by Derek Kravitz

03-07-08 Democratic lawmakers say the Bush administration knew more than it let on about a controversial oil deal between Dallas-based Hunt Oil and Kurdish regional officials in Iraq, a move that sparked condemnation for complicating the country's ability to enact a nationwide oil law.
Hunt Oil, whose chief executive Ray L. Hunt is a member of the President's Foreign Intelligence Advisory Board and a major contributor to Bush's campaigns, signed a petroleum production-sharing contract in September with the Kurdistan Regional Government, the first since the semi-autonomous government unanimously adopted its own petroleum legislation in August. Since then, Kurdish officials have signed oil exploration contracts and hope that foreign firms will ultimately invest $ 10 bn in the oil sector and extract 1 mm bpd from the region over the next five years.

Some Iraqis have accused the Kurdish regional authorities of giving overly generous terms to foreign oil companies in production-sharingagreements. In those agreements, a foreign firm takes on all the risk of exploration but gets a share of production if it finds oil.
The Hunt contract upset the State Department, which has been pressing Iraq to adopt a petroleum law that would delineate the division of authority between the central and regional governments. In a Sept. 28 meeting with the Washington representatives of major oil companies, two State Department officials insisted that the Bush administration's policy was that US companies should not sign separate deals with the Kurdistan Regional Government without approval from the central government in Baghdad.

But Hunt Oil's general manager, David McDonald, wrote in a Sept. 28 e-mail released by the House Committee on Oversight and Government Reform that "there was no communication to me or in my presence made by any of the 9 state department officials with whom I met... that Hunt should not pursue our course of action leading to a contract. In fact, there was ample opportunity to do so, but it did not happen."
A Commerce Department official working at the US Embassy in Baghdad who met with Hunt Oil officials in Kurdistan offered them further support and wished them "a fruitful visit to Kurdistan," documents show.

Five days after the announcement of the Hunt Oil contract, a State Department official contacted Hunt Oil to describe another "good opportunity for Hunt" in Iraq, prompting Jeanne L. Phillips, director of public and government affairs for Hunt Oil, to write to Hunt: "This is really good for us. ... I find it a huge compliment that he is 'tipping' us off about this.... This is a lucky break."
The release of the documents sparked some pundits and commentators to accuse the Bush administration and Hunt Oil of arranging an illegal back-door deal.
"All this strikes me as a wink-and-nod deal, that administration officials in Washington wanted arm's distance deniability if the deal stirred controversy," wrote Dallas Morning News columnist James Mitchell. "It seems to reflect different moods -- Washington officials favouring the deal and US diplomats in Iraq who worrying that it might be counterproductive."

In a letter to Secretary of State Condoleezza Rice, Henry A. Waxman, chairman of the House Committee on Oversight and Government Reform, wrote that Rice "and other Administration officials have denied playing any role in these contracts."
"In the case of Hunt Oil, however, similar denials appear to have been misleading."