LONDON: To entice foreign companies to develop Iraq's oil sector, the nation's next government will not only have to tackle violence that has scared away investors, it will also have to determine who controls the country's lucrative oil fields.
Despite the oil industry's many problems - falling production, crumbling infrastructure and relentless insurgent attacks - the prize of the world's second-largest proven reserves is so enticing that some foreign companies have taken the risk of investing.
Most have been small companies that bypass the central government in Baghdad and sign agreements with regional Kurdish officials in the north, just to get a foothold in the market. The real test will be if Iraq can manage to entice the world's top oil companies, which are needed to rebuild the industry.
That isn't expected to happen until the new government resolves the constitutional debate over the control of oil. Kurds and Shi'ites, who predominate in Iraq's two main oil-rich areas - the north and south, respectively - seem determined to form virtual mini-states that have control over their oil assets and profits. Iraq's Sunni Arabs are concentrated in mostly oil-poor central Iraq and want central control over the resources to ensure they get a share of the profits.
The new Iraqi government must establish a state oil company and consider constitutional amendments that Sunnis are demanding to decide whether Baghdad continues to control oil assets or whether it shares that privilege with regional governments.
"If the election is a success, the constitutional dispute over oil supplies is resolved and a new central oil company is created, Iraq will finally start to move ahead," Issam Al Chalabi, a former Iraqi oil minister now working as an oil consultant in Jordan, said.
Still, security fears could make it tough for the government to draw in companies such as BP, Exxon Mobil and Royal Dutch Shell, he said.
"I'm keeping my fingers crossed," Chalabi said. "But the new government must face the fact that nothing of substance from the large foreign oil companies is likely to happen in 2006."