– in International Law – Now Owns the Oil in the Mosul Vilayet
Question du feu (pétrol): res in usu omnium en Droit Musulman et Arab
UN Department of Humanitarian Affairs on Iraq's limited sovereignty & oil matters
26 Oct 12
Oil majors back Kurdistan, Financial
Post, Lawrence Solomon
16.Aug 12 Ölförderung im kurdischen Teilstaat: Der Irak als erstarkende Erdölnation, NZZ, Gerald Hosp
13 Aug 12 Hussein Shahristani: Iraq Warns Total over KRG Oil Deal, Iraq Business News, John Lee
1 Jul 12 Assessing Iraq's Oil Industry, MERIA, Aymenn Jawad Al-Tamimi
15 Nov 11 Ashti Hawrami: ALL ABOUT KURDISH OIL: Q&A, Iraq Oil Report, BEN LANDO
29 Nov 10 Iraq Petroleum 2010 with Tariq Shafiq
27 Apr 10 E&P Power Forum Jakarta with Tariq Shafiq
20 Jun 10 BP in $50bn plan to plug finances, Sunday Times, Ben Marlow et al.
9 Jun 10 Iraq's Ex-Oil Chief Criticizes Baghdad Deals, WSJ, HASSAN HAFIDH
31 Mar 10 BP Begins Big Push to Revive Iraq's Oil, WSJ, RUSSELL GOLD
25 Mar 10 Iraq’s oil output targets 'impossible', Energy Risk, Lianna Brinded
5 Mar 10 Analysis: Oil beneath the Iraqi election, Global Post, Tom Hundley
3 Mar 10 Legalities, realities are high hurdles: Iraq Potential Faces a Lot of ‘Ifs’, Explorer, Louise S. Durham
19 Feb 10 Remember: Their Oil, Not Ours, WSJ, PAOLO SCARONI
15 Feb 10 Iraq In 2010: The Dangers Of European Complacency, FRIDE, Eurasia Review, Edward Burke
8 Jan 10 Iraqi Oil Reserves By Province, Eraly Warning, Stuart Staniford
4 Jan 10 Iraq Could Delay Peak Oil a Decade, Eraly Warning, Stuart Staniford
13 Dec 09 Iraq ends 'successful' oil bid round, output seen tripled, MarketWatch, Hassan Hafidh
12 Dec 09 Lukoil, Statoil Win West Qurna, Prize in Iraq Bidding, Bloomberg, Anthony DiPaola
11 Dec 09 Key Oil Auction in Iraq Today: Foreign Companies Are Back, Huffington Post, Antonia Juhasz
10 Oct 09 Why Iraq's Oil Law Remains Deadlocked Three Years On, TIME Magazine, Vivienne Walt
4 Oct 09 Baghdad vs KRG, Iraq Oil Forum, Ruba Husari
10 Jul 09 1st Oil Bidding Round Flops In Iraq, Musings on Iraq, Joel Wing, comments
25 May 09 Iraq Oil: Between The Centre And The Region, MEES, Tariq Shafiq
27 Dec 08 Common goods in Islamic and Arab law - Questions on water, land and fire (oil), Sami ALDEEB
Dec 08 THE LEGAL DIMENSIONS OF OIL AND GAS IN IRAQ, Cambridge, Rex J. Zedalis
25.Sep 08 Blood for oil? Wie die US-amerikanische Öl-Industrie den Irak erobert, WDR Monitor
11 Sep 08 Iraq Cancels Six No-Bid Oil Contracts, NYT, Andrew E. Kramer & Campbell Robertson
4 Aug 08 A Major Political Test for Iraq, NYT, editorial
28 Jul 08 Iraq’s Technical Support And Production Service Contracts: Pros And Cons, MEES, Tariq Shafiq
7 Jul 08 Tapping Iraq's Oil, WP, CFR, Lee Hudson Teslik
26 Jun 08 Iraqi oil in the balance, Iraq Federation of Oil Unions, Hassan Juma’a et al.
22 Jun 08 Iraq Petroleum Company successors show up in Baghdad, NYT, Editorial
25 Feb 08 An Opinion Opposing the Existing Draft Iraqi Oil & Gas Law, Al-Ghad, Fouad Alamir
9 Dec 07 Kirkuk Pot Heating Up as Arabs, Turkmen & Kurds Vie for Kirkuk’s Oil, NYT, Stephen Farrell
9 Dec 07 No External Peace Without Internal Balance, NYT, Thomas L. Friedman
5 Dec 07 KRG Deputy PM Fattah meets US Vice President Cheney, KRG.org
2 Dec 07 Nonstop Theft and Bribery Are Staggering Iraq, NYT, Damien Cave
28 Nov 07 Baghdad must implement Kirkuk Article 140 of Iraq Constitution, KRG.org, Nechirvan Barzani
26 Nov 07 Iraqi Oil Professionals Make Statement Against Oil Theft, Global Policy Forum, Assalamu Alaykum
20 Nov 07 KRG responds to Baghdad’s threats to oil international companies, KRG.org
19/29 Nov 07 Mosul Vilayet Council takes KRG Prime Minister by his words
12 Nov 07 KRG signs five more petroleum contracts, KRG.org
6 Nov 07 Ministry announces 7 new, reviews 5 existing contracts, KRG.org
26 Oct 07 Bina Bawi - Northern Iraq, Petholding
22 Oct 07 Kurdistan as a model for Iraq, CFR's Greg Bruno interviews Falah Mustafa Bakir
15 Oct 07 Iraqi Oil Spoils, NYT, Editorial
15 Oct 07 The Kurdish example, Washington Times, Falah Mustafa Bakir
6 Oct 07 Taking the lead on Iraqi oil, Wall Street Journal, Nechirvan Barzani
2 Oct 07 Kurdistan spearheads Iraq oil investment, KRG.org
29 Sep 07 Iraq Kurdish region says new oil deals are legal, Reuters, Simon Webb
29 Sep 07 Security may trump ethnicity in Kirkuk, Los Angeles Times, Borzou Daragahi
17 Sep 07 Sharing Iraq's Oil: Analyzing Production-Sharing Contracts, Tulane University, Daniel Behn
15 Sep 07 Theory on delay of Iran bombing and Iraq Hydrocarbon Law, yurbud
11 Sep 07 KRG responds to Iraqi oil minister's recent statements, KRG.org
10 Sep 07 Northern Iraq has what’s missing in Baghdad, NYT, Thomas L. Friedman
8 Sep 07 KRG signs oil and gas contract with US-based Hunt Oil, KRG.org
6 Sep 07 Kurdistan Region Oil and Gas Law in Arabic and English, updated model contract, KRG.org
6 Aug 07 Kurdistan Oil & Gas Law approved by Kurdistan Parliament, KRG.org
18 Jul 07 Iraq’s Petroleum Law – Revisited, US House Committee on Foreign Affairs, Tariq Shafiq
15 Jul 07 UK Representation thanks KRG's British & international friends, KRG.org
20 Jun 07 Authors oppose the many changes in Iraq oil law, Gas & Oil Connections, Ben Lando
12 Jun 07 Iraq Petroleum Law Re-visited, CSIS, Tariq Shafiq
22 Apr 07 Addax bought stake in Northern Iraq, seeks £2.7bn listing in London, Daily Telegraph, Sylvia Pfeifer
3 Marc 07 Whose Oil Is It, Anyway?, New York Times, Antonia Juhasz
6 Mar 07 Iraq’s Draft Oil Law: The Federal Dimension, http://historiae.org, Reidar Visser
17 Feb 07 Iraq Draft Petroleum Law: An Independent Perspective, Petrolog & Assoc., Tariq Shafiq
15 Feb 07 DRAFT IRAQ OIL AND GAS LAW, Council of Ministers, Oil & Energy Committee
20 Jan 07 Draft Law Keeps Central Control Over Oil in Iraq, NYT, James Glanz
17 Jul 06 Who Needs Big Oil In Iraq? (Part 1 of 2), MEES, Helmut Merklein
22 Hov 05 Crude Designs: The rip-off of Iraq's oil wealth, Platform, Greg Muttitt
Nov 05 UPDATE ON THE IRAQI OIL LAW, Oil Change International, Greg Muttitt
1 Aug 05 Iraq: Oil Plans and Policy, MEES, Tariq Shafiq
June 05 Iraq, World News Network
15-Dec 03 Iraq Oil Development Policy Options: In Search Of Balance, Middle East Economic Survey, Tariq Shafiq
6 May 03 The London Observer "Outs" Israeli Plans to Steal Iraqi Oil
22 April 03 Bush Demands Iraqi Airfields to Protect “Israeli” Oil
19 April 03 Israel Officially Approaches Turkish Labor For Help Stealing Iraqi Oil
17 April 03 Israel's Blitzkrieg on Middle East Oil, Joe Vialls
1996 Question du feu (pétrol): res in usu omnium en Droit Musulman et Arab, Sami Aldeeb
Sep 1995 Hot Spot: Turkey, Iraq, and Mosul, Middle East Quarterly, Daniel Pipes
n.d. Optimising Iraq’s undeveloped gas fields, oilreviewmiddleeast.com
n.d. Was the Iraq War for Oil?, STOP the Iraqi Oil Law
Spot: Turkey, Iraq, and Mosul
by Daniel Pipes
Unnoticed by the international media, a brief controversy flared up in the Middle East during early May 1995, when Turkey's President Süleyman Demirel gave several interviews with Turkish journalists in which he called for a change in Turkey's borders with Iraq. While the controversy quickly disappeared, it raised an issue that could return.
In the aftermath of World War I, the victorious Allies in August 1920 imposed the Treaty of Sèvres on the defeated Ottoman Empire. This treaty allotted Istanbul and the straits region to Russia, then carved up Anatolia into Greek, Italian, French, and Russian zones; Turks remained sovereign only in a rump state in northwest Anatolia to be constrained by many limits on its authority. Thanks to Kemal Atatürk's military victories in the period May 1919-October 1922, however, Sèvres was never implemented. Instead, the much more balanced Treaty of Lausanne was signed in July 1923, confirming most of Turkey's present borders.
Indeed, the Lausanne treaty specified all of Turkey's boundaries except one -- that with Iraq, where only a provisional frontier (called the "Brussels line") was in place. This issue was left open for a "friendly arrangement to be concluded between Turkey and Great Britain within nine months." Failing that, the issue would be referred to the League of Nations.1 The Turkish government resisted giving up its old province Mosul, on several grounds: the political wishes of Mosul's inhabitants, its many Turkish-speakers,2 its oil reserves, and the direction of its trade. Foster 144-5 In addition, British forces were twelve miles away from the city of Mosul on October 30, 1918, the day London signed the Armistice of Mudros that ended its war with the Turks; this made the legality of the British presence in Mosul very dubious.
Despite Turkish claims to Mosul, London claimed the province in its entirety for Iraq; it also turned down Ankara's proposal that a plebiscite be held to measure views in the province. Unable to reach a "friendly arrangement," the two parties referred the dispute to the League of Nations, which endorsed Mosul's becoming part of Iraq. After prolonged tensions, which included threats of armed confrontation in the Turkish press, Ankara eventually signed a treaty3 in July 1926 that made the Brussels line the international frontier, leaving the Mosul region and its 600,000 or so inhabitants in Iraq.4
The issue then died down for sixty years, only to revive during the Iraq-Iran War, when Saddam Husayn's government lost effective control of northern Iraq. Four times after May 1983, he gave permission for Turkish troops fighting insurgents from the Kurdish Workers' Party (Partiya Karkerana Kurdistan--PKK) to engage in hot pursuit onto Iraq territory. The Turkish press began to raise the issue of Turkey's claims to the Mosul region, and the government reportedly informed its allies of an intent to take control of Mosul in case the Iraqi regime should fall. The Kuwait war of 1991 and the subsequent collapse of Iraqi authority north of the 36th parallel stimulated Turkish warnings that it would not countenance Syrian or Iranian encroachments on the Mosul area. During the period March 20-May 2, 1995, in an effort dubbed Operation Steel, some 35,000 Turkish troops moved into northern Iraq attempting to clean out PKK strongholds.
THE DEMIREL STATEMENTS
Just as the Turkish forces were leaving Iraqi territory, Demirel made a dramatic statement to an Istanbul newspaper:
The border is wrong. The Mosul Province was within the Ottoman Empire's territory. Had that place been a part of Turkey, none of the problems we are confronted with at the present time would have existed.5In another meeting, with newspaper columnists, Demirel pointed to a map of the current border area and elaborated:
The border on those heights is wrong. Actually, that is the boundary of the oil region. Turkey begins where that boundary ends. Geologists drew that line. It is not Turkey's national border. That is a matter that has to be rectified. I said some time ago that "the area will be infiltrated when we withdraw [from northern Iraq]." . . . The terrorists will return. We will be confronted with a similar situation in two or three months. So, let us correct the border line. Turkey cannot readjust its border with Iraq by itself. The border line on the heights has to be brought down to the lower areas. I only want to point out that the border line is wrong. Had it been in the low areas at the foot of the mountains, the [PKK] militants would not have been able to assemble in that region.6In a third interview, Demirel accused the West of still wanting to implement the Treaty of Sèvres: "It wants the area beyond the Euphrates."7
MIDDLE EASTERN REACTIONS
These comments roused immediate, strong reactions in the Middle East. A spokesman for Iraq's ruling Revolutionary Command Council said that "Iraq rejects any discussion of the issue and warns Turkey against any unilateral step that would breach the national border. Iraq will resist any act of this kind by all legitimate means."8 The Iraqi News Agency warned that "the Iraqi people, who are rallying around their leader, will resist any encroachment on Iraq's national borders and territorial integrity by all legitimate means. Mesopotamia will always remain united from the far north to the far south."9 A daily newspaper warned the Turks that they are "playing a dangerous game and endangering the security of both Iraq and Turkey."10 A columnist revived the "sick man" sobriquet for Turkey and warned of Iraqi retaliation ("We will cut off the hands of those who try to harm us").11
Opposition forces agreed with Baghdad on this issue. The Iraqi National Congress denounced Demirel's statement, which, it said, "runs counter to . . . the UN Charter and violates the policy of good neighborliness and the history of Mosul."12
The Iranian regime made its sentiments known through the Supreme Assembly of the Islamic Revolution in Iraq (SAIRI), its anti-Saddam movement of Iraqis. SAIRI called the Turkish president's statement "a serious threat to the sovereignty of a state that enjoys internationally recognized borders," condemned "any threat to Iraq's sovereignty and geographic integrity," and called on the Turkish government "to give a satisfactory explanation for these statements and their motives and to apologize to the Iraqi people."13
In Egypt, Foreign Minister `Amr Musa declared his government's opposition to "any encroachment on Arab territorial integrity, including that of Iraq."14 An unnamed Egyptian official commented that "talk about historic rights to Arab territories is an old tune" and urged Ankara to refrain from "talking about historic rights" and "harming Iraqi territorial integrity."15 The chief editor of a Cairene daily characterized Demirel's words as a demand that part of Iraq be annexed to Turkey and blamed this mainly on Saddam's "sinful aggression against Kuwait." But what "really causes anger," he noted, "is the silence of the Western countries, notably the United States."16
Demirel responded to these and other comments with further interviews. On May 8, he backtracked slightly: "Talk of changing [the border] must proceed through dialogue and coordination with the countries concerned."17 (Use of the plural -- "countries" -- suggests bringing the United States into the discussions, which make sense, for it partially controls Iraq north of the 36th parallel.) When this statement failed to quiet his critics, Demirel went further and effectively denied that he meant what he had earlier said:
The views I outlined have been misunderstood. The border between Turkey and Iraq is a problem. However, that state of affairs is not a matter that can be solved now. Turkey does not plan to use force to either solve the problem or gain territory. Nevertheless, something could have been achieved through the cooperation of the peoples of the two countries. That is what I suggested some time ago. We maintain that approach now.18
The Turkish ambassador in Tehran explicitly denied a Turkish intention to occupy Mosul and interpreted Demirel as having done nothing more than "implied that a minor change can be made with the concurrence of the two sides in some parts of the border."19 Demirel himself more emphatically retracted his earlier statements to an Arabic newspaper:
Turkey has no regional claims on any of its neighbors, including Iraq. The question of Mosul was settled in 1926 and it is not now considered an item on the Turkish foreign policy agenda. . . . Turkey has no policy about any new border arrangements and has no plans to reconsider such matters.20This emphatic retraction evidently pleased Baghdad, which replied with soothing words. An Iraqi parliamentarian Safa' al`Umar visiting Ankara declared the two countries had turned over a new leaf in their relations.21 Vice President Taha Yasin Ramadan declared his government's interest in "strong good-neighborly ties with Turkey."22 And so, the incident apparently came to an end, at least temporarily. But nothing was actually resolved and the Mosul issue could flare up into a crisis, especially if the Iraqi government continues to weaken.
Daniel Pipes is editor of the Middle East Quarterly.
1 For the text of the agreement,
see J. C. Hurewitz, ed., The Middle East and North Africa in World Politics:
A Documentary Record, 2d ed. (New Haven, Conn.: Yale University Press,
1975-79), vol. 2, pp. 326-37.
2 On their importance, see Koçsoy, Irak Türkleri (Istanbul: Bogzzzaziçi Yayïnlarï, 1991), pp. 4-8.
3 Text in Middle East and North Africa, vol. 2, pp. 372-74. On the Mosul settlement, see Stephen Hemsley Longrigg, `Iraq, 1900 to 1950: A Political, Social, and Economic History (Oxford: Oxford University Press, 1953), pp. 152-56; Lord Kinross, Ataturk: A Biography of Mustafa Kemal, Father of Modern Turkey (New York: William Morrow, 1965), pp. 463-66.
4 For an account of this issue, see Henry A. Foster, The Making of Modern Iraq: A Product of World Forces (Norman: University of Oklahoma Press, 1935), chapter VIII.
5 Zaman, May 3, 1995. This and the following media reports derive from Foreign Broadcast Information Service, Daily Report and the Mideast Mirror.
6 Hürriyet, May 2, 1995.
7 Milliyet, May 2, 1995.
8 Iraqi News Agency, May 4, 1995.
10 Al-Qadisiya, May 8, 1995.
11 Ath-Thawra, May 7, 1995.
12 Voice of Iraqi People, May 8, 1995.
13 Voice of Iraqi Islamic Revolution, May 4, 1995.
14 Middle East News Agency, May 5, 1995.
15 Al-Hayat, May 4, 1995.
16 Jalal Duwaydar, Al-Akhbar, May 4, 1995.
17 Show Television, as quoted in Al-Hayat, May 10, 1995.
18 Cumhuriyet, May 19, 1995.
19 Ahmet Midhat Balkan, interviewed in Abrar, May 27, 1995.
20 Ash-Sharq al-Awsat, June 4, 1995.
21 Middle East News Agency, June 7, 1995.
22 Jordanian News Agency, June 14, 1995.
Blitzkrieg on Middle East Oil
"Operation Shekhinah a.k.a. Operation Iraqi Freedom"
Copyright Joe Vialls
* * *
* * *
On 21 March 2003, the British and Australian Special Air Services Regiments [SAS] were unwittingly tasked with protecting “Israeli Assets” H2 and H3 in Iraq’s Western Desert. Their British and Australian political masters stood these elite troops into clear and present danger, without ever explaining the real reason for their presence.When Part One of Operation Shekhinah was first published in January 2002, it was viewed by many as a work of complete fiction. “Where is the proof,” my mainly Jewish critics asked, “that Israel intends to illegally invade Iraq and steal its strategic oil reserves?”
Large scale planning map of Iraq, including existing pipelines
crimes including the illegal invasion of a sovereign nation like Iraq,
require opportunity, motive and method. Any policeman on the street
will happily confirm this. Out of these three criteria, motive is by far
the most important, for without it the crime would not be committed in
the first place. A drug addict is motivated to steal by an uncontrollable
need for narcotics, and a car thief is motivated to steal by the
need to convert identifiable goods into anonymous cash.
The Israeli-Jewish lobby’s motive for the original Operation Shekhinah, and latterly for Operation Iraqi Freedom, was and is based on the certainty that the American economy and social structure is in steep decline. Unless the Israel-Jewish lobby could somehow find a massive independent income stream, the parasitic Jewish State would completely collapse in less than a decade. We will examine this harsh reality later in the report.
On the first day of Operation Iraqi Freedom, the British and Australian SAS, in the company of unspecified American special forces, were deployed to the Western Desert of Iraq in order to “protect” two strategic “airfields” code-named H2 and H3, which “might” be used to fire Scud missiles at Israel. This despite the fact that everyone from the UN Secretary General down to the most humble of weapons inspectors, knew the claim was pathetic rubbish. The last of Iraq’s scuds were destroyed many years ago.
What you were told quite clearly by the media, however, is that these highly trained specialist troops, normally reserved for strategic reconnaisance ahead of the main military force, had mysteriously been assigned to the mere “sideshow” of protecting the Jewish State.
In Australia, this startling announcement was promptly followed by visits and telephone calls from former Israeli Prime Minister Barak, and current Prime Minister Sharon, publicly heaping lavish praise on Australian Prime Minister John Howard, for protecting Israel against Scud missiles, which Israel itself already knew no longer existed. So exactly what were these two Prime Ministers thanking Australia for?
The short answer is that “airfields” H2 and H3 are actually “Haifa 2” and “Haifa 3”, critical pumping stations on the oil pipeline that originally ran all the way from Mosul in the north of Iraq to Haifa in Palestine, and pumped oil until 1948. During that year Palestine was invaded by the “Jewish State”, at which time Iraq blocked the pipeline near its western end. But recent Israeli claims that this Mosul to Haifa pipeline is nowadays “dilapidated”, “out of action” and “runs through Syria” are intentional disinformation.
you can see on the map above, the Mosul to Haifa pipeline runs all the
way down the Western Desert of Iraq, then crosses into Jordan rather than
Syria, continuing west to a point near Amman, just a few miles short of
the Israeli border. Until very recently, Iraq pumped free oil along this
pipeline to Jordan, as a way of saying thank you for Jordan’s support during
the 1990-1991 Gulf War. “Free” oil for Israel has thus always been tantalizingly
close, and is the sole reason for “Operation Iraqi Freedom”.
For unspecified reasons that are now becoming much clearer, Bush, Blair and Howard demanded that the best special forces in the western world should defend a line running from H3 in the south, to Mosul in the north. By an odd coincidence perhaps, this is the exact route of “Israel’s” Mosul to Haifa pipeline. Proof that this initial Israeli objective of securing the pipeline as far north as Mosul had been achieved, was inadvertently provided by Jane’s Defence Weekly on 3 April 2003.
“The parading on Al Jazeera television of UK equipment in the northern Iraqi city of Mosul on 31 March provided a brief glimpse into the SAS role in toppling Saddam Hussein's regime. Footage showed Iraqi civilians jubilantly driving a Land Rover through the streets of the city, then a quad-bike and a collection of weapons being displayed at an Iraqi military base.
