The Iraqi cabinet Tuesday approved a law providing for the establishment of a national oil company for the first time in decades, a government spokesman said.
Ali al-Dabbagh said that the cabinet submitted the new draft law to the country's parliament for final approval. He didn't provide any details about the content of the new law.
The Iraqi National Oil Co., or INOC, was set up in 1964 but ousted leader Saddam Hussein scrapped the company in late 1987.
The reinstated national oil company would act as the parent of the existing three major Iraqi oil operators - the South Oil Co., Iraq's largest petroleum company in Basra; North Oil Co. in Kirkuk; and Missan Oil Co. in Ammarh in southern Iraq.
Thamir al-Ghadhban, an energy adviser to Prime Minister Nouri al-Maliki, confirmed that the law was passed by the cabinet Tuesday and would be sent to the parliament for approval.
Ghadhban told Dow Jones Newswires that the new draft law was prepared by a committee set up by the cabinet last year, which consisted of the Minister of State for Parliamentary Affairs Safaaeddine al-Safi, himself and other senior officials.
He said the law stipulates that the new company consist of a board of directors headed by a chairman with ministerial powers. "We have prepared a modern law that gives the new company wide powers," Ghadhban said.
The new legislation won't become a law until it is approved by the parliament, which is expected to begin a six-week recess at the end of this week.
Previous legislation for a national oil company, which was included in an overall hydrocarbons law, has been long delayed by a bitter dispute among the parliament's Shiite, Sunni and Kurdish factions over the sharing of Iraq's oil wealth.
Unlike that legislation, the new draft law avoids naming the fields that the company would operate in order to avoid disputes among the country's political parties and lawmakers. Kurdish officials had rejected the earlier legislation, fearing it gave the national oil company wider powers to run most of the country's oil fields, including those inside Iraq's northern region of Kurdistan.
"In the new draft law we didn't mention the fields that the new company would run," Ghadhban said. "The fields to be operated by the company would be determined by a federal oil and gas council yet to be established," he said.
The previous law stated that the INOC would have authority to conclude service and management contracts with international oil companies to improve oil recovery from producing fields. It isn't known if that provision was retained in the new law.
Iraq sits atop the world's third-largest proven crude reserves after Saudi Arabia and Iran, but is desperate for oil revenue to rebuild its war-shattered economy, especially with global prices down.
Iraq's pre-U.S.-led-invasion production ceiling was about 3 million barrels a day, but it now produces only 2.4 million barrels a day, of which 1.8 million is for export, according to Oil Ministry figures.
Crucial to improving Iraq's broken infrastructure and returning production to pre-2003 levels are security guarantees that major international oil companies' operations won't be disrupted by sectarian power struggles.
Last month Iraq held its first licensing auction, offering six oil and two gas fields to international companies. Only one, the giant Rumaila field in southern Iraq, was awarded to an alliance of BP PLC (BP) and China National Petroleum Corp. The country is planning to hold a second licensing auction by the end of this year, covering 10 groups of oil and gas fields.