Kuwaiti Panel Votes to Exempt Foreign Oil Firms from Using Middlemen
A parliamentary committee has voted to exempt foreign oil companies from having to appoint local agents for the multi-billion dollar development of Kuwait's northern oilfields, newspapers reported Monday.
The move is contrary to the Gulf Arab state's commercial law, which stipulates that a foreign-owned company must have a local agent to be able to operate in Kuwait.
But the Legal and Legislative Panel amended the clause so that foreign oil majors will be allowed to deal directly with the Kuwait Oil Company (KOC), the Arab Times said.
The amendment still requires the approval of the house and the endorsement of emir, Sheikh Jaber al-Ahmad al-Sabah, before becoming law.
The five MPs, who presented the amendment, said their aim was to ensure that no additional costs are incurred by the state by virtue of appointing middlemen, and also to free the seven-billion-dollar project from political influence.
Two weeks ago, the Kuwaiti government presented to parliament new legislation regulating the oil investments. It permits foreign oil majors to set up Kuwaiti shareholding companies fully owned by them to carry out the development projects.
But MPs have repeatedly expressed concern that influential Kuwaiti middlemen were to benefit the most from the project and this might eventually harm the emirate's interests.
Approved by the cabinet in April, the legislation rules out foreign ownership of Kuwait's natural resources, but it is unlikely to get through parliament before November.
The Gulf Arab state aims to increase production capacity to 2.5 million barrels per day (bpd) in 2000 and three million bpd in 2005. Its present capacity is 2.2 million bpd.
The majors are to be paid by a fee per barrel of oil extracted for developing the fields near the Iraqi border, not through production-sharing agreements.
Foreign oil firms in Kuwait, which holds around 10 percent of global oil reserves, have previously been restricted to technical service agreements - (AFP)
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