“This included hand-held rocket launchers, 40mm grenades, machine guns and specialized radio equipment, suggesting this was not from an conventional British Army unit. The location of the incident, far from the main UK operating area around Kuwait and Basra, immediately led to media speculation that the highly secretive 22nd SAS Regiment was in some way involved.”
According to Russian Military Intelligence [GRU] reports, this was indeed the case. In a chilling report released on 2 April, twenty-four hours before Jane’s wrote about the Land Rover, quad-bike and other special forces equipment in Mosul, the GRU stated:
“Tactical attack units from the American 82nd Airborne Division and the 22nd SAS Regiment, earlier deployed to northern Iraq near the town of Al-Buadj, were destroyed and dispersed as the result of a daylong battle with the Iraqi troops. The exact number of [coalition] losses is still being verified.
“Intercepted radio communications show that the coalition troops are retreating in small groups and have no exact information about their own losses. Currently the remaining units are trying to reach the Kurdish-controlled territory. It is believed that up to 30 [coalition] soldiers were killed or captured by the Iraqis.”
The Mosul to Haifa pipeline is a “bonus” not originally envisioned under the original 2001 Operation Shekhinah, which called only for the capture of southern Iraq and the old Trans Arabian Pipeline, which runs east to west along the extreme northern edge of Saudi Arabia [see map].
The original 2001 Operation Shekhinah was a “can do” solo Israeli objective, bearing in mind the sheer distance over flat desert separating Baghdad from Basrah, and Israel’s overwhelming air superiority. If the Iraqi Republican Guard moved south over the desert in an attempt to intervene, they would be swiftly decimated by state-of-the-art Israeli aircraft, all provided free of charge by generous American taxpayers.
With the rich Mosul to Haifa pipeline now added to the war booty, predicted profits have already gone through the roof, with Israeli traders excitedly muttering to each other about “New Rotterdam” becoming the jewel in the Israeli-Jewish crown. At a more subtle level, the hijacked oil supplies are intended to help fund the planned expansion of the Jewish State, east to the Iranian border.
Nowadays, visible Israeli-Jewish greed for free Iraqi oil borders on the obscene. Less than a week ago while body bags containing dead Americans and Britons were still piling up in Kuwait refrigerated storage [believe me, you really don’t want to know how many], Israeli-Jews were already starting to gloat publicly about their future oil wealth. A leading Tel Aviv newspaper explained:
“Israel's National Infrastructures Minister Yoseph Paritzky is already meeting with Jordanian officials about the [Mosul-Haifa] pipeline, on the assumption that a pro-Western government will be set up following the US-led war. “Minister Paritzky reportedly believes that restarting the pipeline could reduce Israel's fuel costs by 25 percent and turn Haifa into "the Rotterdam of the Middle East" - a major oil export terminal. UPI quotes international relations researcher Dr. Hooman Peimani of Geneva as saying that the venture will reduce Israel's dependence on Russian crude and the cost of its energy imports.”
What the newspaper failed to report, was that on the very same day Israeli Prime Minister Ariel Sharon called American Secretary of State Colin Powell, instructing him to start pumping oil as quickly as possible. Evidently, indicted war criminal Ariel Sharon wished to make it crystal clear exactly who was really in control of American foreign policy, and in charge of US military assets.
Before examining exactly how the “New Rotterdam” expects to operate, we should first answer the obvious question of “Why bother with Operation Shekhinah at all?” It is an open secret that when the powerful Israeli-Jewish lobby snaps its fingers in New York, American taxpayer cash and defense equipment is immediately provided by the shipload. Which of course brings us right back to the failing American economy and social structures mentioned earlier in this report.
Since early 2000, it has been obvious to most informed analysts that America’s economy and employment have been in ever-decreasing decline, made worse by several nations switching their oil trading from US Dollars to Euros. If the situation worsens, perhaps triggered by OPEC switching all oil trade to Euros, with China and Japan panicked into converting their own massive holdings to Euros, the United States Dollar will crash completely, driving America into a depression of hitherto unimaginable severity.
The Jewish State is a true parasite, wholly dependent on massive American funding in order to survive. Remove that funding either intentionally or accidentally, and the Jewish State would be overrun and destroyed in a matter of months. Though the entire Middle East now hates America with a passion, it reserves its deepest loathing for the Jewish invaders, who, every single day without end, bring more death and destruction to the helpless women and children of Palestine.
So what is a poor parasite to do, when its host appears to be running out of the fiscal nourishment it depends on for its very survival? Most normal parasites would seek out a new host, but this is an impossible task for the Jewish State. There is simply no other country on earth capable of generating sufficient revenue to cope with the greed and corruption in Tel Aviv.
The only answer of course was Operation Shekhinah “mark two”, renamed Operation Iraqi Freedom and designed to provide the Jewish State with massive income streams from stolen Iraqi oil. The prime objectives were to decapitate [murder] President Saddam Hussein, decimate the Iraqi military structure, and destabilize the country completely. After that, a carefully selected “Military Governor” would be installed, followed by a carefully selected “Interim Administrator”, both of whom could be relied on to look after Israel’s best interests, rather than those of America. The Israeli-Jewish lobby in New York vetted a few possible candidates, then made their final choices.
The new “Military Governor” of Iraq will be retired American Lieutenant General Jay Garner, a very close and ardent supporter of Israel. In fact, Garner is a member of the Jewish Institute for National Security Affairs (JINSA), a cabal of Jewish American military officers who have long advocated putting Israel's security needs before those of the United States. From Israel’s viewpoint, Garner is their perfect point man in Iraq, guaranteed to solve any little “problems” that might be encountered while setting up the two massive oil pipelines running from Iraq to Haifa.
Following in Jay Garner’s footsteps will be new “Interim Administrator” Ahmad Chalabi, who was convicted in Jordan in 1992 of 31 charges of embezzlement and misuse of funds while running the Petra Bank, a known Mossad front. Chalabi was sentenced to 22 years imprisonment, but somehow managed to “escape” from police custody in Amman before he could be transported to prison.
With a Mossad man in place and ready to select the final “democratic” Government of Iraq, Israel predictably feels very confident that any and all other little problems with oil supplies for New Rotterdam can be swiftly resolved, either with a few shekels or with a bullet.
Iraq was [apparently] already conquered by coalition forces and [apparently] under western control, so the impatient Israeli-Jewish lobby immediately pointed George W. Bush and Co. at Syria, which, as I noted back in January 2002, is the wild card in the Shekhinah pack, because of its close proximity to the massive oil pipelines running along its southern border, from Iraq to the New Rotterdam at Haifa:
“It should be noted very carefully though, that in every sense Syria is the wild card in the pack. If Israel seriously underestimates Syrian military equipment, skill and determination, that country can and will terminate not only Operation Shekhinah, but also the Jewish State. The same will apply if Israel sends too large an occupation force to southern Iraq, thereby leaving itself wide open to an attack on what it fondly regards as its ‘Home Land’, i.e. Palestine.”
Obviously I wrote this paragraph many months before the Israeli-Jewish lobby managed to suborn the entire US Military for a massive attack across the length and breadth of Iraq. This changed things considerably in the planning phase, with Israel now intent on using American firepower to eliminate the Syrian risk completely. After the Bush-Rumsfeld-Powell choir launched the catchy new “Syria is Harboring Weapons of Mass Destruction” jingle on 14 April, Powell gave a speech to the Israeli-Jewish lobby AIPAC [American Israel Public Affairs Committee], confirming that the US will not stop with Iraq:
"Syria can continue direct support for terrorist groups and the dying regime of Saddam Hussein, or it can embark on a different and more hopeful course. Either way, Syria bears the responsibility for its choices -- and for the consequences." [Wild applause and hooting from the audience, largely composed of powerful and well-connected establishment Jews.]
The word “consequences” has only one meaning in the megalomanic worlds of the US State Department and the Israeli-Jewish lobby. Syria must immediately agree to replace President Bashar al-Assad with Ahmad Chalabi’s younger brother, or be bombed back into the Stone Age.
Theoretically then, only a few thousand more American cluster bombs on Damascus lie between Israel and its staggering quantities of black gold flowing through New Rotterdam, made possible solely by Coalition firepower and Coalition lives. Israeli-Jews will be able to strut their stuff on the streets of Tel Aviv, as tons of freshly minted Shekels cascade all over the entire city. To hell with America!
In reality, things are set to be a whole lot more difficult than that. The academic Israeli-Jewish lobby planners in New York were living in a dream world where nothing could go wrong, and who in turn were advised by resplendent retired generals in business suits. The closest any of these jokers ever got to real combat, was driving a Jeep around the Pentagon car park on Halloween.
As Jay Garner and Ahmad Chalabi hide nervously behind bodyguards in southern Iraq, they know that things are not what they were planned to be. Peter Arnett and Robert Fisk have already confirmed that Saddam Hussein was not decapitated in the bunker-buster attack, meaning that he, his two sons and the Iraqi Command Council are still out there somewhere.
Military counts have confirmed that very few Republican Guardsmen were killed in the coalition attacks, in turn meaning that somewhere in Iraq there are 300,000 trained soldiers with at least one rifle each. All are now in civilian clothes, and all hate America and Israel with a passion bordering on fanaticism. Very likely arranged in small cells of four to six men, these soldiers will probably wait until sheer cost forces America to remove much of its heavy armor from the country.
After that, Iraq will probably resemble Northern Ireland at the height of IRA power, but on a much larger scale. If you can imagine a Northern Ireland nearly twice the size of Vietnam, containing 299,900 more trained shooters than the IRA, you will probably be close to the reality of Iraq after most of the coalition invaders withdraw to the south.
Then there is the small problem of sorting out the vast oilfields and pumping crude to Israel, the main objective of “Operation Iraqi Freedom”. Speaking as a former oilfield troubleshooter, I can assure you this will be an impossible task if the Iraqis wish to block it. There are a thousand ways to sabotage the operation, not the least of which is picking off the workers with sniper rifles. Sooner or later, no one will want to go to work at all.
Externally, Russia might be a problem, though Vladimir Putin has assured the world that the nine Russian warships and three nuclear submarines currently on their way to the northern Indian Ocean, “will only be engaging in exercises with the Indian Navy”. Thank heavens for that, because the Russian fleet is packing enough nuclear punch to completely wipe out Saudi Arabia, or the eastern seaboard of America!
History has taught us however, that the poker-faced “Black-Belt Vlad” [only to personal friends at his Dojo], can sometimes be rather economical with the truth, making it essential to listen to retired admirals in Moscow if you want to get the whole picture. Two weeks ago, one of these admirals commented “It is interesting that a very large amphibious assault ship with commandos and tanks on board, has been included in the fleet.” When he was predictably asked what sort of target the assault ship might be used against, the Admiral replied, “Oh, for attacking and capturing a small port, perhaps the size of Umm Qasr or Basrah.”
During 1933, famous author H. G. Wells wrote a book called The Shape of Things to Come, in which he accurately forecast that World War II would start, “out of a conflict between Germany and Poland circa 1939”. In the same book, Wells also wrote that World War III was to commence, “from some future [unidentified] event in Basrah, Iraq.”
Update, 19 April 2003
Israel Officially Approaches Turkish Labor For Help Stealing Iraqi Oil
local time on 17 April in Istanbul, Turkey, less than 24 hours after this
Operation Shekhinah report was first linked on the Internet, it was reported
that Israel has already approached Turkish contracting firms to re-activate
the Mosul to Haifa Pipeline. This report from www.turks.us:
“Israel has made an offer to Turkish contacting firms to reactivate the Mosul-Haifa pipeline, which has been closed for the last 55 years. Not only the Israeli government but also Israeli firms have reportedly approached Turkish companies for an oil pipeline that would provide transportation of 5 million barrels of oil from northern Iraq to the Israeli port of Haifa.
“Turkish Contractors Union Chairman Nihat Ozdemir confirmed the offers from Israel and noted that a considerable part of the Baku-Tbilisi-Ceyhan oil pipeline construction had been carried out by Turkish firms. Pointing out that Turkish construction firms had important experience in the subject of international oil transportation, Ozdemir said that it was ‘normal’ that Turkish firms had been chosen to rebuild the pipeline.”
For those readers puzzled by what at first appears to be a ‘one-time-only’ transportation of 5 million barrels of oil, is it pointed out that oil pipeline contracts are quoted in barrels per day [bbpd] continuous flow. This means that the Israeli-Jews have indirectly advised us though Turkey, that they are already planning to steal 1,825 million barrels of Iraqi oil per annum.
Taking a nominal price of US$25.00 per barrel FOB “New Rotterdam” [after the deduction of engineering expenses and bribes], the Israeli-Jewish terrorists stand to make a cool US$ 45,625,000,000.00 each year over the bodies of thousands of dead Iraqi, American and British soldiers, deliberately sacrificed in the deserts and cities of Iraq for the “Greater Good of Israel”. The fact that the Israeli-Jews will probably not be allowed to get away with it, does nothing to diminish their despicable cold-blooded planning and intent.
Turkish Foreign Minister Abdullah Gul is now aware of Israeli intent, and is stated to be “very angry”, which may be the diplomatic understatement of the year. Since sanctions were imposed in Iraq after Gulf War I, Turkey has lost at least US$6 billion in oil transit and handling fees, which has left Turkey all but destitute. Thus Gul is unlikely to stand by and watch this essential income stream destroyed forever by Tel Aviv.
Local media reports suggest that Turkey currently has around 60,000 troops with a very large quantity of armor on the northern Iraqi border, which lies within easy striking range of Mosul. The next few weeks and months might turn out to be very interesting.
The prestigious “Jane’s Intelligence” organization in Britain has shown a passing interest in this Israeli thirst for Iraqi oil, and has posted a cautious analysis, which can be read by clicking here.
Update, 22 April 2003
Bush Demands Iraqi Airfields to Protect “Israeli” Oil
tear down statue of Saddam Hussein in Paradise Square, Baghdad, at 1130
hrs on 9 April 2003. Four hours after this American public relations
spectacular, the real Saddam Hussein appears less than six miles north
of Paradise Square, mobbed by armed supporters!
In a move once that once again reinforces the accuracy of the original Operation Shekhinah intelligence, George Dubya Bush has demanded four “key” airfields for an ongoing “strategic alliance with the new Government of Iraq.” To say this is premature would be seriously understating the case. As of yesterday, American forces had actual physical control of less than three-percent of sovereign Iraq.
For those who remember Vietnam, the pattern will seem disturbingly familiar: America has now installed several small but heavily defended “Fire Bases” across Iraq [including Paradise Square, Baghdad], and is using media trickery to try to convince the public that these tiny fire bases represent the complete conquest of Iraq. The public certainly believed this pathetic media rubbish about Vietnam, right up to the point where Americans were finally and desperately evacuated from the roof of the US Embassy in downtown Saigon.
Back then, the Vietcong and North Vietnamese Army controlled roughly 97% of South Vietnam, i.e. all of the country except the tiny American fire bases,plus three heavily defended airfields and a few brothels in Saigon. One way and another, this led to 50,000 Americans being repatriated to the United States in body bags. Today, the Iraqi Republican Guard and Home Guard Units control roughly 97% of greater Iraq, and the serious killing will probably commence when temperatures exceed 50C, just a few weeks from now.
The actual positions of Dubya’s four new “key” bases shown on the map above are critical. The New York Times reports, “One will be at the international airport just outside Baghdad, according to Bush administration officials, while the others will be at Tallil, near An Nasiriyah in the south; at an isolated airstrip called H-1 in the western desert, along an old oil pipeline that runs to Jordan; and at the Bashur air field in the Kurdish north”
Extraordinary! H1 [Pumping Station Haifa 1] has at last been mentioned officially, obliging the Israeli-Jews to upgrade last month’s very deceptive, “old Haifa-Mosul pipeline that once used to run through Syria” to the somewhat more accurate “old [operational] oil pipeline that runs to Jordan”.
Even a cursory glance at the large maps above shows how strategic these bases are, specifically in terms of protecting the massive Israeli-Jewish theft of Iraqi oil to Haifa, the “New Rotterdam”. The H1 you were never told about before, is located just south of the pipeline manifold where American forces recently cut the flow of oil from Iraq to Syria.
This airfield will be used to effectively “control” Eastern Syria. Bashur in the north will be used to crush any Kurdish dissent, while Tallil will guard the old Tapline from Saudi Arabia. Well, theoretically at least. Before using H1, the Americans will have to do a lot of hard work laying and extending the runways. At present, the rough airstrip at H1 is suitable only for light aircraft servicing the pipeline pumping station. ,
"There will be some kind of a long-term defense relationship with a new Iraq, similar to Afghanistan," said one senior American administration official. Yeah, right! Nowadays Afghan puppet president Hamid Karzai, who was installed by New York to protect the CIA’s heroin trade from Afghanistan through to the Golden Triangle, is completely surrounded by angry Afghan warlords, who kill American soldiers whenever and wherever they want to. A true though disturbing sign of things to come in the new Israeli-Jewish ‘Democratic’ Iraq.
On a lighter note, it seems that US Central Command in Qatar lied to us yesterday, which I feel sure will come as an enormous surprise to everyone! Apparently in an attempt to deflect attention away from the very real Mosul to Haifa pipeline that the SAS has been inadvertently protecting for Israel, the PR folk hastily rushed out some really pretty pictures which, they claimed, showed the SAS "guarding captured Iraqi aircraft at a secret airfield west of Baghdad".
What these [unidentifiable] hooded men are guarding is a very rare Russian aircraft known as the Mig 25-PU. Known generically to the world as the Mig 25 "Foxbat", this version is a two-seat interceptor trainer produced in numbers so small that every aviation buff in the world knows where they all are. Iraq had never bought any Mig 25-PUs, has not borrowed or been given any Mig 25-PUs, so this official picture from US Central Command cannot have been shot in Iraq. It really is that simple...
The headgear worn by these heroes is mildly interesting, because it is very similar if not identical to that worn by Russian special forces, normally but not always in Russia. The colors on the aircraft indicate that is most likely one belonging to Tajikistan, where certain units of the SAS [hush my mouth...] went on exercise a year or two ago. Remember Exercise "Enduring Freedom"?
Someone really should have a quiet word with US Central Command. If you know their telephone number, call and tell them that if they really want to fool the western public, their PR folk really should use a picture of an aircraft that most people will actually believe is [or can be] in Iraq. Try to stick to the ubiquitous Mig 21. Almost everyone in the Middle East has a few of these, including Saddam...
Update, 6 May 2003
The London Observer "Outs" Israeli Plans to Steal Iraqi Oil
"Plans to build
a pipeline to siphon oil from newly conquered Iraq to Israel are being
discussed between Washington, Tel Aviv and potential future government
figures in Baghdad. The plan envisages the reconstruction of an old pipeline,
inactive since the end of the British mandate in Palestine in 1948, when
the flow from Iraq's northern oilfields to Palestine was re-directed to
"Now, its resurrection would transform economic power in the region, bringing revenue to the new US-dominated Iraq, cutting out Syria and solving Israel's energy crisis at a stroke. It would also create an end less and easily accessible source of cheap Iraqi oil for the US guaranteed by reliable allies other than Saudi Arabia - a keystone of US foreign policy for decades and especially since 11 September 2001.
"Until 1948, the pipeline ran from the Kurdish-controlled city of Mosul to the Israeli port of Haifa, on its northern Mediterranean coast. The revival of the pipeline was first discussed openly by the Israeli Minister for National Infrastructures, Joseph Paritzky, according to the Israeli newspaper Ha'aretz .
"The paper quotes Paritzky as saying that the pipeline would cut Israel's energy bill drastically - probably by more than 25 per cent - since the country is currently largely dependent on expensive imports from Russia. US intelligence sources confirmed to The Observer that the project has been discussed. One former senior CIA official said: 'It has long been a dream of a powerful section of the people now driving this administration [of President George W. Bush] and the war in Iraq to safeguard Israel's energy supply as well as that of the United States.
'The Haifa pipeline was something that existed, was resurrected as a dream and is now a viable project - albeit with a lot of building to do.' The editor-in-chief of the Middle East Economic Review , Walid Khadduri, says in the current issue of Jane's Foreign Report that 'there's not a metre of it left, at least in Arab territory'.
"To resurrect the pipeline would need the backing of whatever government the US is to put in place in Iraq, and has been discussed - according to Western diplomatic sources - with the US-sponsored Iraqi National Congress and its leader Ahmed Chalabi, the former banker favoured by the Pentagon for a powerful role in the war's aftermath.
"Sources at the State Department said that concluding a peace treaty with Israel is to be 'top of the agenda' for a new Iraqi government, and Chalabi is known to have discussed Iraq's recognition of the state of Israel. The pipeline would also require permission from Jordan. Paritzky's Ministry is believed to have approached officials in Amman on 9 April this year. Sources told Ha'aretz that the talks left Israel 'optimistic'.
"James Akins, a former US ambassador to the region and one of America's leading Arabists, said: 'There would be a fee for transit rights through Jordan, just as there would be fees for Israel from those using what would be the Haifa terminal. 'After all, this is a new world order now. This is what things look like particularly if we wipe out Syria. It just goes to show that it is all about oil, for the United States and its ally.'
"Akins was ambassador to Saudi Arabia before he was fired after a series of conflicts with then Secretary of State Henry Kissinger, father of the vision to pipe oil west from Iraq. In 1975, Kissinger signed what forms the basis for the Haifa project: a Memorandum of Understanding whereby the US would guarantee Israel's oil reserves and energy supply in times of crisis.
"Kissinger was also master of the American plan in the mid-Eighties - when Saddam Hussein was a key US ally - to run an oil pipeline from Iraq to Aqaba in Jordan, opposite the Israeli port of Eilat. The plan was promoted by the now Defence Secretary Donald Rumsfeld, and the pipeline was to be built by the Bechtel company, which the Bush administration last week awarded a multi-billion dollar contract for the reconstruction of Iraq.
"The memorandum has been quietly renewed every five years, with special legislation attached whereby the US stocks a strategic oil reserve for Israel even if it entailed domestic shortages - at a cost of $3 billion (£1.9bn) in 2002 to US taxpayers. This bill would be slashed by a new pipeline, which would have the added advantage of giving the US reliable access to Gulf oil other than from Saudi Arabia."
Though this Observer report is a reasonable summary of current events in Iraq, and the advanced state of planning for Operation Shekhinah, it has been somewhat misled by the apparent absence of the Haifa Pipeline in Jane's Foreign Report, which apparently states, 'there's not a metre of it left, at least in Arab territory'.
When it comes to pipelines of critical strategic value to Israel, map makers and newspaper editors alike seem to to develop a rare form of collective myopia. The Haifa pipeline still runs through Iraq and Jordan, is clearly visible from any airliner, and remains fully operational with pumping stations in place and well maintained.
