accessible, but
will the deals be honoured after a March general election?
Iraq's politicians are deeply divided along sectarian and
ethnic lines, and the cabinet and lawmakers are at loggerheads
over whether parliament should have a say over oil deals. Modern
hydrocarbon laws governing Iraqi oil have not yet been passed,
and the independent-minded oil minister has many enemies.
After a previous contract auction in June, Iraq's
government has already ratified one deal for BP (BP.L) and
China's CNPC to develop the Rumaila supergiant oilfield, and has
initial agreements with groups led by Italy ENI (ENI.MI) and
Exxon Mobil (XOM.N) for two other fields.
WHAT DO OIL-SAVVY POLITICIANS SAY?
Opinions are largely split between allies and non-allies of
Prime Minister Nuri al-Maliki, although even some traditional
government critics stand behind the deals.
"According to Iraqi law these contracts will be illegal if
they were passed without parliament approval. To solve this
problem, we need to pass the hydrocarbon law, which could
provide a better legal framework for all future contracts," said
Ali Hussain Balou, head of parliament's oil and gas committee.
The Oil Ministry, which has Maliki's backing, insists
parliamentary approval is not necessary.
"The deals are perfect in terms of developing our damaged
oil industry with lowest costs. An elected government endorsed
these deals and all decisions made must be respected by the next
one," said Abdul-Hadi al-Hasani, deputy head of parliament's oil
and gas committee and a Maliki ally.
WHAT DO MAIN ELECTION COMPETITORS SAY?
Maliki's State of Law coalition, one of the main contenders
in the March polls, will surely honour the oil deals should it
hold onto the clout it currently enjoys.
Some political groups say they will respect the contracts,
but that could change in political wrangling during the
formation of a new government after the March election.
The Supreme Islamic Iraqi Council (ISCI), which heads the
Iraqi National Alliance, a coalition likely to be Maliki's main
challenger at the ballot box, will also stand by the contracts,
said Jalal al-Din al-Sagheer, a senior ISCI member.
"Of course it will be obligatory for the next government to
honour these deals, regardless of reservations of any political
entities right now. For that reason we advise that these
contracts should be shown to parliament (before they are signed)
so there is political consensus to ward off future problems."
Salim al-Jubouri, a senior member of the Iraqi Islamic
Party, an important Sunni Muslim political group and frequent
critic of Maliki's Shi'ite-led government, agrees.
"What this government signs will also be a commitment for
the next government. They are signing in their official capacity
(as government officials) ... and in the end it will be very
difficult to go back on these agreements," said Jubouri, who is
also the deputy head of parliament's legal committee.
"Maybe those individuals who signed can be held to account
for their mistakes, but the deals will remain valid."
The Islamic Party is the biggest member of the main Sunni
group contesting Iraq's March polls.
Iraq's ethnic Kurds are another of Iraq's key political
players, and they are seen as powerbrokers and kingmakers
because of their skilled manoeuvring.
"These contracts will hold because they are legal, and they
have no connection with political differences between the
government and parliament," said Feriyad Rawanduzi, spokesman
for parliament's Kurdish bloc.
WHAT DO IRAQI LEGAL EXPERTS SAY?
Lawyers disagree about the legality of the contracts.
"There is no doubt all oil deals were made in accordance
with valid laws, and the next government is obliged by all means
to respect them," said Tareq Harb, a leading Iraqi lawyer.
Ahmed Azzawi, a corporate lawyer, was not so sure, and
pointed to an oil contract Iraq had originally signed under
former leader Saddam Hussein with China's CNPC.
CNPC has started work on the Ahdab oilfield since Saddam's
fall, but Iraq renegotiated the deal to gain better terms.
"Iraq is a country of contradictions where anything could
happen, that's what we've seen with the Chinese oil company ...
As long as there are no hydrocarbon laws outlining the
relationship between foreign firms and Iraq, these contracts
will always remain in doubt," he said.
(Additional reporting by Waleed Ibrahim, Writing by Mohammed
Abbas: Editing by Michael Christie and Keiron Henderson)