So what about Israel's second route for stealing Iraqi crude oil, the old "Tapline" running acroos the extreme northern edge of Saudi Arabia? What chance that another branch of the myopic media might try to tell you 'there's not a metre of it left, at least in Arab territory'?
Rest assured that if they do, they will be lying. The Trans Arabian Pipeline, just like the Haifa Pipeline, is currently not pumping, but it is full of oil, with pumping stations properly maintained. There is a slight glitch, however. According to reliable inside sources, the western oil multinationals have refused to connect the pipelines or transfer Iraqi oil, because there is no proper "sovereign title" to the product, and they are not prepared to start World War III with Russia over the matter.
Draft Law Keeps Central Control Over Oil in Iraq
By JAMES GLANZ
BAGHDAD, Jan. 19 — After months of tense bargaining, a cabinet-level committee has produced a draft law governing Iraq’s vast oil fields that would distribute all revenues through the federal government and grant Baghdad wide powers in exploration, development and awarding major international contracts.
The draft, described Friday by several members of the committee, could still change and must be approved by the Iraqi cabinet and Parliament before it becomes law. Negotiations have veered off track in the past, and members of the political and sectarian groups with interest in the law could still object as they read it more closely.
But if approved in anything close to its present form, the law would appear to settle a longstanding debate over whether the oil industry and its revenues should be overseen by the central government or the regions dominated by Kurds in the north and Shiite Arabs in the south, where the richest oil fields are located.
The draft comes down firmly on the side of central oversight, a decision that advocates for Iraq’s unity are likely to trumpet as a triumph. Because control of the oil industry touches so directly on the interests of all Iraq’s warring sectarian groups, and therefore the future of the country, the proposed law has been described as the most critical piece of pending legislation.
“This will give us the basis of the unity of this country,” said Ali Baban, the Iraqi planning minister and a member of the Sunni-dominated Tawafaq party who serves on the negotiating committee. “We pushed for the center in Baghdad, but we didn’t neglect the Kurds and other regions,” Mr. Baban said.
Negotiators said that the final weeks of wrangling on the draft focused on a federal committee that would be set up to review the oil contracts. Kurdish, and to some extent Shiite, parties wanted to maintain regional control over the contracts, while Sunni Arabs, with few oil resources on territories they dominate, insisted that the federal committee have the power to approve contracts, rather than just reviewing them and offering advice.
The negotiators appear to have finessed that issue by allowing the regions to initiate the process of tendering contracts before sending them to Baghdad for approval. To limit the powers of the committee, they also have drawn up an exacting set of criteria to govern the deliberations of the committee rather than simply relying on its independent discretion. And in a bow to the Kurds, who objected to the use of the word “approve” in describing the committee’s duties, the draft law says instead that the committee may review and reject contracts that do not meet the criteria.
The draft law would also radically restructure parts of Iraq’s state-controlled oil industry by giving wide independence — possibly leading to eventual privatization — to the government companies that control oil exports, the maintenance of pipelines and the operation of oil platforms in the Persian Gulf. The law would also revive the Iraqi National Oil Company, a countrywide umbrella organization that was essentially closed by Saddam Hussein.
At the same time, the law would place substantial administrative authorities outside Baghdad by allowing any region that produces at least 150,000 barrels of oil a day to create its own operating company, according to Hussain al-Shahristani, the Iraqi oil minister and member of a powerful coalition of Shiite political parties who also serves on the negotiating committee.
Barham Salih, a deputy prime minister and the chairman of the negotiating committee, said that the precise wording of clauses could still change. He was speaking by telephone from Iraqi Kurdistan, where Mr. Salih, a Kurd, said he was still working to cement support for some provisions in the draft law. “This is the most important piece of legislation that Iraq will adopt, and it is not a surprise that it is taking long, tedious rounds of negotiations,” Mr. Salih said. “We are close, but we have not yet closed the deal. We are making progress and need to continue.”
The developments come with several additional cautions, not the least of which is that in Iraq’s chaotic wartime environment, even laws that do get passed can have little impact. In one example of a document arrived at through similar negotiations, Iraq’s Constitution, it remains unclear what effect many of the fastidiously negotiated clauses are having in the governance of the country. And even though Iraq’s main political and sectarian groups have been represented in the talks over the oil law, it is still possible that members of those groups could bridle as the draft is scrutinized more widely.
As a case in point, the Kurdistan regional government issued a statement on Friday criticizing an Oil Ministry spokesman for saying that the oil law had been agreed upon unanimously and put in final form. “Although the process of drafting the oil law is nearing completion, the important annexes to the law are still pending,” the statement said.
Some of those annexes will address how to deal with fields that are already producing oil under existing contracts, how to begin taking bids for drilling new wells in known fields and exploring areas where currently unknown oil fields could be located.
The committee achieved a breakthrough of sorts in December, when negotiators took a step toward central control by agreeing that all oil revenues should first go to the central government before being sent back to the regions in amounts proportional to population. But the talks bogged down on the question of whether the committee, to be called the Federal Oil and Gas Council, would be called upon to approve contracts proposed by the regions or just review those contracts and offer advice. In its current form, the draft law avoids the word “approve” and in effect gives the committee veto power.
Whatever the language, Mr. Shahristani, the oil minister, said, the committee will in fact pass judgment on each contract, even when it originates in a proposed deal between a company and one of the oil-producing regions.
But the committee must make its decision based on specific guidelines, like a directive to maximize profits for Iraq and to keep the contracting process transparent, Mr. Shahristani said. And there are other checks and balances written into the law. For example, while the regions can propose their own deals, they will have to work with companies that have been “pre-qualified” in Baghdad. Directives like that could still generate objections in Kurdistan, which wants as much freedom as possible to write its own contracts.
The draft law also specifies that technical experts in the Oil Ministry are to be included in the process at all levels. It is the ministry that will be called upon to write a plan for which oil fields will be developed and drilled first, and which ones will follow. The federal council would simply be called upon to endorse that plan or send it back for revisions.
The Oil Ministry would also be closely involved in developing “model contracts” to be used as templates at all levels of Iraq’s oil industry. Having an oil law will in principle make it easier to attract international companies with the resources and expertise that the country so desperately needs. Still, hovering over all the negotiations is the question of whether companies will want to do business in Iraq.
Mr. Shahristani, for one, says that because of the financial stakes, companies are already reaching out. “The international companies keep contacting me — every week, without exception,” Mr. Shahristani said. “They are all very, very keen.”
Yerevan Adham contributed reporting from Iraqi Kurdistan.
Addax seeks £2.7bn listing in London
By Sylvia Pfeifer
A Swiss-based company with assets in West Africa and Iraq is poised to become the largest independent oil and gas company on the London market. Addax Petroleum, which is already listed in Toronto, has hired advisers ahead of a dual listing on the main market.
With a market value of £2.7bn, Addax will be larger than Tullow Oil, currently the largest independent, and could be a candidate to enter the blue-chip FTSE100 index at a later stage.
Representatives from Addax are understood to be holding meetings with prospective investors this week with a view to listing as early as next month. "They're a proper big exploration and production company," said one industry source. "The shares have had a good run in Canada but the audience is different in London and they may get a better valuation here."
Shares in the company soared to an all-time high of C$39.49 (£17.55) earlier this month. They closed on Friday at C$39.30.
Founded [by Jean Claude Gandur] in 1994 by the Addax & Oryx Group, Addax Petroleum has grown through targeted acquisitions of producing assets and exploration acreage in countries such as Nigeria, Cameroon and offshore Gabon.
Unlike many of the oil and gas companies that have taken advantage of the soaring crude prices and listed in London, Addax is profitable and has significant assets and production.
Last year it struck a C$1.6bn (£800m) deal to buy PanOcean Energy, a Calgary-listed oil and gas explorer with assets in West Africa. Two years ago Addax also became one of the first oil companies to set foot in Iraq, buying a stake in one of the largest oil fields in the Kurdistan region of the country.
Analysts said last week that the acquisition spree had paid off; Addax's annual production rose last year to around 100,000 barrels per day, significantly higher than Tullow's 80,000 barrels a day.
In a recent note on the company, analysts from First-Energy Capital in Canada said the company estimated that annual production could rise to between 127,000 and 133,000 barrels a day by the end of this year.
• Separately, five of the world's largest oil majors are competing for a stake in one of the largest gas projects in the Middle East. Both BP and Royal Dutch Shell have submitted bids for the sour gas project in the United Arab Emirates, which could cost an estimated $10bn to develop and produce a massive 3bn cubic feet a day.
Representatives from the companies are expected to meet the government in the coming days to discuss their bids. The contract is expected to be awarded in the final quarter of this year.
Total, the French oil group, and Occidental Petroleum of the US also submitted bids, but analysts said Shell was widely tipped as the frontrunner. The Anglo-Dutch oil company has been active in the UAE for several decades. The UAE holds the world's fifth largest gas reserves and wants to develop them to meet soaring demand.
Information appearing on telegraph.co.uk is the copyright of Telegraph Media Group Limited and must not be reproduced in any medium without licence. For the full copyright statement see Copyright
UK Representation thanks KRG's British & international friends
London, UK (KRG.org) – Ms Bayan Sami Abdul Rahman, the Kurdistan Regional Government High Representative to the UK, yesterday hosted the KRG's annual reception in London to thank Kurdistan's friends from Britain and the international community.
Ms Abdul Rahman told guests, “The friendship the people of Kurdistan feel towards Britain is deep…We are optimistic that under Prime Minister Gordon Brown, Kurdistan Region and Britain’s friendship will continue to strengthen.”
The KRG's guests at the reception included MPs and Lords, government officials, London-based diplomats, business executives, journalists, academics, NGOs and members of the Kurdish community. The reception was also attended by Dr Salah Al-Shaikhly, the Iraqi ambassador in London and members of the Iraqi embassy.
Lord Tim Clement-Jones, a Liberal-Democrat peer, told the KRG’s guests about his visit to the Kurdistan Region last November when he headed a high-level British trade delegation. He said, “Thanks to Prime Minister Nechirvan Barzani and the efforts of the KRG, the economic progress that has been made since my previous visit in 2004 is impressive. Thanks in particular to Karim Sinjari, the Interior Minister, the Kurdistan Region is even more secure than it had been previously. There was enormous goodwill towards British business. With much better transport links and the Foreign Office being much more positive about its travel advice, we now need to take advantage of this.”
Ms Sami Abdul Rahman said, “Looking over the past year, I’m pleased to say that there were many visits to Kurdistan by our friends from Britain. The delegations included British trade union groups, journalists, doctors, parliamentarians including of course Ann Clwyd and Lord Tim Clement Jones, and two high-level trade missions. We are grateful to the Middle East Association and to British Expertise, who organised the trade visits, for their continued interest in the Region.” The Middle East Association plans another visit in early October and British Expertise will organise a British delegation for the Erbil International Trade Fair later in the same month.
She also reflected on the progress made over the past year, such as the open investment law passed in June 2006, and the Kurdistan Region’s oil law which is currently being considered by parliament. She added that the KRG looked forward to more visits by British friends in the future and to strengthening ties with Prime Minister Gordon Brown.
Kurdistan Oil & Gas Law approved by Kurdistan Parliament
Prime Minister Nechirvan Barzani hailed the Kurdistan National Assembly’s passage of the Kurdistan Oil and Gas Law as a “historic moment” that, “together with the Iraq Constitution, will be the foundation of our economic development,” and will allow the Kurdistan Regional Government to “chose the best, most experienced, the most committed investors” for the Region. (Statement by Prime Minister of the Kurdistan Regional Government Nechirvan Barzani )
The Kurdistan Region Oil and Gas Law is consistent with the Iraq Constitution and will require the Kurdistan Region to share revenues with the Federal Government and other regions in Iraq, just as other regions will share revenues with the Kurdistan Region. The Kurdistan Region will receive 17% of all revenues from all oil production in all of Iraq.
The Prime Minister stated that “this law is the concrete embodiment of our commitment to a federal, democratic, and pluralistic Iraq…We are giving much to Iraq, and we are receiving much in return.”
The law is also an important sign to the rest of Iraq and the international community that consensus on important issues is possible. The Prime Minister emphasized this by saying that “we are leading the way, through the passage of this Law, and showing others in Iraq and the international community that we can cooperate, we can develop, and we can succeed.”
Prime Minister Barzani thanked the Members of the Assembly, the Ministry of Justice, and in particular the Minster of Natural Resources, Dr. Ashti Hawrami, for their hard work and dedication.
Minister Hawrami echoed the Prime Minister’s statements regarding the important economic effect resulting from the passage of this law and also commented that the Kurdistan Regional Government would redouble its “efforts to ensure that the Iraq revenue sharing law and Iraq hydrocarbon law proceed through the federal parliament. All Iraqi peoples have a common interest in ensuring that investment and petroleum production are maximized.” (Ashti Hawrami: Kurdistan Region Oil and Gas Law)
The passage of this law is a concrete example of the hard work and pragmatism of the Kurdistan Regional Government and its dedication to demonstrating through action that it is committed to bringing wealth, fairness, transparency, and accountability to Iraq. It is also an important step towards the creation of a new Iraq – one based on the principles of pluralism, federalism and equality for all its peoples.
Region Oil and Gas Law in Arabic and English,
updated model contract
The Spokesman, Kurdistan Regional Government
The Kurdistan Regional Government (KRG) is pleased to publish the Kurdistan Region Oil and Gas Law in Arabic and English [mirror copy: www.solami.com/kurdoillaw.pdf], which has now been approved by the Kurdistan National Assembly (parliament). The parliament approved the Law on 6 August, and the Law entered into force upon the assent of President Masoud Barzani on 9 August.
The first draft of this Law was published in August 2006, and has benefited from extensive comments from petroleum companies, NGOs, and citizens of the Kurdistan Region and other parts of Iraq. It was approved by the Kurdistan Region Council of Ministers in July.
The KRG is also pleased to publish an updated Kurdistan Region Model Production Sharing Contract (PSC), amended to take the new Law into account.
The Arabic version of the Law is the official version. The Law will also be published in the Kurdish language in the near future.
Please submit any further comments to: spokesman(at)krg.org
Send any investment related enquiries to mnr(at)krgoil.com
KRG signs oil and gas contract with US-based Hunt Oil
Erbil, Kurdistan- Iraq (KRG.org) - The Kurdistan Regional Government (KRG) together with Hunt Oil Company of the Kurdistan Region, a subsidiary of Hunt Oil Company of Dallas, Texas, and Impulse Energy Corporation (IEC) announced today that they have signed a Production Sharing Contract (PSC) covering petroleum exploration activities in the Duhok area of the Kurdistan Region. Under the terms of the agreement, Hunt Oil Company of the Kurdistan Region will serve as operator. This is the first PSC to be signed by the KRG since the Oil and Gas Law of the Kurdistan Region was issued by the Kurdistan National Assembly, Kurdistan's parliament, in early August, 2007.
Hunt Oil Company of the Kurdistan Region will begin geological survey and seismic work by the end of 2007 and plans to be in a position to drill an exploration well in 2008.
Dr Ashti Hawrami, the KRG Minister for Natural Resources, commented, “The signing of this PSC by Hunt is evidence that the KRG's enactment of a modern and balanced oil and gas law has created a supportive and transparent business environment which promotes investment by international oil companies in our Region for the benefit of all. Revenues from this Kurdistan petroleum development will be shared by the KRG throughout Iraq, consistent with the Iraq constitution and the new Oil and Gas Law of the Kurdistan Region.”
Mr Ray L. Hunt, CEO of Hunt Oil Company in Dallas, Texas, said, “We are very pleased to have the opportunity to be a part of these landmark events by actively participating in the establishment of the petroleum industry in the Kurdistan Region of Iraq.”
Mr Mathew Heysel, an IEC representative, added, “We are pleased to partner with Hunt Oil on this important project to develop the oil and gas resources in the Kurdistan Region.”
Hunt Oil Company of the Kurdistan Region is a wholly-owned affiliate of the Hunt Oil Company, Dallas, Texas, USA, which is a part of the Hunt family of companies directed by Ray L. Hunt. Hunt Oil Company is one of the largest privately held independent oil companies and conducts a variety of petroleum related operations in several regions of the world, including a liquefied natural gas (LNG) project in Peru which is considered the largest project ever built in that country. In addition to oil and gas interests, the Hunt family of companies is engaged in real estate; private investments; refining; electrical power, ranching and farming interests.
Impulse Energy Corporation is a private company that invests in the energy sector in developing economies targeting oil, gas and power.
What’s missing in Baghdad
By Thomas L. Friedman
Erbil, Iraq - One of the most troubling lessons of the Iraq invasion is just how empty the Arab dictatorships are. Once you break the palace, by ousting the dictator, the elevator goes straight to the mosque. There is nothing in between — no civil society, no real labor unions, no real human rights groups, no real parliaments or press. So it is not surprising to see the sort of clerical leadership that has emerged in both the Sunni and Shiite areas of Iraq.
But this is not true in northern Iraq, in Kurdistan. Though not a full-fledged democracy, Kurdistan is developing the key elements of a civil society. I met in Erbil with 20 such Kurdish groups — unions, human rights and political watchdogs, editors and women’s associations. It is worth studying what went right in Kurdistan to understand what we still can and can’t do to promote democratization in the rest of Iraq and the Arab world.
The United States played a critical role in Kurdistan. In 1998, we helped to resolve the Kurdish civil war — the power struggle between two rival clans — which created the possibility of a stable, power-sharing election in 2005. And by removing Saddam, we triggered a flood of foreign investment here.
But that is all we did. Today, there are almost no U.S. soldiers or diplomats in Kurdistan. Yet politics here is flourishing, as is the economy, because the Kurds want it that way. Down south, we’ve spent billions trying to democratize the Sunni and Shiite zones and have little to show for it.
Three lessons: 1) Until the power struggle between Sunnis and Shiites is resolved, you can’t establish any stable politics in southern Iraq. 2) When people want to move down a progressive path, there is no stopping them. When they don’t, there is no helping them. 3) Culture matters. The Kurdish Islam is a moderate, tolerant strain, explained Salam Barwari, head of Kurdistan’s Democracy and Human Rights Research Center. “We have a culture of pluralism,” he said. “We have 2,000 years of living together with people living around us.” Actually, there are still plenty of Arab-Kurdish disputes, but there is an ethos of tolerance here you don’t find elsewhere in Iraq.
While visiting Kurdistan, I read a timely new book, “Democracy’s Good Name: The Rise and Risks of the World’s Most Popular Form of Government,” by my friend Michael Mandelbaum, a foreign affairs expert at Johns Hopkins University. It is highly relevant to America’s democracy project in Iraq and beyond.
Mr. Mandelbaum argues that democracy is made up of two elements: liberty and popular sovereignty. “Liberty involves what governments do” — the rule of law, the protection of people from abuses of state power and the regulations by which government institutions operate, he explains. Popular sovereignty involves how the people determine who governs them — through free elections.
What Baghdad exemplifies, Mr. Mandelbaum says, is what happens when you have elections without liberty. You end up with a tyranny of the majority, or what Fareed Zakaria has labeled “illiberal democracy.” Kurdistan, by contrast, has a chance to build a balanced democracy, because it is nurturing the institutions of liberty, not just holding elections.
What the Kurdistan-Baghdad contrast also illustrates, notes Mr. Mandelbaum, is that “we can help create the conditions for democracy to take root, but people have to develop the skills and values that make it work themselves.”
In the southern part of Iraq “you have people who are undemocratic who have a democratic government,” said Hemin Malazada, who heads a Kurdish journalists’ association. “In Kurdistan, you have a democratic government for a democratic people.”
One way a country develops the software of liberty, Mr. Mandelbaum says, is by nurturing a free market. Kurdistan has one. The economy in the rest of Iraq remains a mess. “A market economy,” he argues, “gives people a stake in peace, as well as a constructive way of dealing with people who are strangers. Free markets teach the basic democratic practices of compromise and trust.”
Democracy can fail because of religious intolerance, the curse of oil, a legacy of colonialism and military dictatorship, or an aversion to Western values — the wellspring of democracy. The Middle East, notes Mr. Mandelbaum, is the one region afflicted by all of these maladies. That doesn’t mean democratization is impossible here, as the Kurds demonstrate. But it does mean it’s really hard. Above all, Iraq teaches us that democracy is possible only when people want both pillars of it — liberty and self-government — and build both themselves. We’re miles away from that in Baghdad.
responds to Dr Shahristani’s recent statements on oil
The Spokesman, Kurdistan Regional Government, Erbil, Kurdistan Region
11 September 2007 The Kurdistan Regional Government (KRG) would like to make it clear that Dr Shahristani's recent remarks about the legality of the KRG's oil and gas contracts are totally unacceptable. His views are irrelevant to what the KRG is doing legally and constitutionally in Kurdistan. Dr Shahristani should concentrate on making a positive contribution to the country, rather than undermining the constructive work that the KRG is carrying out for the benefit of all the Iraqi people.
Dr Shahristani was already strongly advised to stay out of issues over which he has no authority. But once again he has repeated his false mantra of “it is illegal”. Unfortunately this has been his way of dealing with the legitimate concerns of the hard working oil union members in the south, with the achievements of the KRG or with any other organisation that he does not like. Dr Shahristani has no authority to question the legitimacy of contracts awarded by the KRG acting under the powers of the newly enacted law passed by the unanimous decision of the Regional Parliament and according to the new Iraq constitution.
We suggest that the Minister concentrates on his real task of preventing illegal oil smuggling under his watch, which is crippling the Iraqi economy, and removing the unconstitutional obstacles that he has created against the agreed draft oil law, so that it can go to the Iraqi parliament in its agreed form. As far as we know this would be consistent with government policy, but if he cannot do that, he should do the decent thing and step aside as the Iraqi oil industry deserves better.
The KRG would also like Dr Shahristani to explain why, during his frequent visits to some neighbouring countries he recommended to their authorities that they should not supply fuel products to KRG, as in his view “this will undermine the Oil Law in Iraq”? What is the connection between the KRG’s fuel supply and the Oil Law? We can only conclude from his behaviour that he has a personal grudge or vendetta against the Kurdish people.
On the Oil Law, we would like to remind Dr Shahristani that most of Saddam’s oil-related laws are inconsistent with the new federal constitution and cannot apply. No company will dare to sign agreements under such laws. Furthermore, all Saddam’s laws have been nullified in Kurdistan under the newly passed oil and gas law of the Region. Once again Dr Shahristani appears to prefer Saddam’s laws over laws enacted according to the new constitution. The answer is not to stick to Saddam’s laws, which is merely an act of desperation, or to invite the anti-oil law campaigners to conferences to attack the constitution. The answer is to get on with the agreed draft oil law and present it without changes to the parliament. That way we will all get on with the task of developing the oil industry for the benefit of the people.
Iraq Kurdish region says new oil deals are legal
By Simon Webb
DUBAI, Sept 28 (Reuters) - Iraq's Kurdish regional government (KRG) said on Friday that oil and gas deals it has signed since February are legal, rejecting Baghdad's claim that the deals breach the country's law.
Iraq's cabinet agreed a draft law for dividing the world's third-largest oil reserves in February, but rows with the KRG, as well as objections from some Shi'ite and Sunni Arab politicians have slowed its progress.
Frustrated by Baghdad's delays, the semi-autonomous KRG approved its own oil law in August and announced this month it had signed a production-sharing contract with a unit of U.S.-based Hunt Oil Co. and with Impulse Energy Corp. In April the KRG signed a service contract with the United Arab Emirate's Dana Gas.
"The Hunt contract was signed...according to the enacted regional law based on the federal constitution. There is no question about the legality of that or any other deal," KRG government spokesman Khaled Salih said in a statement sent to Reuters by e-mail.
It would be unconstitutional for Baghdad to punish the companies that had signed deals with the semi-autonomous region in the north of Iraq, Salih said.
"How can any serious government official think they are in a position to punish any company working in Iraq legally to contribute to the country's revenue for the benefit of the whole country?," Salih said.
Iraq's Oil Minister Hussain al-Shahristani said on Monday that deals signed since February were illegal, and warned that the firms involved "will bear the consequences."
Shahristani also said that crude from the deals could not be legally exported, as under the draft oil law only Iraq's State Oil Marketing Organisation (SOMO) held the right to export.
But Salih said the draft oil law gave no such exclusive right to SOMO.
Salih said that companies with an interest in the Kurdish oil and gas industry were no longer discouraged by Shahristani's statements. Oil majors have to date shown little interest in the Kurdish region, as they fear by alienating Baghdad they may miss out on potentially more lucrative contracts elsewhere in Iraq.
"In the early days people took the statements seriously," Salih said. "Several oil companies informed us about the discouragement and implied threats of doing business in Kurdistan. However, as time passed... it seems to us that people are no longer deterred by such statements from Dr Shahristani."
Security may trump ethnicity in Kirkuk
Kurds have long sought the mixed city and its environs for their semiautonomous region.
Now some Arabs think that may not be so bad.
By Borzou Daragahi, Los Angeles Times Staff Writer
KIRKUK, IRAQ — A staunch Arab nationalist, Ismail Hadidi once dreaded the possibility that his ethnically diverse city would be swallowed up by the neighboring semiautonomous Kurdish region and cut off from the Baghdad government.
But the provincial councilman is also a practical man. And when he compares the chaos and violence in the Iraqi capital with the prosperity and peace next door in the three-province Kurdistan Regional Government area, teaming up with the Kurds doesn't seem like such a bad idea. He's even considering buying some property in the Kurdish enclave.
"The people of Kirkuk were afraid of this," said Hadidi, a Sunni Arab tribal leader. "But given the situation, I believe most people will move toward being part of Kurdistan, because what the people want above all is security."
Uncertainty clouds Iraq's future, but not so much here. The Kurdish region's exploding economic and political power has begun to shape northern Iraq's reality.
Oil-rich and ethnically diverse Kirkuk, the capital of Tamim province, was billed as northern Iraq's most contested prize in the wake of the U.S.-led invasion of Iraq in 2003, and its fate was to be resolved by the new Iraqi Constitution, which instead mandated a referendum. But that hasn't happened yet. And now, just as medieval peasants clung to local warlords who could protect them from looters and bandits, this gritty city's war- and poverty-ravaged population has begun gravitating toward the Kurds, who are hungrily reclaiming territory lost to successive waves of Arabization.
Few doubt what will happen when U.S. forces exit. Grown strong and rich in their enclave of more than 16,000 square miles, Iraq's Kurds will rush to annex Tamim and other areas in Diyala and Nineveh provinces they have laid claim to, which could double the size of their de facto state.
"The Kurdistan region will include all parts of Iraq that are historically and geographically part of Kurdistan," predicted Omer Fattah, deputy premier of the Kurdistan Regional Government, which is based in Irbil.
Hussein and leaders of earlier Arab-dominated Baghdad governments sought to upend the oil-rich region's ethnic balance by forcibly evicting tens of thousands of Kurds and other non-Arab minorities and replacing them with Arab settlers. A referendum on whether Kirkuk and its outlying province will join the Kurdish region is scheduled to take place by year's end.
However, many doubt the vote will be held. Politicians in Baghdad said this week it can't be held until well into 2008. Kurds blame the delays on U.S. reluctance to address an explosive Iraqi political issue. At the same time, Kurds say the Americans are increasingly less of a factor in the north. Kirkuk security officials say U.S. forces have already moved from the city to more volatile Baghdad and central Iraq.
A U.S. Army spokesman in Kirkuk skirted the question of redeployment. "Our brigade remains committed to providing security and partnering with Iraqi forces to maintain stability in the Kirkuk province," said Maj. Derrick W. Cheng of the 31st Brigade Combat Team in response to an e-mail query.
Kurds say they don't mind the Americans leaving. "We are thinking about it and preparing for it," said Abdul-Salaam Berwari, who runs a think tank close to the Kurdish leadership. "It's OK for us if they do that."
Kurdish officials suggest that it might be better if the U.S. pulled out of day-to-day operations in the north. Without Washington's political obligations to fellow North Atlantic Treaty Organization member Turkey, which fears Kurdish regional ambitions, many Kurds believe they can resolve the Kirkuk dilemma themselves.
"You'll never find a single Kurd willing to give up Kirkuk whether the Americans are here or not," said one official of the Kurdistan Democratic Party, one of the two main Kurdish parties in Iraq. He spoke anonymously because he said his view and that of many others was not the official Kurdish position.
Just as Kurds exploited Iraq's chaos after the 1991 Gulf War to build their enclave, they've begun quietly incorporating Tamim province and reversing the Arab migration.
Kurds have also in effect taken up security duties in other traditionally Kurdish lands and villages, including oil-rich Makhmour, northwest of Kirkuk, and Khanaqin, farther south in Diyala province. Kurds emphasize that the bombings that killed at least 400 Yazidis, a religious minority that is ethnically Kurdish, last month fell just outside the zone of Kurdish control.
Already at least 58,000 Arabs have left the Kirkuk region, said Kamal Kirkuki, deputy speaker of the Kurdish parliament. He said the Kurds have collected a trove of documents to determine who belongs in Kirkuk and who does not, including records of all Arabs who arrived in Kirkuk from 1968, when Hussein's Baath Party consolidated power, to the Iraqi leader's ouster in 2003. "We could solve the Kirkuk issue in one minute," Kirkuki said. "All we need is a political decision."
The Irbil-based regional government bankrolls the teaching of the Kurdish language in Kirkuk schools. New housing sprouts on the no-man's land that served for 12 years as a buffer between Hussein's Iraq and the three Kurdish provinces, Irbil, Dahuk and Sulaymaniya, that were protected by American and British air power.
Soon, 5,000 overwhelmingly Kurdish Iraqi army troops will begin patrolling the countryside around Kirkuk, ostensibly to protect oil and electricity lines, but also to form a de facto barrier between the area and the rest of Iraq. The controversial patrols were approved by the Baghdad government.
"Our problem is coming from the terrorists who are outside the city," said Police Chief Gen. Jamal Taher, a Kurd. "What we want to do is to protect ourselves from the rest of the provinces where the terrorists are."
The proposal has outraged some of the city's Turkmen and Arab leaders, who see it as a ploy to extend Kurdish control.
"This is a barrel of TNT," said Hassan Torhan, an ethnic Turkmen politician and a member of the Turkmen Front, which is backed by Turkey. "Saddam Hussein tried to Arabize Kirkuk, Now the two parties are trying to 'Kurdize' Kirkuk."
Torhan frequents Irbil's new international airport. He drives there through newly constructed tunnels and freshly asphalted streets and past shiny new hotels, restaurants, office buildings and apartment blocks.
Kurds boast that not a single non-Iraqi has been killed in their semiautonomous region since April 9, 2003. They say they've drawn on decades of intelligence experience from their dealings with Western and Middle Eastern spy agencies to keep militants at bay.
They've also incorporated into the political process many of the Kurdish Islamist groups that share the same extremist religious outlook as Al Qaeda.
Around Irbil, they've strengthened a gigantic earthen berm to keep militants out. Ironically, the trench was dug by Hussein during the 1980s to keep the city out of the hands of Kurdish guerrillas now running much of the north.
Meanwhile, in the 4 1/2 years since the invasion of Iraq, life inside Kirkuk has only become more dangerous. Grinding poverty persists. Insurgent bombings and gunfire daily target soldiers, police officers and civilians. Barbed wire and concrete blast barriers line the city's unkempt boulevards as Black Hawk helicopters hover above.
Fifteen minutes into a day-long foray into the city, a visiting Western reporter was accosted by a burly man who drew a 9-millimeter semiautomatic handgun on him and taunted his driver. It was an off-duty police officer venting frustration over a minor traffic incident.
Kirkuk officials believe Kurds can do a better job of providing security than either the Iraqi or U.S. security forces.
"There will be bloodshed if the Americans leave," said Brig. Gen. Hamid Salar, head of Kirkuk's traffic police. "But if the Kurdish authorities would be given responsibility, the terrorist activity would immediately drop 50%."
Looking at life without the Americans, some Arabs in Kirkuk whisper that at least the Kurds are mostly Sunni Muslims, whereas the Baghdad government is dominated by Shiite Muslims with close ties to Iran. The Kurds also generally have a much better record on human rights and treatment of minorities than does Baghdad, where security forces are full of Shiite militiamen and sectarian death squads have run rampant.
But some worry as to how the Kurds might behave without U.S. scrutiny. Recently, Arabs who fled to Kirkuk to escape sectarian killings elsewhere in Iraq have reported being rousted from their homes by Kurdish-dominated security forces and ordered to move again, lest they upset the city's ethnic balance ahead of the referendum.
"We were informed that we have to leave our houses that we have rented for over a year and a half," said Radhi Mohammed, who fled Baghdad's Bayaa neighborhood for Kirkuk with 13 family members.
"Police arrested one of my sons and told us to leave or they will detain my son until we do so."
A special correspondent in Kirkuk contributed to this report.
Kurdistan spearheads Iraq oil investment
KRG announces new Kurdistan Region petroleum contracts
The Spokesman, Kurdistan Regional Government
2 October 2007 Erbil, Kurdistan Region, Iraq The Kurdistan Regional Government (KRG) Ministry for Natural Resources today announced that the KRG Regional Oil and Gas Council has approved four new production sharing contracts (PSCs) and sanctioned two new refinery projects in the Kurdistan Region in Iraq. The announcement came a day after the Council unanimously decided to award the contracts at its second formal meeting.
Dr Ashti Hawrami, the KRG Minister for Natural Resoures, said, “The projects will spearhead international investment for the whole of Iraq”. He added, “The first step was the KRG Oil and Gas Law in August, also approved unanimously by Kurdistan’s legislature. Pursuant to the Iraq Constitution, the KRG Law is the supreme law governing oil and gas activities in the Region. Now, these contracts with reputable and experienced oil companies. New oil discoveries under these contracts will bring large amounts of new revenues for sharing throughout Iraq, and locally refined petroleum products will help the people of the Kurdistan Region and the whole of Iraq, who now suffer from costly black market imports. It will spell the beginning of the end of the wasteful fuel subsidies of the federal government, and the corruption and crime that goes with them.”
Dr Hawrami said, “Next, we must see the draft federal Oil and Gas Law and the draft federal Revenue Sharing Law passed in the agreed form and consistent with the Iraqi Constitution. These will provide a proper platform for investment established in southern and central Iraq. If we use the federal Constitution as our guide, we will avoid the costly mistakes that were made in Iraq’s past and get projects going not just in the Kurdistan Region, but throughout our country.”
The combined initial exploration investments on the upstream projects will be approximately US$500 million. Estimated investment on the two new refinery projects will be around $300 million.
New upstream projects
The Ministry for Natural Resources today executed two of the approved production sharing contracts (PSCs) for oil and gas exploration and development in the Kurdistan Region:
Award of the Miran Block (1,015 square kilometres) in Suleimaniah Governorate to Heritage Energy Middle East Limited, a wholly owned subsidiary of Canadian listed oil company Heritage Oil and Gas. The Miran Block is a low to medium exploration risk area.
Award of the Sindi/Amedi Block (2,358 square kilometres) along the Iraq/Turkish border to Perenco Kurdistan Limited, a wholly owned subsidiary of Perenco S.A., the privately held French oil exploration and production company. The Sindi/Amedi Block is a high exploration risk area.
The signing of the other two PSCs with experienced international companies will follow shortly. If commercial discoveries are made, these two PSCs will provide an estimated aggregate return/profit of over 85% to Iraq and around 15% to the contractors. The commercial terms of these contracts conform to the term guidelines published by the KRG on its website on 29 June and provide similar returns to Iraq. The contract signed with Hunt Oil in August this year was also within these terms. The existing KRG contracts, signed prior to Kurdistan Region Oil and Gas Law, will also, where necessary, be brought into conformity with the guidelines, and as required by that Law. The details of commercial terms of all contracts will soon be published by the KRG as required by the Law. All contracts issued by the KRG are in the form of the Model PSC, also published on 29 June.
Under the four PSCs, the KRG has the right to up to 25% participation interest, and it has retained the right to assign up to another 25% to qualified Iraqi and international companies to further stimulate the local economy.
Miran area Refinery: Heritage has also agreed to fully fund (on a joint-venture basis) the completion of a new 20,000 barrels per day refinery in the Taq Taq / Miran area, to be completed within two years.
Taq Taq Refinery: The KRG’s Regional Oil and Gas Council has also approved a project for a refinery to be fully funded, commissioned and constructed by the Taq Taq field oil project operators (Genel/Addax) and other local and international investors. The refinery will also be expected to produce another 20,000 barrels per day. This refinery will be completed within eighteen months.
Revenue sharing, transparency
The government share of all revenues generated from the Kurdistan Region PSCs shall be for the benefit of all the Iraqi people. The products from the new refineries shall be available to the people of the Kurdistan Region and all of Iraq.
The KRG is in continuing negotiations with a number of international oil companies, downstream operators and local companies for further upstream and downstream projects.
“The KRG has established a transparent, attractive and competitive petroleum sector,” said Dr Hawrami. “We are open for business, and working hard to implement a broad range of projects that will be Iraq’s best hope for recovery and prosperity.”
Industry and media inquiries: spokesman(at)krg.org
Taking the lead on Iraqi oil
By Nechirvan Barzani
This August, the Kurdistan Regional Government (KRG) of Iraq passed an oil and gas law to regulate the oil sector in our region. So far, we have signed eight production-sharing contracts with international oil and gas companies. We expect to sign another two in the near future.
We were deeply disappointed by the negative reaction of several officials in Baghdad to these contracts. In the last several months it has become clear to us that many in the Iraqi Oil Ministry are locked in a time warp dating back to the regime of Saddam Hussein, in which Baghdad holds tight control of all the resources of Iraq and uses these resources to create obeisance and loyalty to the centre.
The KRG production sharing contracts are fully consistent with the Iraqi Constitution, which gives the regions of Iraq substantial control over natural resources. The contracts are also fully consistent with the draft Iraqi oil law that was agreed to this March, but has yet to be passed by the Iraqi National Assembly. The Kurdistan region's oil law, passed in August by our parliament, is 100% faithful to the agreed draft of the Iraqi law, and includes provisions for the KRG to share its oil revenue with the rest of Iraq in the same 83%-17% ratio. If we had intended to "go it alone," why would we ever consider passing a law which requires us to give 83% of the revenues to the rest of Iraq? We waited five months for the Iraqi Assembly to pass the agreed draft - they have not acted, and there is no sign that they will act anytime soon. We decided to "lead from the front."
The Bush administration and Congress have been pressing the government in Baghdad to move ahead on a fair, transparent and efficient oil law. So have we. Neither of us have had any success. Thus, we have chosen to pass in our own assembly the very same law that was agreed to by all parties in March of this year.
We hope our friends and supporters in the US will understand that this is not an attempt to usurp the nation's oil resources, but rather our best effort to move the process forward, leading by example to make these valuable resources work for the people of Iraq. The resources that can ease the suffering of the people of Iraq lie beneath our feet.
The Kurdistan Region has achieved great things since the liberation of 2003. We are proud to be described as the model for the rest of Iraq: tolerant, democratic, peaceful and working toward economic prosperity. We have been given a chance to build a bright future after decades of oppression and violence. Our political system, our judicial system, our physical infrastructure and our educational system all are in great need of modernisation, but we will persevere with the help of our friends and by the fruits of our labour.
In 2003, we chose voluntarily and openly to remain part of Iraq, and
we will continue to do so. But does this mean that we have to be held back
by the chaos and bloodshed that dominate the rest of the country? Must
we sit idly by, waiting for Iraqi politicians to waste months debating
oil legislation that has already been agreed upon by the major parties?
We have tried our best to be a loyal ally of the US. We have supported nearly every major initiative and decision that the US has sought in Iraq - sometimes contrary to what we consider to be in our best interests. We will continue to do so because we believe that there is no alternative to maintaining the US presence in Iraq. We want the US to remain, and we need American help. In return for our loyalty we ask understanding. We are not a "rogue province" seeking an early escape from the chaos that has become Iraq. We are a people and a region that have seen nothing but death, destruction and deprivation from Baghdad over the decades. Does it surprise anyone that we harbour deep suspicions about becoming reliant on the capital that has brought us such misery for so many years?
In the past, oil in the Kurdistan Region has been more of a curse than a blessing. The people have never benefited from our natural resources. Successive governments in Iraq have deliberately left our oil in the ground in an effort to keep our people poor and to deny our aspirations for a better way of life. Now, after so much suffering, we have a chance to turn this curse into a blessing. And we are asked to wait while the Iraqi parliament takes its vacation, and then considers new ways to manage our resources.
The answer is found in the principles of the Iraqi Constitution, the US Constitution and many others around the world - federalism. This is not just a concept to us. Federalism means that we have the liberty to develop our resources under the umbrella, but not the central control, of Iraq. It means that as 17% of the population we will receive 17% of the wealth, and that we will accordingly share 83% of our wealth with the rest of the population.
We want peace and prosperity for the rest of Iraq as well. We will contribute our fair share and more to that goal. But we cannot be asked to sit by and postpone our aspirations for prosperity in pursuit of a vision of a centralised Iraq that long ago passed from reality. We are trying to lead by example in all that we do. Our oil law, and the contracts we have signed, are nothing more than that.
Mr. Barzani is the prime minister of the Kurdistan Regional Government in Iraq.
Iraqi Oil Spoils
The quickening pace of oil deals between Kurdish regional leaders and foreign companies is another sign that Iraq is spinning out of control and the Bush administration has no idea how to stop it.
President Bush set enactment of a national oil law that centralizes development and ensures an equitable division of the profits as a key benchmark of progress. Iraq’s leaders, who have little interest in equity or reconciliation, have blithely ignored it. So the Kurds have taken matters into their own hands, signing nine legally questionable exploration deals with foreign companies.
The administration has complained that the deals “needlessly elevated tensions” between the Kurds and the central government. But it apparently hasn’t leaned very hard on the one American oil company involved, Hunt Oil of Dallas, which has close ties to the White House. Iraq’s oil ministry, meanwhile, has warned that the contracts will be either ignored or considered illegal.
We cannot blame the Kurds for wanting to get on with exploiting their region’s lucrative oil deposits for energy and for profit. While the rest of Iraq is convulsed in violence and politically paralyzed, the Kurdish-administered northeast is the one relatively peaceful region, with functioning schools and government, a separate army and booming business.
The oil contracts, however, are a dangerous attempt to establish facts on the ground, fanning even more distrust and resentment. The Sunnis, many of whom live in areas without any oil resources, fear they will get shut out completely from the country’s oil wealth. The Shiite-dominated government suspects that the Kurds are looking for the resources to secede from Iraq. Any sign that Iraq is about to break up will encourage even more dangerous meddling by neighboring Turkey and Iran.
The Kurds agreed to a carefully constructed compromise national draft oil law last February and insist they remain committed to sharing oil revenues with the rest of the country. But as The Times’s James Glanz reported last month, the compromise appears to have collapsed in an ever more bitter struggle among the Shiite-led government in Baghdad and the Sunnis — who both insist on a strong central government role in letting contracts and running the oil fields — and the Kurds, who demand more regional control.
Foreign oil companies are so eager for profits that they don’t seem worried about whether the deals are legally binding or how they may contribute to Iraq’s chaos.
The White House needs to send a clearer warning to these companies — American and foreign — about the dangers of their course. It should also urge the companies to bring their own pressure on Iraqi officials to adopt a law that ensures that whatever system emerges is transparent, accountable and profitable for all Iraqis. Ignoring that is a recipe for continued chaos.
The Kurdish example
By Falah Mustafa Bakir, Head of KRG Department of Foreign Relations
In 1998 I was barred from obtaining a graduate degree in Iraq because I refused to join Saddam Hussein's Ba'ath Party. Luckily, a prestigious British scholarship program allowed me to leave Erbil, the capital of the Kurdistan region of Iraq, and attend the University of Bath in England to get a degree in Development Studies. I've always found that rather ironic — not Ba'ath, but Bath.
Last week I again left Erbil, but this time as a member of the Iraqi delegation to the 62nd United Nations General Assembly. In the past two decades I have gone from being a member of a marginalized and oppressed group within Iraq to helping represent it to the outside world. While the news from Iraq may be dominated by terrorism and violence in a society that seems irrevocably split by ethnic and sectarian divisions, my being a member of this delegation showed another side to the story: Kurds and Arabsworking together to make Iraq's case to the United Nations.
My presence in New York is also a tribute to the leadership of the Kurdistan Regional Government (KRG), the resilience of the people of our region and the sacrifice of those who died unable to imagine that a day like this would ever come. And it will be proof positive that rather than let violence rip us apart, we in the Kurdistan region are dedicated to attaining a free, democratic, federal and pluralistic Iraq.
Some have criticized the KRG's commitment to federalism as a sign of Kurdish separatism or a long-term plan to "partition" Iraq. But this misreads Iraqi and Kurdish history. The Kurdistan region had been a de facto autonomous state since 1991, with the advent of Operations Provide Comfort and Northern Watch, the no-fly zone enforced by the United States, Britain and France following the 1991 Gulf War. It was the voluntary decision of the KRG to rejoin the rest of the country and participate in building an independent, federal and free Iraq for all of its people.
The Kurdistan Regional Government has shown itself to be a model for the democratic transition in Iraq. Not a single coalition soldier has been killed, our markets are vibrant and our people are relatively free of the terrorism inflicted on the rest of the country. We are not perfect, but we are getting things right. Our regional parliament has passed important legislation such as the Investment Law, which allows foreign companies the right of full property ownership, tax and customs-duty exemptions, repatriation of capital and the Kurdistan region's oil and gas law. Some in Baghdad have reacted negatively to this law, with arguments that smack of the overly centralized period of Saddam's autocracy. Our oil and gas law conforms totally with the Iraqi Constitution's approach to federalism and the management of Iraq's energy resources.
Because of a favorable and welcoming investment climate, the KRG should be understood by the international community as the gateway to the rest of Iraq. Our commitments to the rule of law, security, democracy and tolerance are sources of strength, not division, for Iraq. The Kurdish ministers and members of parliament in the Iraqi government are internationally recognized for their competence and commitment to a democratic, federal and secular Iraq. We are on the side of freedom and democracy.
My personal commitments to both the Kurdistan region and a free, federal Iraq blend easily in my mind. After so much suffering under one of the worst dictatorships in modern history, the Iraqi people deserve a chance for a normal life — none more so than the Kurds, who were victims of a genocidal campaign and chemical-weapons attacks by Saddam's regime. I will do all I can to make sure that when the time comes, my children will be able to attend a university in their own country, and that their acceptance will not be dependent on membership in a political party.
When I left Erbil for the United Kingdom, I was going to a country unsullied by the violence and suppression I knew at home. Today, all Iraqi people dream of an end to the violence in Iraq. We dream of a federal country where democracy and human rights are upheld, where people are free to worship as they see fit, where one's ethnicity is irrelevant and where outside investment helps fuel a developing economy and benefits our infrastructure. But we don't only dream. The Kurdistan Regional Government of Iraq is working hard to make that future a reality for its people.
Falah Mustafa Bakir is head of the Department of Foreign Relations in the Kurdistan Regional Government of Iraq.
Bakir: Kurdistan as a model for Iraq
The Council on Foreign Relations, a US independent, nonpartisan membership organisation, think tank and publisher, interviewed Minister Falah Mustafa Bakir, Director of the Foreign Relations Department of the Kurdistan Regional Government, Iraq.Interviewer: Greg Bruno, Staff Writer
Falah Mustafa Bakir, Director of the Foreign Relations Department for the Kurdistan Regional Government in Iraq, says his government favours a political solution to cross-border tensions with Turkey, but so far, Ankara has “only considered a military operation to solve this problem.” He adds that while Kurds “would like to have an independent Kurdish state,” political realities in Iraq have prompted Kurdish officials to embrace a federal government strategy to solving Iraq’s sectarian problems.
Q: Turkey’s parliament has voted on a military plan to allow Turkish soldiers to conduct cross-border raids against Kurdish rebels in northern Iraq. How would the Kurdish government respond to such an act of aggression and, in your view, what’s behind the latest tough talk from Ankara?
FM Bakir: We believe the best way to solve this problem is through political dialogue. We understand Turkey’s concerns and we are against the killing of civilians, but there is no military solution for this problem. It would be in the interests of both Turkey and the KRG [Kurdistan Regional Government] for this question to be addressed politically, and we believe there may now be an opportunity for a political approach.
So far the Turkish government has only considered a military operation to solve this problem. But history and experience have proven that you cannot solve such a problem only through military means. We believe there is a window of opportunity and the door is still open for an alternative to a military solution.
Q: The Kurdistan Worker’s Party (PKK) has been described as a Kurdish separatist group. As far as you can tell, what are the aims of the PKK, and what is your government doing to reign in the separatists?
FM Bakir: In the last few years, the PKK has begun to change its conduct and it now may be ready for a peaceful approach within Turkey. Our understanding is that the PKK may be prepared to join the political process in Turkey, and it is left to the Turkish government to seize this opportunity for a potential political solution to this problem. But as far as we are concerned in the Kurdistan Region of Iraq, we agree on the principle of non-interference in the internal affairs of Turkey, and we are not ready for the Iraqi Kurdistan region to be used against Turkey or any of our neighbours. We do not provide support to any group that wants to create problems for Turkey.
Q: The US Congress recently voted to label the Ottoman Turk killing of Armenians in 1915 as genocide. The move has clearly angered Ankara, and could leave the impression that lawmakers in Washington have in some way turned their backs on the KRG. I was wondering what your thoughts were on this.
FM Bakir: We do not want to be part of any friction between Turkey and the United States. We are allies with the United States and we are neighbours with Turkey - we want to enjoy good relations with everyone. We did not want Ankara’s reaction to the House resolution to negatively affect our Region, which is the only safe part of Iraq. Any military action by Turkey would jeopardise our hard work to cooperate with our Iraqi colleagues to build a more stable and prosperous future for all of the Iraqi people.
Q: Shifting gears a bit, Kurdistan and Turkey have been in the news a bit lately because of growing cross-border tensions. Less heralded, however, are economic ties between your government and the Turkish government. What is the status of these economic partnerships?
FM Bakir: Even before the fall of Saddam's regime, we had encouraged Turkish companies to come and do business in the Iraqi-Kurdistan region. We had limited capacity internally and therefore wanted to reach out to those Turkish companies who have had a good reputation and good performance and invite them to be active in our Region. After the fall of the regime, the main construction projects have been granted to Turkish companies because we believe that both sides can benefit from these kinds of commercial and business activities. These ties are growing, not decreasing, and that is very good news. We want this trend to continue.
Q: What sectors are you seeing the largest growth in?
FM Bakir: Mainly construction - Erbil International Airport, Suleimaniah Airport, bridges, roads, public buildings - to name a few.
Q: You mentioned in your speech to the United Nations this week that Kurdistan has experienced “an historic period of economic growth and expansion.” I wonder if you could detail what those expansions are, and define this historic growth?
FM Bakir: If you go back to the history of the Kurdistan Region under the dictatorial regime of Saddam Hussein, the infrastructure was ruined and there was no attention given to the agricultural sector, industrial, or service sectors. It was after the fall of the regime that we got the opportunity to expand and institute economic and investment policies to encourage growth. These policies have provided an opportunity for the public sector, the private sector and people who lived abroad to start small businesses. It's in the housing, tourism, agricultural and construction sectors, and others, that the government is trying to build a stronger economic foundation for our people and for our future. People have started to have hope for the future and are working together for a better future.
Q: You also mentioned during your speech at the United Nations that the Kurdistan Region serves as a model for the rest of Iraq. Could you expand on that?
FM Bakir: Since 1991 we have been free from Saddam Hussein’s control. The Kurdistan National Assembly, our regional parliament, opted for a federal solution in 1992 in order to be part of a federal democratic system in Iraq. We wanted to show the rest of the country that, when given the opportunity, we are able to administer our own Region and take care of our own affairs. We have agreed with the rest of the leadership in Iraq to draft a constitution which states that Iraq is a federal state, a democratic state, a state that lives in peace with its own people and its neighbours. Therefore we wanted the stability, security, and economic activities in Kurdistan to be seen as a gateway to the rest of Iraq, so that the rest of Iraq could be doing the same as Kurdistan. We believe that companies established here will move south when the time is right; Kurdistan is a gateway to the rest of the country.
Q: You mention the Iraqi constitution and the federal system of government. Last month the US Senate approved a nonbinding resolution that urged the furthering of this federal government strategy in Iraq. But the legislation has been widely criticized by the Shiite government in Baghdad, Sunni groups and, in fact, the US Embassy. I wonder what your thoughts are on the resolution?
FM Bakir: We were surprised by that reaction to and criticism of the nonbinding resolution. We understand what the resolution was asking for, and it was exactly what is stated in the Iraqi Constitution: the implementation a federal system in Iraq. After trying a strong central government, which has proven a failure, the best solution that we could see that would bring the diverse Iraqi groups together within a unified country is a federal system of governance. We see federalism as a solution and not a problem. Federalism means uniting Iraq and not partitioning Iraq. It’s unfortunate that people have misrepresented federalism as a problem.
The president of the Kurdistan region, Masoud Barzani, has called for a conference for all the major Iraqi political parties and groups to come to Kurdistan and discuss the most appropriate means of putting a federal system in place that will have the best chance to bring political stability and progress to Iraq. Again, this is an example of the Kurdistan Regional Government acting proactively and constructively to find the best solutions to the problems facing Iraq.
Q: Now there are also those, however, who suggest that Kurdistan’s favouring of this system is tantamount to favoring separatism. That seems to be the concern that Turkey has. What are your thoughts on that characterisation of support for this strategy?
FM Bakir: It’s unfortunate, because we have contributed so positively to the political progress in Iraq and have given the best that we can. We have done our best in serving the Iraqi people. But unfortunately, still that kind of accusation, and that kind of fear, remains.
We have opted voluntarily to be part of a federal democratic system in Iraq. So long as Iraq continues to be committed to the constitution, we will remain part of Iraq. We know very well that it is in our interest to be part of this country, and we have decided voluntarily to remain so. We have contributed so much to Iraq, and expect that the rest of Iraq can return that kind of goodwill and gesture from the KRG, so that we build together a federal and democratic system that can give us a situation that allows for power sharing and wealth sharing within the same country, which is for all Iraqis. Basically, the foreign, defence and monetary policies would be handled by the federal government in Baghdad, and the rest would be left to the region.
Q: The oil and gas law passed by the parliament of Kurdistan has been questioned by many, including the Iraqi oil minister. I wonder if you could talk on the subject of legality, and how the oil and gas law, as passed, benefits not just your Region but Iraq as a whole.
FM Bakir: Whatever we have done comes within the constitutional rights that our Region enjoys. And more importantly, we talk about revenue sharing. Whatever we do, only 17 percent will come to the KRG area, while the rest, which is 83 percent, will go to the federal government in Baghdad. So we are committed to our constitutional rights, we are committed to the constitution. We are committed to revenue sharing. But our people have high expectations - they need services and better opportunities.
We cannot put our future on hold while the rest of the country stabilises. Therefore we have an opportunity: Kurdistan can serve as the gateway for investors to come [through] and be a launching pad or a stepping-stone toward the rest of the country.
Q: As an Iraqi from the Kurdish region of Erbil, do you believe the Kurdish region deserves its own independent state?
FM Bakir: Every Kurd would like to have an independent Kurdish state. We are the largest nation in the world without a state. But we understand the difficulties. We understand the circumstances and the neighborhood we live in, and therefore there is a difference between what one wishes to achieve and what can be achieved.
The leadership of the Kurdistan Region is wise enough and there is enough political maturity in the Region for them to make calculations that take into consideration all the factors. Therefore they have opted for a federal, democratic, pluralistic system to be part of Iraq because they know what’s in the interests of the people. During the elections, there was a referendum - 97.5 percent of the people voted for an independent state, but still the political leadership tried its best to manage the expectations of the people and explain to the people why it’s in the interests of the KRG to be part of Iraq and to work within Iraq.
Bina Bawi - Northern Iraq
Drilling begun in the field in Bina Bawi, Northern Iraq in August 2006 proceeds apace. The company established for this project, which is operated by Petoil, is called A&T Petroleum Company, and our partner in this project is Hawler Energy. The second well is drilled and the seismic studies will start in the last quarter of 2007.
Ministry announces 7 new, reviews 5 existing contracts
Following the unanimous decision of the Regional Oil and Gas Council ("the Council") of the Kurdistan Regional Government (KRG) at its third meeting on Sunday 4 November, the KRG Minister of Natural Resources Dr. Ashti Hawrami today announced that seven new production sharing contracts (PSCs) have been signed by the KRG. "There has been great interest in Kurdistan's exploration acreage," said Dr. Hawrami. "We are pleased to be able to meet that demand."
Pursuant to the Iraq Constitution, the Kurdistan Oil and Gas Law of August 2007 is the supreme law governing oil and gas activities in the Region. All revenues from petroleum activities in the Kurdistan Region will be shared proportionately throughout Iraq pursuant to the Constitution.
New production sharing contracts
The Prime Minister of the Kurdistan Region, Nechirvan Barzani, executed the seven new PSCs on behalf of the Council, together with Minister Hawrami.
Award of two PSCs, for the Mala Omar and Shorish Blocks (of 285 and 526 square kilometres respectively) in Erbil Governorate, to OMV Petroleum Exploration GMBH, a wholly-owned subsidiary of OMV Aktiengesellschaft, the largest oil and gas company in Central Europe. The blocks are considered to be low to medium exploration risk areas.
Award of the Akre-Bijeel Block (889 square kilometres) in the Dohuk Governorate to Kalegran Limited, a wholly-owned subsidiary of MOL Hungarian Oil and Gas PLC, and Gulf Keystone Petroleum International Limited, a wholly-owned subsidiary of UK-listed Gulf Keystone Petroleum Limited. The Akre-Bijeel Block is a medium exploration risk area.
Award of the Shaikan Block (283 square kilometres) in the Dohuk Governorate to Gulf Keystone Petroleum International Limited, Texas Keystone Inc., and Kalegran Limited. The Shaikan Block is a low exploration risk area.
Award of the Rovi and Sarta Blocks (517 and 607 square kilometres respectively) to Reliance Exploration and Production DMCC, a wholly owned subsidiary of Reliance Industries Limited. These PSCs had been negotiated prior to the entry into force of the Kurdistan Oil and Gas Law, and had been awaiting the passage of the Law and the approval of the Council.
Award of another block (1226 square kilometres) also in the Dohuk Governorate to a western company, with details to be announced in coming days. The block is considered to be a medium exploration risk area.
If commercial discoveries are made, these seven PSCs will provide an estimated aggregate return/profit of over 85% to Iraq and around 15% to the contractors. The commercial terms of these contracts conform to the term guidelines published by the KRG on its website on 29 June and provide similar returns to Iraq.
All contracts issued by the KRG are in the form of the Model PSC, also published on 29 June. Under the seven PSCs, the KRG has the right to a participation interest of between 20% and 25%, and it has retained the right to assign third party participation interests of between 15% and 25% to qualified Iraqi and international companies to further stimulate the local economy.
Updated map and commercial guidelines
A map of the Kurdistan Region contract areas that remain open for negotiation can be downloaded here. Corrected and updated guidelines of commercial terms can also be downloaded here. These guidelines now include a new category, "frontier blocks", along the Iraq-Iran border.
Review of old contracts
At its Sunday meeting the Council also reviewed the PSCs of the companies whose contracts predate the Kurdistan Region Oil and Gas Law to bring them into conformity with the Law and Model PSC. Those PSCs are held by DNO, Genel Enerji/Addax Petroleum, WesternZagros, Hawler Energy/A&T Petroleum and Shakal/Trilax/Petoil.
The results of the review, including commercial terms, have now been communicated to the PSC holders.
KEPCO / KNOC contracts
On Sunday the Council also approved the award of four strategic blocks in the Suleimaniah-Erbil area to the Kurdistan Exploration and Production Company (KEPCO), a government-owned oil exploration and development company established by the Kurdistan Oil and Gas Law.
KEPCO was awarded PSCs for the blocks on terms that will be identical to those applicable to international oil companies (IOCs), and will contain a condition that KEPCO bring into their contract areas as a partner a suitable large IOC, to be approved by the Ministry of Natural Resources and the Council. The IOC will provide technical and financial support to KEPCO in the execution of its responsibilities under the PSC.
The Council also approved the award of an integrated project to the Kurdistan National Oil Company (KNOC), a government-owned development company, for a refinery by developing the Khurmala field discovery. The associated natural gas and fuel oil from the refinery will be processed and supplied to the Kurdistan Region Ministry of Electricity for power generation purposes.
The project will be in the form of a service contract which, when it is executed, will provide for a 30-month development phase for the construction of a new 50,000 barrels per day refinery. KNOC will be entitled to bring in third parties, including reputable local or international companies, to provide financial and technical/management support on all aspects of the project. The engagement of third party contractors shall be subject to the approval of the Ministry of Natural Resources and the Council.
Production from the Khurmala field will start gradually from existing appraisal wells, and more wells will be drilled to boost production to a peak rate of 250,000 barrels per day. Excess oil not used for the refinery will be exported to boost petroleum revenues for all Iraqi people.
Twenty IOCs now working in Kurdistan
Having made these announcements, Dr. Hawrami said: "I am very pleased at the rapid pace of progress in the Region. With these new PSCs executed today, we now have 20 experienced international oil companies working in Kurdistan. Twenty companies and rising fast. Five additional blocks are reserved pending the finalisation of ongoing negotiations. A further 24 blocks in the Region are the subject of intense interest from international companies. There will be more announcements soon."
Dr. Hawrami added: "These contracts are a major step towards the Kurdistan Region's goal of increasing oil production from the Region to one million barrels per day. This new level of exploration and production activity in the Kurdistan Region will also galvanise investment interest for the rest of Iraq once a transparent, investor-friendly and unambiguously constitutional oil and gas law for Iraq is in place."
Pursuant to revenue sharing principles agreed with the Federal Government, only a 17% share of government revenues from petroleum operations in the Kurdistan Region will stay in Kurdistan. 83% of the revenues will, under the Constitution's revenue sharing principles, be for the benefit of Iraqis outside Kurdistan.
Industry and media inquiries: spokesman(at)krg.org
signs five more petroleum contracts
KRG signs petroleum contracts with affiliates and subsidiaries of TNK-BP,
Korea National Oil Corp, Hillwood, Sterling Energy, Aspect Energy
12 November 2007 Erbil, Kurdistan Region, Iraq Following the unanimous decisions of the Regional Oil and Gas Council (“the Council”) of the Kurdistan Regional Government (KRG) at its second and third meetings, Dr Ashti Hawrami, the KRG Minister for Natural Resources, today announced that the five production sharing contracts (PSCs) previously approved by the Council have been signed by the KRG with TNK-BP affiliate Norbest Limited, with a Korean consortium headed by Korean state-owned oil company KNOC, with Hillwood International Energy company HKN Energy, and with subsidiaries of UK-listed Sterling Energy LLC and Denver-based Aspect Energy LLC.
“These five PSCs are yet another clear expression of confidence in the strength and stability of the Kurdistan Region,” said Dr Hawrami, “and they produce very comprehensive returns for the people of Iraq.”
The Council had approved these contracts at its earlier meetings, with today’s announcement following formal signing ceremonies in Erbil, the capital of the Kurdistan Region, on Saturday 10 November and Monday 12 November.
The Prime Minister of the Kurdistan Region, Nechirvan Barzani, executed the five new PSCs on behalf of the Council, together with Minister Hawrami.
Award of one PSC for four blocks comprising the Hawler Contract Area (of 1,532 square kilometres) in Erbil Governorate, to Norbest Limited, an affiliate of TNK-BP. The Hawler Area comprises blocks advertised in June as K11, K12, K14, K15, and is considered to be a low to medium exploration risk area.
Award of the Bazian Block (473 square kilometres) in Sulaimani Governorate to KNOC Bazian Limited, owned by the Korea National Oil Corporation, and Korean private sector oil exploration and development companies SK Energy Co Ltd, Daesung Industrial Co, Ltd, Samchully Co Ltd, Bum-Ah Resource Development Corp, UI Energy Corporation, GS Holdings Corp, and Majuko Corporation. The Bazian Block is a relatively low exploration risk area.
Award of the Sarsang Block (1,226 square kilometres) in Dohuk Governorate to HKN Energy Ltd, a Hillwood International Energy company. The Sarsang Block is considered to be a medium exploration risk area.
Award of the Sangaw North Block (492 square kilometres) in Sulaimani Governorate to Sterling Energy (International) Limited, a wholly-owned subsidiary of Sterling Energy LLC. The Sangaw North Block is considered to be a low exploration risk area.
Award of the Atrush Block (269 square kilometres) in Dohuk Governorate to General Exploration Partners Inc, a wholly-owned subsidiary of Aspect Energy LLC. The Atrush Block is considered to be a low exploration risk area.
If commercial discoveries are made, these five PSCs will provide an estimated aggregate return/profit of over 85% to Iraq and around 15% to the contractors. The commercial terms of these contracts conform to the term guidelines published by the KRG on its website on 6 November and provide similar returns to Iraq.
All contracts issued by the KRG are in the form of the Model PSC, also published on 29 June and updated recently after the passage of the Regional Law. Under the five PSCs, the KRG has the right to a participation interest to further increase Iraq’s profit share and has retained the right to assign third party participation interests to qualified Iraqi and international companies to further stimulate the local economy.
Updated map and commercial guidelines
A map of the Kurdistan Region contract areas that remain open for negotiation, further updated from the map published on 6 November, can be downloaded here.
Remaining blocks will, as always, be awarded to the companies which meet the financial and technical qualification criteria established by the Kurdistan Region Oil and Gas Law and offer the people of Iraq the best commercial terms.
Kurdistan Region in the lead
After the signing ceremony today, Dr Hawrami said: “In Kurdistan, we are setting an example: this is the first post-Saddam framework for oil investment in Iraq which follows the democratic, federal, and free market principles mandated by the Iraq Constitution. It is the first and the only constitutionally based legal framework to attract investments to Iraq, which is designed for Iraq-wide revenue sharing, an essential element of future stability in Iraq that the Constitution also rightly mandates.”
“The KRG’s ambition now is for a similar constitutional framework to be adopted in the rest of Iraq. Without such a framework, investors cannot have confidence in contracts issued by authorities in other parts of Iraq,” he added.
Industry and media inquiries: spokesman(at)krg.org
Hay Alwozarah - Arbil, Mosul Vilayet
26 November 2007
H.E. The Prime Minister
This is to present my compliments and to advise you of the email communication sent to you, on 19 November 2007, by way of both the KRG Representative in Germany and the website of the KRG Foreign Ministry, reading as follows:
with interest your timely edpage piece "Kurdistan's
Hope for Talks" of 5 Nov 07 (Nechirvan Barzani, Washington Post:
www.solami.com/mindset.htm#Nechirvan) - and the some 67 mostly illuminating
After my earlier plans for a General Assembly of the Mosul Vilayet Council for May 2004 (.../invitation.htm ¦ .../recres.htm) were scuttled, respectively hijacked by some flat earth people at the UN and elsewhere, it has taken me some time to ponder and adjust to developements taking place in and around Iraq before I've raised my voice again (e.g. in my interview with the Turkish think tank Ekopolitik: .../rebirth.htm). I have just returned to Geneva from another trip to Turkey for exploring with some decision-makers there some new/old ideas on how to turn the Iraqi mess into opportunities to lastingly heal some new and old societal wounds in that part of the world (.../hotpursuit.htm#Gridlocks). And on the two most pressing fronts - e.g. the Turkish-Iraqi border violations, and the planned referendum on the future status of Kirkuk - I think it proper and indicated under the circumstances to draw your particular attention to the following items:
I The repeated armed incursions by Iraq-based PKK groups into Turkish territory, and by Iraq-based PJAK groups into Iranian territory, are seen as incompatible with Iraq's sovereign obligations under international law. In the case of Turkey, these incursions have, moreover, constituted violations of the recently reconfirmed Treaty of Friendship and Neighborly Relations between Iraq and Turkey of 29 March 1946 (Protocol 6, articles 1 and 11: .../bordertreaty.pdf). Turkey is seen to take seriously official statements admitting Iraq's inability and/or unwillingness to effectively and reliably see to it that Iraqi territory is not misused for armed cross-border operations. No less unhelpful are official statements ruling out the extradition to Turkey of PKK leaders said to be responsible for such incursions and related damages. The risk thus remains high of the reportedly some 200'000 Turkish troops currently stationed at the border to react in self-defense, not excluding a temporary occupation of the Mosul Vilayet in case of a still not ruled out third party aggression against Iran.
(a) the PKK leadership's public statement of October 26, 2007: “If we are guaranteed that Turkey doesn’t attack us, we’ll immediately lay down our arms.” (.../hotpursuit.htm#Gridlocks);
(b) the time-tested principle of sovereign responsibility for damages due to illegal armed cross-border attacks: "He who, with intent, by day or in the dark of the night, set fire to the property of a Confederate, shall have lost forever his rights as a member of our Communities, and he who shelters and protects this offender shall in our valleys compensate the injured." (Swiss Federal Pact of 1291: .../nations.htm#1291);
(c) the standing formal invitation to the Turkish Government: "to avail itself of the good offices which the Mosul Vilayet Council may be able to provide towards an early cease-fire and a mutually advantageous lasting solution of Turkey's ‘Kurdish Question’" (.../a31.htm#4);
(d) articles 4 and 14, in particular, of the Declaration of the Kingdom of Iraq of May 30, 1932, providing for international non-discrimination, minority protection and private property guarantees in all of Iraq (.../a3a.htm#DECLARATION); and
(e) the principles laid down for resolving all conflicting landownership claims, as agreed to in 1992 and 1994 by leaders of the Mosul Vilayet's Assyrian, Kurdish and Turkoman communities (.../a32a.htm#Meeting), notably: "to have no territorial or other public claims against each other, to have their land holdings and related rights and obligations registered with the Mosul Vilayet Registrar [.../registrars.htm], to have any ensuing dispute with other proprietors or claimants settled exclusively by peaceful means, such as mediation or arbitration, with the termination of the League of Nations Mandate on 3 October 1932 serving as reference date for property rights, and disputes with foreign cIaimants to be settled under internationally recognized arbitration rules either in a mutually agreed third country or, by default, in Geneva, and to settle among themselves, or to have settled among their constituents, whatever claims, disputes or feuds that may arise in the future exclusively by peaceful means respecting the Rule of Law, their traditions and the overriding interests of their union enrooted in the Mosul Vilayet territory, as defined by the Mosul Vilayet Council;" (.../a31.htm#MOSUL):
I took the opportunity to submit to the Turkish authorities notably the following proposals which are understood to be currently under consideration:
1. The Government of Iraq, in international law, is responsible for its entire territory, including any act which may emanate from its territory and which may cause any bodily, mental or material damage in a neighboring country. The right to self-defense and to hot pursuit (.../hotpursuit.htm) is provided for also in the Treaty of Friendship and Neighborly Relations between Iraq and Turkey of 29 March 1946. Damages caused in violation of international law by armed groups operating from across the Turkey-Iraq border may be examined by a neutral assessor. Unless the Government of Iraq is prepared to identify and duly extradite to Turkey the responsible individuals, the Government of Iraq may be called upon to pay prompt and equitable compensations.
2. The Government of Iraq is responsible for the safety of those residing on its territory. Reliable and strict enforcement of such international treaty obligations as the maintenance of a 75km demilitarized border zone is seen to afford the Turkish Government an opportunity to desist in the pursuit of its inalienable rights to self-defense. By availing itself of the good offices of suitable third partners, it may also facilitate the development and implementation of political answers to its internal "Kurdish question". Mutually agreed upon and properly equipped, the Mosul Vilayet Council (.../mvcindex.htm) and the International Committee for European Security and Co-operation (.../ICESC.htm) avail themselves for such parallel diplomacy good offices (.../edouardbrunner.htm).
3. The Government of Iraq is responsible for the reliable and strict application of its pre-eminent international non-discrimination, minority protection and private property obligations which, in international law, constitute the "fundamental laws of Iraq, and no law, regulation or official action shall conflict or interfere with these stipulations, nor shall any law, regulation or official action now or in the future prevail over them." (article 1, Iraq Declaration of 30 May 1932: .../a3a.htm#DECLARATION). In as much as article 140 of Iraq's current constitution may not be in harmony with this clause, the troublesome and regionally destabilizing impending "Kirkuk referendum" can and should be put aside in favor of more enlightened and appeasing approaches to overlapping land claims, such as the reconstitution of Kirkuk's reportedly vandalized cadastre office by other archives and registries (.../registrars.htm). As co-guarantor of the related rights of Iraq's internationally protected minorities, the Turkish Government, in consultation with other co-guarantors and the Government of Iraq, may take mutually beneficial corresponding initiatives at the UN and elsewhere.
III Ekopolitik is currently planning a private follow-up consultation on the above items with Turkish politicians and lawmakers (13-14 December probably in Ankara or Istanbul). The topic is: "Iraq's international minority & private property guarantees - How and Who is to bring them alive?" Currently, our co-founding Council members Najim Sourchi, Sheik Salar, Mohammad Siddiq Mahmoud, Mushir Hadi Ahmed, and Mohammad Mahmood Harony, as well as John Nimrod from Chicago, the Yezidi Pope from Dahok, Philip Wainwright from New York, and Hussein Tahiri from Australia are expected to join me there. Of course, I'm sure you have other channels to make your own views known. Yet, I'm equally confident that all of us would greatly appreciate and benefit from your experience and advice. Your personal attendance would thus be most welcome - the more so as your presence there is seen to significantly impact some impending decisions by our Turkish friends. Notably on what military and/or non-military and political course of action would best meet their and the long-term interests of the Mosul Vilayet residents in particular. At any rate, if you see yourself unable to personally attend our planned meeting, please advise me promptly on whether, either personally and/or on behalf of the Kurdistan Regional Government, you support the above initiative to provide for a non-military resolution of the border issue and for a road-holding solution of the Kirkuk headache in line with Iraq's still valid formal obligations under its 1932 Declaration by way of a correspondingly Iraq-funded mandate for our Council - or the UN-accredited I.C.E.S.C. - to serve as mediator, facilitator and neutral honest broker providing notably for a promptly and effectively de-militarized 75km boder zone based on the Turkey-Iraq Treaty of 1946.
While looking forward to hear from you at your earliest convenience,
I take this opportunity to assure Your Excellency of my highest consideration,
and remain, sincerely yours
Anton Keller, Adviser of the Mosul Vilayet Council
+4122-7400362 +4179-6047707 firstname.lastname@example.org (www.solami.com/nechirvan.htm)
PS: On November 19, the above-quoted communication was brought to your urgent and benevolant attention on the basis of need-to-know and Your Excellency's public and private pledges regarding your own and your government's desire to resolve the outstanding questions notably on the Iraqi-Turkish border, Kirkuk and the return of some seized assets in good faith, promptly and exclusively through negociations (see also: .../petition.htm). It is understood that some persons entrusted with external communications may have kept this information from you due to a misunderstanding of universally appreciated international standards of email communications. And it is hoped that the delays caused due this apparent preference of form over substance will not adversely affect your timely and appropriate response. [Meanwhile, on November 28, an indirect - negativ - public response is seen to have been given in the name of the KRG, thus calling into question the timeliness of the Istanbul/Ankara meetings set for December 13-14, 2007 and April 3-4, 2008: .../symposium.doc ¦ .../symposiumt.doc, with corresponding adverse consequences for the Council's efforts to help resolve the Kirkuk problem on the basis of international law and previously obtained consensus among the Mosul Vilayet's constituant communities]
responds to Dr Shahristani’s threats
to international oil companies
Statement by the Kurdistan Regional Government
Erbil, Kurdistan Region, Iraq 20 November 2007 Dr Hussein Shahristani, the Iraqi Oil Minister, has issued threats against oil companies who have signed contracts with the Kurdistan Regional Government. He warns that Iraq's oil will not be allowed to be exported.
Dr Shahristani has failed to deliver any meaningful projects through his Ministry year after year. He has not managed to spend even a quarter of the annual federal budget allocated to his Ministry, and is now trying also to deter others from doing the right thing for the country. It is amazing that a Minister in Baghdad should continue to threaten international oil companies (IOCs) with sanctions and punishment because they have decided to invest in one of the secure and safe parts of Iraq.
We thought that the era of threats against the Kurds in Iraq was over. We thought that the era of punishing the Kurdistan Region was not part of our new and agreed political order. It is disappointing to see that Dr Shahristani has chosen to side with the anti-Kurdish elements from the Saddam era, and to see that he holds such grudges against the Kurdish people as if they belonged to another country.
We are not deterred by Dr Shahristani’s views. Experience shows that most international oil companies (IOCs) now ignore his unhelpful interventions. We know that the KRG is doing the right thing by encouraging the IOCs to invest in Kurdistan. The oil exploration contracts signed by the KRG will create an additional one million barrels of oil per day to enhance the much needed revenues to all the peoples of Iraq in the near future.
Dr Shahristani’s Ministry spent three years talking about the Khor Mor gas project for power generation without taking any real action. Earlier this year, the KRG made its decision to plan and implement the project through a service contract and by early 2008 we will be able to supply the power grid with much needed electricity to be shared throughout the country. If we had access to some of Dr Shahristani’s annual budget we would have done much more for the country by now.
Since we are an integrated part of Iraq with constitutional rights and duties, we know that oil exploration and production in one part of the country should create revenue for the whole country. When we are at the stage of exporting oil from the Kurdistan Region, we will be exporting Iraq's oil for the benefit of all Iraqis. We have agreed in the approved Constitution of Iraq and the agreed draft Revenue Sharing Law that the country's wealth and resources will be shared as demanded by the Constitution which was approved by an overwhelming majority of the country's voters.
Our contracts with the IOCs are both constitutional and legal within the framework of the Kurdistan Oil and Gas Law, the only existing framework regulating our oil industry in the post-Saddam era.
People who are threatening to use the Saddam-era laws will not only go against the country’s principal agreement between crucial political forces, but they are directly endangering the country’s Constitution in which federalism and revenue-sharing are the only elements keeping the country together. During Saddam's era nothing in the direction of federalism and revenue sharing ever existed.
Dr Shahristani keeps saying that Iraqi law does not allow this or that. People around the world wonder which law he is talking about because they know that since most of Saddam’s laws contradict the new Constitution, they are now null and void.
Since the fall of Saddam Hussein and his regime, representatives of the Kurdistan Region and its government have been both imaginative and forward-looking in solving many issues, ranging from constitutional to political mediation between different parties in Iraq.
We would like to remind Dr Shahristani that we neither expect nor accept threats, sanctions and punishments from partners in our coalition government in Baghdad. The Kurdistan Alliance List is a partner in Iraq, not a rogue region to be threatened or punished for exercising its constitutional rights and power and for its willingness to contribute to the country's security, stability and revenue.
Once again our message to the IOCs and potential investors is that the KRG is mandated by the Constitution and has managed to create an investment-friendly business environment. Empty threats and talk of blackmail will not last. We are sure that eventually common sense will prevail in dealing with these matters.
statement at reopening of UN office:
Baghdad must implement Article 140
Speech by KRG Prime Minister Nechirvan Barzani
UN Office, Erbil, 28 November 2007 Dear distinguished guests, good morning to you all.
I am pleased and privileged to attend the official opening ceremony of your office, which is a sign of the continuing participation of the UN and the expansion of its role in Iraq. I warmly welcome Ambassador Stefan de Mistura, the UN Secretary General's Special Envoy to Iraq. On this occasion I congratulate him on assuming his new post. In 1991 during the mass exodus you helped us. I thank you for your contribution at that time.
The KRG welcomes UN resolution 1770 which expands the role and participation of the UN in Iraq. The Kurdistan Region desires a strong relationship with the UN with the aim of finding appropriate and long term solutions for the problems we face. The people of the Kurdistan Region are thankful for the assistance of the UN agencies in the past and we do not forget the humanitarian assistance that you provided.
From then until now there have been many changes. The tone of our relationship and our methods of working together have also changed. We are pleased that now Iraq, as the host country, and the KRG as part of Iraq, have established a new relationship with the UN on the basis of equal partnership. Now the UN and the KRG work together to raise the living standards of the people and support government programmes.
We are pleased with continued UN offer of technical assistance and benefit from its rich experience and commitment to peace. The presence of the UN means that the world cares about this region and that it will not abandon us during times of need. Our people view the presence of the UN as a sign of hope for the future.
Raising the UN flag and increasing the number of UN officials is a sign of the confidence that you have in the KRG and the circumstances that have come into being. We are proud of our efforts that have led to realising this environment. As is obvious the security situation in the Kurdistan Region is different from other parts of Iraq. There is an opportunity offered by progress in commercial activities and investment and we have tried to provide the opportunity for economic and social development. We want our society to be a prosperous one, and we want the UN to help us to realise this objective.
We in the government work directly on behalf of the people in the Kurdistan Region but also actively participate in the political process in Iraq as a whole. In 2003 we willingly decided to rejoin Iraq and live within this county. We still believe that this was the right decision and that this has been a key factor in achieving progress in Iraq. The Kurdistan Alliance is an effective force for progress in Iraq. Our alliance has the ability to unite different groups and also to create consensus in attitudes. We will continue with conviction on our role. We will continue in a positive way to work for the sake of all Iraqis regardless of ethnicity, religion, or geographic location. We believe in the future of this country and the equality of its citizens.
Here a question arises: Is it just and fair that the KRG works in this way for the sake of the prosperity and wellbeing for the rest of the country while its key demands are neglected? The KRG had a limited number of demands of the federal government in Baghdad. Here I would like to cite Article 140 of the Iraq constitution as an example. Our demand was very clear and explicit: The implementation of this constitutional article within the framework of law.
Today I would like to reiterate the same demand. I believe that cooperation and coordination are a two way process and it is unfortunate that we often see the Kurdistan Alliance and the KRG trying to reach agreement and understanding for the interest of other coalition partners while being rewarded by having its demands ignored.
I want to be very open and to say this as a matter of record and for posterity. The KRG wants to see genuine progress in the implementation of Article 140 of the constitution. The issue of the dispute areas, including Kirkuk, will not be solved by us avoiding it and waiting for time and circumstances to solve it.
And here a question arises, is this a question of controlling oil as some mistakenly understand? No, this is absolutely not the case. From our side, we have accepted the revenue sharing principle and only 17% of the oil revenues will be allocated to the Kurdistan Region and 83% will be allocated to the Federal Government. I would like to say once again, and very clearly, this is not about controlling oil. Once again, I would like to reiterate that the issue of Kirkuk is about ownership and property rights. Our policy and attitude are explicit in this regard.
In a peaceful and democratic way, within the framework of the Iraq constitution, we ask for the return of the rights which were taken from us forcibly. In 2003, we had the opportunity to solve this problem by other means if we had wanted to. But we willingly asked that the citizens of Kirkuk be given the democratic and legal right and opportunity so they can decide on their own future.
We believe that this is an issue of justice and the right to return for those whose rights were usurped. We only ask for the implementation of our just rights which have been stipulated within the framework of a constitutional article that the majority of the people voted for. We know very well that not only Kurds live in Kirkuk. But we want to make Kirkuk an example of a city of brotherhood, coexistence and tolerance. As the KRG we want to transfer our experience of national, cultural and religious tolerance from our region to the disputed areas.
We are confident that the rights of all communities will be secured and respected because as a people whose rights have been violated in the past, and who suffered from persecution, it is impossible that others will be persecuted or have their rights violated under our system of governance. Therefore, Mr Ambassador, I would like to address our serious concern about the slow implementation of Article 140 which we see in Baghdad. The federal government in Baghdad must stand up to its responsibility regarding this constitutional article.
Ambassador de Mistura, I don't hide from you that the clock is ticking fast and we are approaching the 31st of December. Time does not stop. It is time for Baghdad to take serious steps to implement their commitment. The Kurdish people and the KRG has been patient thus far, waiting for a peaceful and legal solution. The time for talks has passed, it is now time for practical steps and implement this constitutional commitment.
The KRG deals with this issue with an explicit attitude and a forward-looking approach. Therefore I ask here whether we want peace, security and stability in Iraq? Do we need to learn lessons from our history? Do we want to solve the suspended problems in Iraq? On our part, we work for peace, stability and solutions to our problems.
We hope that this time Baghdad tries seriously to implement its commitment so that our people will not remain waiting for a solution. If we look at the history of Iraq and see the consequences of non-implementation, we see that it has not brought peace and security. Therefore, we ask for real commitment on implementing the principles which we have agreed.
If there are those who believe that ignoring the situation will solve it, they are sadly mistaken. This is a vital and serious issue for our people. We want implementation. I hope this message is very clear to you all. Our vision for the future is clear. We want to secure a bright future for our people within the framework of a federal democratic system.
We know we have a long way to go but we hope that the international community and the UN understands our position. We ask for a just solution for the issues that have become an obstacle in the political process. Once again we are pleased that we are entering into a new stage with our relations with the UN.
Again, we welcome the UN resolution and your expanded role. I am confident that your will play an effective role in finding a solution. I would like to thank the local and international staff who have been implementing the programme here in the Kurdistan Region. I'd also like to thank the KRG's UN coordinator in Erbil for the work he has been doing. We hope that through cooperation and coordination we will be able to serve the interests of the people of Kurdistan and all Iraq. Thank you very much.
Nonstop Theft and Bribery Are Staggering Iraq
By DAMIEN CAVE
BAGHDAD, Dec. 1 — Jobless men pay $500 bribes to join the police. Families build houses illegally on government land, carwashes steal water from public pipes, and nearly everything the government buys or sells can now be found on the black market.
Painkillers for cancer (from the Ministry of Health) cost $80 for a few capsules; electricity meters (from the Ministry of Electricity) go for $200 each, and even third-grade textbooks (stolen from the Ministry of Education) must be bought at bookstores for three times what schools once charged.
“Everyone is stealing from the state,” said Adel Adel al-Subihawi, a prominent Shiite tribal leader in Sadr City, throwing up his hands in disgust. “It’s a very large meal, and everyone wants to eat.”
Corruption and theft are not new to Iraq, and government officials have promised to address the problem. But as Iraqis and American officials assess the effects of this year’s American troop increase, there is a growing sense that, even as security has improved, Iraq has slipped to new depths of lawlessness.
One recent independent analysis ranked Iraq the third most corrupt country in the world. Of 180 countries surveyed, only Somalia and Myanmar were worse, according to Transparency International, a Berlin-based group that publishes the index annually.
And the extent of the theft is staggering. Some American officials estimate that as much as a third of what they spend on Iraqi contracts and grants ends up unaccounted for or stolen, with a portion going to Shiite or Sunni militias. In addition, Iraq’s top anticorruption official estimated this fall — before resigning and fleeing the country after 31 of his agency’s employees were killed over a three-year period — that $18 billion in Iraqi government money had been lost to various stealing schemes since 2004.
The collective filching undermines Iraq’s ability to provide essential services, a key to sustaining recent security gains, according to American military commanders. It also sows a corrosive distrust of democracy and hinders reconciliation as entrenched groups in the Shiite-led government resist reforms that would cut into reliable cash flows.
In interviews across Baghdad, though, Iraqis said the widespread thieving affected them at least as powerfully on an emotional and moral level. The Koran is very clear on stealing: “God does not love the corrupters,” one verse says. And for average Iraqis, those ashamed of the looting that took place immediately after the fall of Saddam Hussein, the current era of anything-goes is particularly crushing because almost no one can avoid its taint.
For many, it is not a question of getting rich. Theft and corruption have become survival tools, creating a spiral of dishonest transactions that leave nearly everyone feeling dirty.
Abu Ali is a 23-year-old Sunni with a soft middle and a common tale. Identifying himself by only a nickname, which means father of Ali, he said that he, his wife, his elderly mother and six relatives fled their home in eastern Baghdad last year after receiving death threats from Shiite militias. First they rushed to Diyala Province, and when that turned violent, they moved back to a safer area of Baghdad — broke and desperate.
A major breadwinner for his family, Abu Ali needed a job. And like many Iraqis, he saw only one employer hiring: the government. A neighbor who was a police officer suggested joining the force. Abu Ali asked how, noting that recruits outnumbered positions. The answer was simple: a $500 bribe.
Abu Ali borrowed the money a few months ago and found his way to a cellphone shop downtown, where, he said, a man in his late 20s welcomed him inside. The man identified himself as a police captain and seemed at ease with the transaction. His wealth sparkled all around.
“He had a silver Mercedes,” Abu Ali said. “He was wearing a thick gold chain and a gold watch.”
Abu Ali tried to bargain for a lower fee, but failed, handing over the cash and filling out official forms. In return, he said, he received a blue card stamped “Ministry of the Interior,” which declared him an accepted member of the police force. The man with the gold chain told him to watch for an announcement in the local paper that listed the names of newly accepted recruits, and to bring the card to his first day of training.
“How do I know I’ll really get the job?” Abu Ali said he asked. “He told me, ‘I’ve put in 70 or 80 people already. Don’t worry about it.’”
Five months later, Abu Ali’s name appeared in the newspaper. At the police academy in September, he said, he discovered that most of his class was from Sadr City and that everyone paid $400 to $800 to join.
“There’s not a single person among the 850 people in my class who joined for free,” he said.
His commanders, he added, also now collect the salaries of recruits who quit, a payout of more than $100,000 a month. “No one can stop it,” Abu Ali said. “Corruption runs from top to bottom.”
The details of Abu Ali’s story could not be independently verified, but they fit a pattern of bribes and payroll schemes found in nearly every nook of Iraq’s government, according to government workers, Iraqi lawmakers and some American officials.
Many Iraqis speak from personal experience.
Mr. Subihawi, the Shiite tribal leader in Sadr City, said that when he recently tried to find a job for a young member of his tribe, he was told by local government officials that there was nothing available unless he was willing to pay.
Other Iraqis, in interviews, described similar encounters.
Cash is also often what leads to promotions — with the help of a fake college degree, purchased for about $40 — and theft is no less common. One government worker, who goes by the name Abu Muhammad, said a senior administrator at the ministry where he worked recently sold off computers, laser printers, office furniture and other supplies that appeared to have been paid for with American aid. The official was never caught or prosecuted, he said.
Haider Abu Laith, an engineer at the Ministry of Culture, said a close friend and fellow engineer at a government agricultural agency recently told him he was being pressured to inflate the cost of equipment purchased abroad so that senior officials could skim the surplus.
He said his friend quit, fearing that he would be killed if he refused.
And at the Ministry of Health’s main warehouse in Baghdad, American troops discovered this summer that two trucks full of medicines and medical equipment had disappeared while several guards on duty — young men in acid-washed jeans, with gel in their hair — said they saw nothing.
Even some Iraqi lawmakers admit that the free-for-all has become too extensive to stop easily. “The size of the corruption exceeds the imagination,” said Shatha Munthir Abdul Razzaq, a member of Parliament’s largest Sunni bloc. “Because there are no tough laws, no penalties for those who steal.”
Stuart W. Bowen Jr., who runs the Office of the Special Inspector General for Iraq Reconstruction, said Prime Minister Nuri Kamal al-Maliki actually undercut anticorruption efforts this year by requiring that investigators get permission from his office before pursuing ministers or former ministers on corruption charges.
Mr. Maliki has also not rescinded a law, opposed by the Americans, that lets ministers exempt their employees from investigation. “Those two legal positions within the fledgling Iraqi government are incompatible with democracy,” Mr. Bowen said in an interview. “My concerns about the corruption problem have risen.”
Ali al-Dabbagh, the prime minister’s spokesman, has said the government is determined to fight corruption. And at some gas stations, especially where American troops have concentrated their efforts, Iraqis report fewer demands for the bribes that once tripled or quadrupled the price of gas.
But for a large number of people, survival still depends on taking what they can, when they can. Some estimates put unemployment at 40 percent. For many Iraqis, minor theft seems justified because others take so much and because daily life in Iraq still feels precarious — a crust of calm resting on currents of sectarianism, poverty and anger.
Baghdad, in particular, is still marked by desperation, with more women begging at intersections and with many Iraqis barely getting by, even with a little cheating.
These are people like Sattar Alwan, 41, a taxi driver with a dark mustache who lives with nearly a dozen relatives in a makeshift, illegal house on government land in eastern Baghdad. He said his family built the squat brick structure because gunmen pushed them out of their own home and they had nowhere else to go.
Or Abbas Wadi Kadhim, 42, who uses a raspy air compressor to extract city water from broken pipes so he can earn money washing cars.
Mr. Kadhim acknowledges that he does not pay for the water, nor does he pay rent at the abandoned government building a few hundred yards away, where he often sleeps so he can be ready when customers arrive at 7 a.m.
He figures his government owes him. He was imprisoned by Mr. Hussein’s government and disabled in the Iran-Iraq war. His left forearm is as thin as a child’s, and crooked at the wrist.
“I have six kids,” he said, spraying down a silver sedan last week, “and all I get is 150,000 Iraqi dinar,” about $120 a month in disability payments. “It’s not enough.”
Mr. Kadhim said he was from Sadr City, a sprawling public housing project dominated by the Mahdi Army, Iraq’s most prominent Shiite militia. He suggested that he could make more money if he were less religious.
“The forbidden work is far away from us, as far away as the seven seas,” he said, looking east toward his old neighborhood.
He sounded proud. He spends long hours scrubbing cars for $4 each in an empty lot with a clear view of Baghdad’s main soccer stadium. His customers praise him for being thorough. But like many Iraqis who have made a choice to bend the rules, he seems still unsure of his moral footing: a little bit ashamed, a touch defensive.
“This job is better for us than doing things that are forbidden,” he said, his voice getting louder. “It’s better than stealing or using people.”“The more honest the job is and the harder we work, the better.”
Reporting was contributed by Anwar J. Ali, Diana Oliva Cave, Hosham Hussein, Qais Mizher and Abeer Mohammad.
KRG Deputy PM Fattah meets US Vice President Cheney
Washington DC, US (KRG.org) – Mr Omer Fattah, the Deputy Prime Minister of the Kurdistan Regional Government (KRG), last week met US Vice President Dick Cheney, who paid tribute to the KRG's contribution to the new democracy in Iraq.
The White House talks with Vice President Cheney capped two weeks of high level meetings for Mr Fattah at the Departments of State, Defence, Energy and Commerce, and at the National Security Council. The KRG Deputy Prime Minister was accompanied by Dr Ashti Hawrami, the Minister for Natural Resources.
Mr Fattah told Mr Cheney that the Kurdistan Region fully supports a long-term strategic partnership between the US and Iraq. He relayed the KRG’s backing for the declaration of principles between the two countries signed on 26 November and asked for continued US support for Kurdistan’s development. “A stable and prosperous Kurdistan Region is to the benefit of all Iraq and the US,” he said. The declaration of principles sets out US political, economic and security support for and ties with Iraq.
Vice President Cheney urged the KRG and Kurdish members of the Baghdad federal government to continue playing a leading role in resolving the outstanding political issues in Iraq.
Deputy Prime Minister Fattah outlined the KRG’s steps to tackle the PKK problem. “We are against the use of our Region for attacks against Turkey,” he said. “We intend to strengthen our relationship with Turkey and ensure that the Kurdistan Region remains Iraq’s most stable and prosperous area.” He reiterated that the KRG is a partner in the global war on terror and had played a key role in fighting Al-Qaeda in Iraq.
The two leaders agreed on the KRG’s proactive and cooperative role in looking for agreement on all the outstanding pieces of legislation, especially the Iraq oil and gas (hydrocarbons) law. Mr Fattah said that although so far several negotiated drafts of the hydrocarbons law were initially accepted but then later rejected by some in Baghdad, he remained optimistic that a negotiated settlement can be reached soon.
Dr Ashti Hawrami, the KRG Minister of Natural Resources, provided Vice President Cheney and other officials with details of Iraq’s draft hydrocarbons law. Dr Hawrami said, “All we are doing is implementing the Iraqi constitution, which today is the only law of the land, and it must be respected.” He added, “Iraq today is a federation, as stipulated by the Iraqi constitution, and we cannot have political federalism without economic federalism. Our efforts in Kurdistan will greatly increase the Iraqi national budget, while providing much needed resources for the Kurdistan Region; it’s a win-win situation.”
Dr Hawrami in meetings said that while he was frustrated with Baghdad’s slow pace in developing Iraq’s oil potential, the KRG is determined to continue leading by example. It is already establishing and implementing a transparent and investor-friendly oil production structure that will hopefully one day would be applicable throughout Iraq.
The KRG Natural Resource Minister said that any oil production and exports from the Kurdistan Region in Iraq remains a few years away. Once production begins, the territory currently administered by the KRG has the potential to export 1 million barrels of oil per day, with the revenues from that production to be shared throughout Iraq through an agreed national framework.
Mr Qubad Talabani, the KRG’s Representative to the United States, said, “The reception the delegation received from the US government, the business community and our friends in Washington shows a sincere appreciation for the leadership of the Kurdistan Region.” He added, “It is now time to take our mutual appreciation to the next level and translate our shared vision into tangible action on the ground to show the people of the Kurdistan Region, Iraq and America the successes they deserve to see.”
As Iraqis Vie for Kirkuk’s Oil, Kurds Become Pawns
By STEPHEN FARRELL
KIRKUK, Iraq — Even by the skewed standards of a country where millions are homeless or in exile, the squalor of the Kirkuk soccer stadium is a startling sight.
On the outskirts of a city adjoining some of Iraq’s most lucrative oil reserves, a rivulet of urine flows past the entrance to the barren playing field.
There are no spectators, only 2,200 Kurdish squatters who have converted the dugouts, stands and parking lot into a refugee city of cinder-block hovels covered in Kurdish political graffiti, some for President Jalal Talabani’s Patriotic Union of Kurdistan.
These homeless Kurds are here not for soccer but for politics. They are reluctant players in a future referendum to decide whether oil-rich Tamim Province in the north and its capital, Kirkuk, will become part of the semiautonomous Kurdish regional government or remain under administration by Baghdad.
Under the Iraqi Constitution the referendum is due before Dec. 31. But in a nation with a famously slow political clock, one of the few things on which Kirkuk’s Kurdish, Arab and Turkmen communities agree is that yet another political deadline is about to be missed.
This unstable city can ill afford much more delay and uncertainty. The fusion of oil, politics and ethnic tensions make Kirkuk one of the most potentially explosive places in the country, and its fate is seen as a crucial issue by all sides in the debate about whether Iraq will eventually be partitioned among Kurds, Sunni Arabs and Shiite Arabs.
What rankles the stadium’s impoverished Kurds most is that while they remain in a foul-smelling limbo, on the other side of town some of the Arabs who were forcibly moved here by Saddam Hussein still live in comfortable suburbs, a legacy of the dictator’s notorious 1980s Anfal campaign to depopulate Kurdish areas and “Arabize” Tamim.
Moreover, some of the squatting Kurds complain that it is their own leaders who forced them to move to Kirkuk, to pack the city with Kurdish votes before the referendum.
Hajji Walid Muhammad, 67, a taxi driver here, grumbled that after the 2003 invasion, the Kurdish authorities told a gathering of Kirkuk-born Kurds living nearby in Chamchamal, “Even if you own a small tent you have to go back to your own homeland.”
When asked what would have happened if he had refused, Mr. Muhammad said: “By God’s name, they would cut off our food basket and not pay us our salary and give us nothing else and force us to go back. They ordered us to go back.”
Najat Jaseem Muhammad also said that the authorities “encouraged” him to leave Chamchamal, where he had lived since 1997. He said he was happy to be back in the town of his birth, but not to be living in such conditions, without enough money to escape.
“They said: ‘If you do not return, we will lose Kirkuk. You are Kurdish and Kirkuk must return to the arms of Kurdistan,’” he said, standing in front of political graffiti on a stadium pillar.
“It was not a matter of being forced, but if anyone stayed over there they would not have been supplied with anything and they would have been oppressed,” he added. “They would have stopped my work.”
In a province where the population balance has been distorted by decades of gerrymandering and forced settlement, the Iraqi Constitution spells out a three-stage process to resolve the issue. First a process of “normalization” to restore the city’s population balance to what it was before Mr. Hussein’s decrees, then a census, then the referendum.
But even that first stage is incomplete. American and international officials who have pushed for progress on the issue are conceding that the Dec. 31 date is unfeasible.
The inevitable delay frustrates the Kurds, who are confident of victory and suspect delaying tactics by opponents intent on keeping the land, and the oil.
In contrast, the delay is welcomed with ill-concealed delight by Kirkuk’s Arabs.
“I believe the main error was to set a holy date for the referendum,” said Tahsin Kahya, an Arab member of Kirkuk Provincial Council.
“A problem created over 35 years cannot be fixed in seven or eight months,” he added, ticking off with the ease of frequent practice the constitutional, logistic, legal, parliamentary, boundary, property and financial hurdles he believed should delay a referendum for “years, of course.”
In a volatile city where Sunni insurgent violence has been reduced significantly in recent months but not eliminated, how the Kurds react to the missed deadline will be crucial.
The issue is further complicated by Turkey’s desire to safeguard Kirkuk’s Turkmen minority and its hostility to the notion of the Kurds gaining control of Kirkuk’s oil fields. Turkey fears this could embolden the Kurds to declare their own state, thereby encouraging Kurdish separatists in northeastern Turkey.
“No Iraqi government could ‘give’ Kirkuk to the Kurds and hope to survive, in view of broad popular opposition in Arab Iraq,” said the International Crisis Group, a nonprofit organization that seeks to prevent or resolve deadly conflicts. “The Kirkuk question could, therefore, trigger total deadlock, breakdown and violent conflict, just when the Bush administration hopes its security plan for Baghdad will yield political dividends.”
All sides decline to give exact figures of their population, but the Kurds, who won 26 of 41 council seats in the last provincial elections, appear to believe they make up more than half of the province’s 1.2 million population.
“Since no statistical process has been done, if we announce any kind of number it will cause a political conflict.” said Rebwar Fa’aq al-Talabany, a Kurd who is deputy chairman of Kirkuk Provincial Council.
Mr. Talabany rejected accusations that the Kurds were forcing their own people to move.
“In Kirkuk you find deaths and explosions, so how could you persuade someone to come and live here? I myself would tell families not to come to Kirkuk, because Kirkuk’s condition is not good,” he said during an interview.
He also ruled out seizing Kirkuk by arms. “If we can’t have it with a referendum or a legal way, we are not going to use force. It will be a peaceful solution between the communities,” he said.
To restore the ethnic balance before Arabization, a compensation deal has been reached by all parties and built into Iraq’s Constitution, paying the former dictator’s Arab “Wafidin,” or newcomers, to leave the city. Each family would receive 20 million dinars, or about $16,000, and some land, on condition that they transfer their ration cards, residency papers and identification documents from Kirkuk to the cities where they move.
In suburbs of Kirkuk that were once nearly 100 percent Arab, many have already gone and others are preparing to leave, complaining of intimidation by Kurdish pesh merga fighters and unwarranted roundups by Kurdish intelligence forces.
Arab residents point to empty Arab houses with the Kurdish word “Gyrawa,” or reserved, written on the wall, ready for their new Kurdish occupants. Buildings abandoned by senior commanders from the Hussein government have “terrorist” scrawled on them in Kurdish.
Outside the provincial council offices, crowds gather daily to scrutinize lists posted high on the blast walls that contain the names of 15,000 whose relocation cases have been resolved. Some admit that they actually left the city months ago — the Shiites heading mainly south and Sunnis north or west — and now just visit Kirkuk every few days to see if they can still get the money.
As political battle lines are drawn over who controls the oil below the land and the people above it, the city has at least one consolation: Most Arabs agree there is less underlying tension here between Sunnis and Shiites because they are united against the prospect of a Kurdish Kirkuk.
As time passes, the balance of the town is changing. A short drive from where the departing Arabs peer at the lists, residents of the once-Arab suburb known as Officer District say it has been renamed Nawroz, or New Days, the Kurdish word for the New Year spring festival.
Wafaq Aziz al-Obaidi, an Air Force brigadier general under Mr. Hussein’s rule, said he and all of his neighbors had fled the district; he just returns occasionally to check his old property.
“I left the house, like thousands of Arabs have done, to protect myself from the hatred and aggression of the pesh merga, who are so aggressive against Arabs,” he said. “I went back to Kirkuk 20 days later and found my house had been seized, all my furniture stolen, and there was Kurdish writing in my house. Later on guards wearing Kurdish uniforms came to me and told me, ‘Save yourself and leave the house immediately,’ so I was forced to leave it.”
In his office in the provincial council, Mr. Talabany pointed to the compensation package and said the Arab exodus was “voluntary, not enforced.”
Yet the strength of Kurdish sentiment about their entitlement is as strong in the council’s air-conditioned offices as it is in the soccer stadium.
“The Kurdish people have seen genocide, Arabization and Baathism in Kirkuk, and they have had all their property taken away,” Mr. Talabany said, with feeling. “All these are the rights of Kurds. The Arabic people have not had such troubles, and if the Turkmen have, they have had less of it.” He added that in his family alone, 19 people had been killed by Mr. Hussein’s government.
“All these rights must be given back to them, and this process is called normalization,” he said. “When normalization has happened, let Kirkuk be added to Sudan — I have no problem with that. But let the people decide.”
Iraqi employees of The New York Times contributed reporting.
Making Peace With Pieces
By THOMAS L. FRIEDMAN, Manama, Bahrain
One of the most telling but little-noted ironies of the U.S.-sponsored peace summit in Annapolis, Md., was who on the Arab side didn’t attend. Syria, a country we barely talk to, was there. Saudi Arabia, which never meets with Israelis, was there. No, the two no-shows were the two Arab countries liberated by U.S. troops from the grip of Saddam Hussein: Iraq and Kuwait.
That’s right — Iraq and Kuwait, the two Arab countries hosting the most U.S. troops, and the two Arab countries with probably the most active elected Parliaments, were both absent. The Kuwaitis asked not to be invited, and the Iraqis were invited but declined to come.
Don’t get me wrong, I think Annapolis was useful. But when you toil for a year to throw a party and some of your worst enemies R.S.V.P., but the two people whose lives you’ve once saved don’t show up, it’s beyond rude. It’s interesting.
It actually reveals the core problem we’re facing in the Middle East: all of these countries are deeply internally divided, some with active civil wars — Palestine, Iraq, Lebanon and Afghanistan — and some with latent ones. These divisions date from when these states were shaped by colonial pens, with boundaries that rarely reflected either shared ethnicity or a shared desire to live together. For decades, they were held together by colonial powers, the cold war, oil wealth or iron-fisted military dictators and monarchs.
But lately the lids have started to loosen, and in those places with real Parliaments — like the Palestinian territories, Lebanon, Iraq and Kuwait — they tend to expose the depth of lingering divisions rather than express, or forge, a new consensus. These are divisions about basics, like the line between religion and state, the rights of women and minorities, and the role of citizens.
Kuwait’s Parliament has a liberal minority and an Islamist majority, which does not like Israel (and doesn’t like Palestinians much either). The Lebanese and Palestinian Parliaments are both paralyzed by discord. And Iraq? Sitting down with Israelis was only one of many things Iraqis can’t agree on, which is why the U.S. military surge has not yet produced an upturn in national reconciliation.
On Thursday, The Associated Press reported that a shouting match erupted in the Iraqi Parliament when a top Shiite lawmaker, Bahaa al-Aaraji, said he had evidence that a leading Sunni politician, Adnan al-Dulaimi, had branded Shiites “heretics” and had called their murder legitimate. We’re not talking Democrats and Republicans here.
What we are trying to do in Iraq is unprecedented: we are hosting the first real horizontal dialogue in modern Arab history by the constituents of an Arab country — on the assumption that if Shiites, Sunnis and Kurds could actually write their own social contract, it would mean that something other than top-down, iron-fist politics was possible for this part of the world. It is hugely important — and next to impossible.
Each of the Arab countries and Israel has “its own Gaza,” said Mamoun Fandy, director of Middle East programs at London’s International Institute of Strategic Studies. “That is, an antipeace, fundamentalist, xenophobic faction, which wants to hold back any reconciliation. ... Until each country confronts its own Gaza, it will have problems.”
Including Iran. I’m in Bahrain, just across the Persian Gulf from Iran, for the institute’s annual conference. A big Iranian delegation was scheduled to attend, alongside a big U.S. team. The Iranians canceled at the last minute. Internal fighting.
“All these countries are like unfinished novellas,” said Stephen P. Cohen, author of the upcoming “Beyond America’s Grasp,” a history of the modern Middle East. Indeed, if you looked at just the key players — Israel, Lebanon, the Palestinians, Egypt and Saudi Arabia — “their leaders who went to Annapolis were all embroiled in struggles with domestic opponents,” which limited their room to maneuver, he said. Each one, he added, has a “Party of God” back home “that believes it doesn’t have to pay attention to what the government says because it doesn’t recognize that government’s legitimacy to make big decisions.”
That’s why these days big decisions get made by iron fists or they don’t get made. Power has become too fragmented. So unless there is more reconciliation within these countries, it is hard to see how there will be more reconciliation between them.
Which is also why, I thought, that instead of Annapolis, the peace conference should have been held, symbolically, at Appomattox Court House, Va., where on Palm Sunday, 1865, Gen. R. E. Lee surrendered to Lt. Gen. U. S. Grant, ending the American Civil War and reunifying our country. Admission is only $4 — and President Bush probably could have gotten a group rate.
Iraq Oil Rush
So great is the demand for oil today — and so great the concern over rising prices — that it would be tempting to uncritically embrace plans by major Western oil companies to return to Iraq.
Unfortunately, the evolving deals could well rekindle understandable suspicions in the Arab world about oil being America’s real reason for invading Iraq and fan even more distrust and resentment among Iraq’s competing religious and ethnic factions.
As reported by Andrew Kramer in The Times, Exxon Mobil, Shell, Total and BP — original partners in the Iraq Petroleum Company — are in the final stages of discussions that will let them formally re-enter Iraq’s oil market, which expelled them 36 years ago. The contracts also include Chevron.
Iraq can certainly use the modern technology and skills these oil giants offer. Although Iraq’s oil reserves are among the world’s largest, years of United Nations sanctions and war have badly eroded the industry. Government officials say they aim to increase production from 2.5 million barrels of oil a day to 3 million barrels. That is a minor increase in global terms, but with oil at $140 a barrel, it is good news for Iraqis, who need the money to rebuild their war-torn country.
We cannot blame Baghdad for wanting to get on with exploiting the country’s lucrative oil deposits, especially when Kurds in northern Iraq are rapidly signing contracts to develop oil fields in their own semiautonomous region. Still, the negotiating process pursued by Baghdad is flawed and troubling.
The contracts are being let without competitive bidding to companies that since the American invasion have been quietly advising Iraq’s oil ministry how to increase production. While the contracts are limited to refurbishing equipment and technical support and last only two years, they would give these companies an inside track on vastly more lucrative long-term deals.
Given that corruption is an acknowledged problem in Iraq’s government, the contracts would have more legitimacy if the bidding were open to all and the process more transparent. Iraqis must apply that standard when they let contracts for long-term oil field development.
Also troubling is that the deals were made even though Iraq’s parliament has failed to adopt oil and revenue sharing laws — critical political benchmarks set by the Bush administration. That is evidence of continued deep divisions in Iraq over whether oil should be controlled by central or regional government, whether international oil companies should be involved in development and how the profits should be distributed.
The United States and the oil companies must encourage Iraqi officials to make the political compromises needed to establish in law the rules for managing Iraq’s abundant natural resources with as much transparency as possible. Otherwise, oil will just become one more centripetal force pulling the country apart.
Tapping Iraq's Oil
Lee Hudson Teslik, Council on Foreign Relations
Through five-plus years of fighting in Iraq, oil has been the elephant in the war room. The country's vast and underexplored oil resources typically take a backseat to more pressing security questions, but in any broad analysis of Iraq's long-term prospects, talk of crude output is never far away. Oil is Iraq's economic motor and the key to meaningful reconstruction in the country, many experts say. Even discounting conspiracy theories that the United States invaded Iraq for its oil, increased Iraqi oil output would also be an unequivocally good thing for Washington. Among many other side effects, higher output levels could help mitigate concerns about the total economic cost of the Iraq war by tapping one of the largest -- and most underutilized -- national reserves in the world.
The potential risks and rewards of gaining access to Iraqi oil will come into sharp focus over the coming months as Iraq prepares to sell oil contracts (WSJ) to foreign firms for the first time in more than three decades. Iraq's oil minister says he wants to grant development rights to six major oil fields -- the "backbone" of Iraq's oil industry -- in the hopes that foreign investment will raise Iraqi output from 2.5 million barrels per day today to 4.5 million in 2013 (FT). Using estimates from the Central Intelligence Agency, such an increase would raise Iraq from the world's fourteenth leading producer of oil (in 2007) to its fourth leading producer, behind only Saudi Arabia, Russia, and the United States. The ramifications of opening up these reserves would likely be felt globally. In a recent podcast, Robert D. Hormats, the vice chairman of Goldman Sachs International, said increased Iraqi oil exports could potentially "have a very positive effect on the oil market and therefore on the global economy."
For all the potential gains, however, the effort to open up Iraqi oil may well prove a hornet's nest, both politically and logistically. Iraq's goal of opening up its oil fields to international firms stands in stark contrast to global energy market trends, in which national oil companies, not private firms, have seized larger market share. The New York Times reports that many Iraqis remain skeptical about doling out contracts to Western firms, despite insistences from Iraq's government that multinational companies will only serve as service providers, not project owners, and that Iraq's two national oil companies will have at least a 25 percent stake in all projects.
Foreign oil firms, too, seem unlikely to dive headlong into Iraqi oil projects without certain assurances, even as they salivate over the idea of winning production contracts through Iraqi auctions. The Journal article cited above reports that oil firms will likely wait for Iraq to forge an oil revenue-sharing agreement before broadening their involvement in the country's oil projects. Yet the prospects for such a deal seem highly uncertain. Prior draft agreements have met a sharp response from Sunnis and Kurds, each for different reasons, and experts say disputes over how to divvy Iraqi oil revenues don't seem much closer to resolution than they did years ago.
Even if a revenue-sharing bill were passed, other concerns will persist. Firms will likely seek guarantees that Iraq's government won't renege on contracts, as it has before. French and Russian firms operating in Iraq experienced just this in the early 1970s, following Saddam Hussein's decision to nationalize Iraqi oil production. Other firms have been burnt recently in Venezuela and Russia, even after investing substantially in infrastructure development. Until Iraq's government can assuage these concerns, a gusher of new oil output seems little more than a pipe dream.
© 2008 CFR.org
Iraq Cancels Six No-Bid Oil Contracts
By ANDREW E. KRAMER and CAMPBELL ROBERTSON
An Iraqi plan to award six no-bid contracts to Western oil companies, which came under sharp criticism from several United States senators this summer, has been withdrawn, participants in the negotiations said on Wednesday.
Iraq’s oil minister, Hussain al-Shahristani, told reporters at an OPEC summit meeting in Vienna on Tuesday that talks with Exxon Mobil, Chevron, Shell, Total, BP and several smaller companies for one-year deals, which were announced in June and subsequently delayed, had dragged on for so long that the companies could not now fulfill the work within that time frame. The companies confirmed on Wednesday that the deals had been canceled.
While not particularly lucrative by industry standards, the contracts were valued for providing a foothold in Iraq at a time when oil companies are being shut out of energy-rich countries around the world. The companies will still be eligible to compete in open bidding in Iraq.
The six no-bid deals were for work to increase Iraqi oil production from existing oil fields by half a million barrels a day — the same amount by which OPEC countries agreed Tuesday to reduce output. After its cancellation of the deals, Iraq reduced by 200,000 barrels per day its goal of producing 2.9 million barrels per day by the end of the year.
The deals would have been the first major oil contracts with the central government since the toppling of Saddam Hussein in 2003, though the Kurdistan region has separately signed more than 20 contracts.
Since that time, however, Iraq’s central government has moved on with other energy deals. The Oil Ministry last month signed its first major post-Hussein contract with the China National Petroleum Corporation. On Sunday, the Iraqi cabinet approved a deal with Shell to process natural gas in southern Iraq.
The ministry informed the oil companies of the cancellation on Sept. 3, according to a statement from Shell. In Vienna, Mr. Shahristani said the ministry would now invite bids on the contracts.
Shell said the Iraqi side had broken off negotiations. “Shell can confirm that we received a letter from Iraqi Ministry of Oil on September 3rd informing us of their decision to cease further discussions,” the company said in a statement.
Earlier this summer, a group of Democratic senators led by Charles E. Schumer of New York had appealed to Secretary of State Condoleezza Rice to block the deals, contending that they could undermine the efforts of Kurds, Sunnis and Shiites to reach agreement on a hydrocarbon law and a revenue-sharing agreement. This criticism was conveyed to Mr. Shahristani by the American Embassy in Baghdad in late June, and after that the deals were delayed.
“I’m glad the Iraqis heard our plea that to do this now would be bad for Iraq and bad for Iraqi-American relations,” Senator Schumer said in a telephone interview on Wednesday. “It’s a good first step. Now let’s make progress on the long-term” goal of passing a hydrocarbon law, he said.
The State Department had responded that the contracts were an Iraqi affair, though American advisers had helped draft them. Meanwhile, the ministry has said it intends to proceed with new oil deals whether or not the Iraqi Parliament passes a hydrocarbon law.
Senator Schumer said Wednesday that he would propose an amendment to the defense appropriation bill in Congress that would specify that should Iraq sign any petroleum contracts before passing the law, profits from those deals would go to defray United States reconstruction spending in Iraq.
Andrew E. Kramer reported from Moscow, and Campbell Robertson from Baghdad. James Glanz contributed reporting from New York.
Oil Bidding Round Flops In Iraq
On June 29, 2009 the Iraqi Oil Ministry offered up six oil fields, and two natural gas fields for long-term deals with international companies. The process was one of the most open and transparent in recent history as it was broadcast live on Iraqi television. 35 companies were pre-approved to participate, but only 22 placed bids. The Oil Ministry was offering 20-year technical service agreements. The companies would be paid a flat fee to invest technology, but would also be paid a fee for each extra barrel of oil produced. The winning companies were also to pay a hefty signing bonus in the form of multi-million dollar loans. Because there were so many objections to the deals, the Oil Ministry claimed that Iraq would earn $1.7 trillion over 20-years from the contracts, while the companies would only be paid $16 billion. Iraq would also get up to $2.6 billion in loans from the signing bonuses.
In the end the process turned out to be a flop. The oil companies first offered an opening bid for how much they expected to be paid for each barrel of increased output, and then the government reveled their price. The two sides were then to negotiate and agree upon an amount. In the end, only one consortium of British Petroleum (BP) and China’s CNPC won a bid for the South Rumaila field in Basra. BP-CNPC wanted $3.99 per extra barrel, while the government asked for $2. BP-CNPC ended up agreeing to the Oil Ministry’s price. That was because it was the smallest gap between the companies’ demands and the Ministry’s. In comparison, the government was willing to pay $8.50 for extra production from the Akkas gas field in Anbar, while the foreign businesses wanted $38. One natural gas field in Diyala didn’t even receive a bid.
It was apparent that Baghdad had unrealistic expectations about their offers, something Anthony Cordesman from the Center for Strategic and International Studies warned about after a recent trip to Iraq. He wrote that Iraqi officials were just thinking about the possible profits, and not about workable business models that international companies would accept. The first round of bidding seems to have proven his point.
This event was supposed to be a defining moment for Iraq’s oil industry. The country relies upon petroleum for almost all of its revenue, and with the drop in oil prices and budget deficit, the Oil Ministry was promising that this first round of bidding would open the country up to the foreign know how necessary to boost production, while protecting the nation’s resources. In the end it turned out to be a fiasco. Only one deal was agreed upon, and the Oil Ministry proved that it was out of touch with economic realities. With oil prices down, the companies, not the oil producing nations have the upper hand, as the former are desperate for deals, which gives the corporations more leeway to negotiate. This could’ve been expected as the Oil Minister’s plans have been ad hoc at best, and he’s scrapped earlier ideas to increase output in 2008. Iraq’s oil wealth will continue to be underdeveloped and mismanaged with this continued leadership, robbing the country of the money that it so desperately needs after years of wars and international sanctions.
Oil And Natural Gas Fields And Bids
South Rumaila Oil Field – Basra Province
Reserves: 7.3 billion barrels
1. British Petroleum and China’s CNPC
2. Exxon-Mobile and Malaysia’s Petronas
Initial Bid: BP-CNPC $3.99 per extra barrel
Oil Ministry’s Bid: $2 per extra barrel
Winning Bid: $2 per extra barrel by BP-CNPC
West Qurna Oil Field – Basra Province
Reserves: 7.4 billion barrels
1. Exxon-Mobile and Royal Dutch Shell
2. Spain’s Reposal with Denmark’s Maersk Oil and Gas and Norway’s Statoil Hydro
3. Russia’s Lukoi
4. France’s Total
5. China’s CNPC
Initial Bid: Exxon-Mobile and Royal Dutch Shell $4 per extra barrel
Oil Ministry’s Bid: $1 per extra barrel
Kirkuk Oil Field – Tamim Province
Reserves: 6.5 billion barrels
Bidders: Royal Dutch Shell and China’s Sinopec and Turkish Petroleum Corp
Initial Bid: $7.89 per extra barrel
Oil Ministry’s Bid: $2 per extra barrel
Zubair Oil Field – Basra Province
Reserves: 4 billion barrels
1. Italy’s Eni, China’s Sinopec, and South Korea’s Occidental and Korean Gas
2. India’s ONGC, Gazprom Russia, and Turkish Petroleum Corp
3. Exxon-Mobile, Royal Dutch Shell, and Petronas
4. British Petroleum and China’s CNPC
Initial Bid: Eni, Sinopec, Occidental and Korean Gas $4.80 per extra barrel
Oil Ministry’s Bid: Unknown
Maysan Group Oil Field – Maysan Province
Reserves: 2.5 billion barrels
Bidders: China’s CNOOC and Sinochem
Initial Bid: $21.40 per extra barrel
Oil Ministry’s Bid: $2.30 per extra barrel
Deal has been referred to Iraqi cabinet
Bai Hassan Oil Field – Maysan Province
Reserves: 2.3 billion barrels
Bidders: Conoco Phillips, China’s Sinopec and CNOOC
Initial Bid: $26.70 per extra barrel
Oil Ministry’s Bid: $4 per extra barrel
Deal has been referred to Iraqi cabinet
Akkas Natural Gas Field – Anbar Province
Reserves: 4,000-4,500 billion cubic feet
Bidders: Italy’s Edison, Malaysia’s Petronas, China’s CNPC, Turkey’s TPAO,
And Korea’s Gas Corp
Initial Bid: $38 for extra production
Oil Ministry’s Bid: $8.50 for extra production
Mansuriyah Natural Gas Field – Diyala Province
Reserves: 3,100 billion cubic feet
Aswat al-Iraq, “Plan to develop Bai Hassan, Kirkuk oil fields,” 7/4/09
Chmaytelli, Maher and DiPaola, Anthony, “Iraq Says May Earn 100 Times More Than Oil Companies (Update1),” Bloomberg, 6/23/09
Chon, Gina, “Big Oil Ready
for Big Gamble in Iraq,” Wall Street Journal, 6/24/09
- “Foreign Firms Bid for Iraqi Oil Licenses,” Wall Street Journal, 6/30/09
- “Oil Companies Reject Iraq’s Contract Terms,” Wall Street Journal, 7/1/09
Cordesman, Anthony, “Observations From a Visit to Iraq,” 6/15/09
Dow Jones, “UPDATE:Iraq Parliament Panel: Rumalia Deal Needs Lawmakers’ OK,” 7/3/09
Hafidh, Hassan, “FOCUS: Oil Majors Line Up For Iraq’s First Bid Round,” Dow Jones, 6/29/09
Hoyos, Carola, Warrell, Helen, and Bernard, Steve, “Crude Competition,” Financial Times, 6/30/09
Al Jazeera, “Foreign oil firms reject Iraq terms,” 6/30/09
Lando, Ben, “Oil bid debrief,” Iraq Oil Report, 7/8/09
Lando, Ben and Latif, Nizar, “One oil field awarded, many questions remain,” Iraq Oil Report, 6/30/09
Londono, Ernesto, Ibrahim, K.I., and Mufson, Steven, “Anxious Oil Giants Pass on Iraq,” Washington Post, 7/1/09
Reuters, “Iraq To Move Up Second Energy Bidding Round,” 7/2/09
Salaheddin, Sinan, “Iraqi PM dissatisfied with energy auction results,” Associated Press, 7/2/09
Sly, Liz, “Iraq awards BP-led
consortium a contract to develop oil field,” Los Angeles Times, 7/1/09
Posted by Joel Wing at 11:26 AM Labels: Natural Gas, Oil
Do you really agree that Iraq should lower the demands on foreign companies? Considering these contracts are gigantic and oil prices are again going to rise, it may certainly be in favour of the government and Iraq to hold out their reserves rather than give them up out of desperation for less favourable deals which could hurt the Iraqi economy in the long run. Far more important in the short term is the security situation and problems of corruption.
July 11, 2009 4:43 AM
Joel Wing said...
To me it's not about the prices that the Oil Ministry set or something like that in this 1st biding round. To me the big problem is that the Oil Minister is completely incompetent. Not a single one of his plans has worked and since Iraq depends upon 80-90% of its money from oil, and there's little to no chance that they will be able to diversify their economy anytime soon, they need to do everything they can to get production up, rebuild and renovate its infrastructure, etc. Most of the increase in production has been because of the Americans, not the Oil Ministry. The U.S. paid for a huge protection project to stop attacks on the pipelines and has improved security in most of the country.
The Oil Minister on the other hand has failed on everything he's come up with. In 2008 he was going to offer 2 year no bid technical service agreements. At the very last minute he scrapped the whole process and signed a deal with a Chinese company the ministry hadn't even been talking to before. Then he says this 1st round of bidding is going to be the most important act he's done so far, he spends around a year in preparation, and then he only comes out with one deal. Before that he starts signing drilling and other contracts for some of the same fields he's offering up to bid, which means the new companies that won bids would have to deal with the previous state-run oil companies work, plus new contracts that were just signed before the bidding process. Now he says a couple of the fields will be developed by the state-run companies, something that they're already doing and have proven incapable of boosting production at, others will be developed by a National Oil Company which doesn't exist yet and can only be created by passage of a new oil law which isn't going to happen anytime soon, and some of the others will be included in a 2nd round of bidding, which of course if goes like the first one will flop again.
The current Oil Minister is the 3rd since the U.S. invasion, yet he's the only one that has no experience in the oil business. He's a nuclear scientist who before this appointment was known for his connections to Grand Ayatollah Sistani and having put together the sectarian Shiite United Iraqi Alliance. He was a political appointee who was given control over the future of the country. So when it comes down to it, it doesn't look like he's playing tough with the oil companies to try to protect the country's resources and get a fair deal, it's that the guy doesn't seem to know what he's doing.
July 11, 2009 6:53 AM
Well I wouldn't dispute that he's incompetent, but surely the fact that these negotiations were open and transparent is a good thing, isn't it? Is there still room for backroom deals and bribery in the system they have in place?
It may be embarrassing that it went so badly, but the establishment of a transparent system gives me hope regardless.
July 12, 2009 9:46 PM
Joel Wing said...
It was an amazingly transparent bidding round from how it was described. That makes up for the fact that his other oil deal with a Chinese company last year and a natural gas deal last year with Shell were no-bid deals done in secret. The last thing they said was 2 fields and 1-2 of the natural gas deals would be developed by the state-run companies that are already working on them, a couple more will be worked on a state-run oil company that needs the national oil law to be passed to be created, and then some of the others may be included in the 2nd round of bidding that's supposed to happen later this year. All of that basically means nothing will happen to them in the end unless they get bid on in the 2nd round.
July 13, 2009 5:44 PM
Attempts To Develop Its Oil Industry
In June 2009, Iraq held its first round of international bidding on its oil fields. Out of six oil and two natural gas fields, only one, Rumaila in Basra tendered a winning bid. The Iraqi Oil Ministry was widely criticized as a result, ...
Posted by Joel Wing at November 4, 2009 6:07 PM
Iraqi Oil Finally Meets Production And Price Goals Set In Budget
In July 2009 the Iraqi Oil Ministry announced that oil exports had finally reached the 2 million barrel a day mark set in the 2009 budget. In that month the Oil Ministry reported that it exported 2.03 million barrels a day, ...
Posted by Joel Wing at August 19, 2009 7:11 PM
NK LUKOIL OAO Royal Dutch Shell PLC Total
Iraq ends 'successful' oil bid round, output seen tripled
By Hassan Hafidh
BAGHDAD (MarketWatch) -- Iraq has taken an important step to revive its struggling oil industry, battered by years of war and sanctions, by awarding some of its attractive oil fields to international companies that pledged to triple the country's oil output.
The Iraqi Oil Ministry concluded Saturday its second post-war licensing auction of 10 groups of oil fields located in different parts of the country. The seven oil fields awarded in the last two days would boost the country's production to 4.765 million barrels a day, the country's oil minister Hussein al-Shaharistani said.
"It is a very successful bid round," Shahristani said.
He said that Iraq would be able to produce up to 12 million barrels a day in a few years if contracts signed in the first bidding round held in June this year are added to those signed Friday and Saturday--a big challenge to the world's top producers, Russia and Saudi Arabia. Iraq is currently producing 2.5 million barrels a day.
Shahristani said that Iraq was ready to accept a production quota system set by the Organization of Petroleum Exporting Countries when the time is right.
All told, executives from more than 30 international oil companies came to Baghdad to bid for the oil fields, despite the volatile security situation.
Russia's Lukoil Holdings /quotes/comstock/11i!lukoy (LUKOY 53.53, -0.22, -0.41%) along with Statoil Hydro secured a deal Saturday to develop one of Iraq's supergiant oil fields, West Qurna Phase 2, which holds more than 12 billion barrels of oil reserves. They proposed a fee of $1.15 a barrel and a production plateau of 1.8 million barrels a day.
"We are going to make a profit out of West Qurna Phase 2," said Torgeir Kydland, Statoil Hydro's senior vice president for international exploration and production in the Middle East. "We are glad that we won the field," he said.
Oil companies from the U.S. weren't interested in the country's second bidding round as none of them submitted an offer, contrary to the view of many people who thought that American firms would win the bulk of Iraqi oil contracts as a result of the U.S.-led invasion in 2003.
Majnoon, a similar size oil field, was awarded Friday, the first day of the auction, to a consortium of Royal Dutch Shell /quotes/comstock/13*!rds.a/quotes/nls/rds.a (RDS.A 54.65, -0.11, -0.20%) and Malaysia's Petronas. They proposed a remuneration fee of $1.39 and pledged to increase output to 1.8 million barrels a day.
Halfaya, with proven reserves of 4.1 billion barrels, was won by China National Petroleum Corp., France's Total /quotes/comstock/13*!tot/quotes/nls/tot (TOT 49.82, -0.33, -0.66%) and Petronas proposing a fee of $1.4 a barrel and a production plateau of 535,000 barrels a day.
Garraf, a smaller oil field in Dhi Qar governorate in southern Iraq, was awarded to a consortium made up of Petronas and Japanese oil company Japex, with a fee of $1.49 a barrel and a production plateau target of 230,000 barrels a day.
But security remains an issue for the winning companies. Over the last few weeks, Baghdad has seen massive bomb explosions that claimed hundreds of lives. In the 20-year technical service contract the ministry is offering, the Iraqi government will provide protection to companies, but the companies can also hire international security firms.
"We are worrying about the security situation," said Katsuo Suzuki, executive vice president of Japex. "We are in discussions with several security companies in order to hire one of them."
Another winner was Angola's Sonangol, which was awarded the Najmah oil field near the city of Mosul in northern Iraq. On Friday, it also won nearby Qaiyarah oil field.
Two of five oil fields were awarded in Friday's session. On Saturday, four of five were awarded. None of the participating companies bid for Middle Furat, a cluster of smaller oil fields in Kerbala province 70 kilometers south of Baghdad.
Shahristani told the winning companies to come to Baghdad in two weeks to work out initial agreements, and then he will send the draft contracts to the cabinet for approval. He expects the final signing of these contracts to take place early next year.
Unlike the rest of the world, mineral rights
in the U.S. belong to landowners
Remember: Their Oil, Not Ours
.By PAOLO SCARONI
One of the big themes of the 21st century will be how to combine population growth and sustainable economic development with the challenge of limited natural resources—food, water, metals, and, of course, energy.
This is not a new concern. Thomas Malthus raised it as long ago as 1798. But, over the years, seemingly inevitable crises have been avoided time and time again, thanks to technological advances which have increased production, reduced waste and changed the way we do things.
Looking ahead, innovation and technology will need to kick into action again. And this is particularly true in the energy sector where the challenge is to combine energy availability with environmental preservation.
International Oil Companies ("IOC") are ideally placed to crack this challenge. But to do so, they need to work much more in partnership with their National Oil Company ("NOC") counterparts.
The rise in power and importance of the NOCs poses a major challenge to the traditional business model of IOCs.
First of all, the oil is quite literally "theirs" rather than ours. Legally, in every country except the U.S., the mineral rights to what is underground belong not to those who own the land above, but to the national government. NOCs are sitting on 90% of global oil reserves, while all the IOCs put together only hold 10%. That means Exxon, the largest IOC, is in fact ranked only 21st globally as measured by reserves.
Secondly, companies like Saudi Aramco of Saudi Arabia, Brazil's Petrobras and Malaysia's Petronas now have the internal expertise required to develop much of the oil in their home countries without the help of the IOCs.
.And finally, some national oil companies now have the skill to go global. Some, like Petrobras, Petronas and Russia's Gazprom, are expanding from a strong domestic presence. Others, like Chinese oil and gas companies CNPC, Sinopec and CNOOC, were conceived to compete for resources abroad.
So, are international oil companies like dinosaurs: big, powerful but destined for extinction?
That's quite possible, unless we acknowledge a simple fact. The oil is not ours. It is theirs. It belongs to oil-producing countries.
If IOCs want to play a role in the future of this industry, we must add value. And that means building a corporate strategy on two pillars:
Firstly, we must improve our competitive position in exploration and production: This means becoming faster and more efficient, investing in people and managerial competencies, and in particular maintaining and increasing our technological leadership.
Despite the increasing competencies of the NOCs, IOCs still lead the field on "difficult oil": oil that is located in deep or ultra-deep waters, in areas which are frozen for many months of the year, or in mature fields where production is declining. For an idea of how important technology is, just think that of all the oil in place in the world, we currently have the means to extract only 35%. New technology has much to contribute and the IOCs are well placed to invest.
The second way we can add value is by developing a real partnership with oil-producing countries; sitting side by side with them to work out how we can help them meet their needs and the needs of their people.
For Eni, this is not a new idea. Eni was born as a tiny Italian company in a field which was dominated by the "Seven Sisters," the precursors of Exxon, Chevron, BP and Royal Dutch Shell.
As a small, politically insignificant upstart, it had to find a way to get its foot in the door. Its competitive edge was precisely this: It built a reputation for mutually beneficial partnership, for example, offering the host country a greater share of the revenue from any production there.
Today, we carry on and build on this legacy approach. Our Eni model is based on long-standing and solid relationships, particularly in Africa, where we pursue a true partnership aimed at providing solutions to local community needs.
What kind of shape can a partnership approach take?
The bare minimum is to ensure that local communities benefit from the ordinary activity of the IOCs. That means local employment, transferring skills, providing advanced healthcare and protecting the environment. But IOCs can go much further than that.
Our integrated business model means we are ideally placed to design 360° solutions to a country's energy needs: for example, building power stations fired by the "associated gas" found alongside oil. This generates electricity for the domestic market. It protects the environment because it uses gas that is traditionally burned or "flared." And it maximizes the amount of energy destined for export.
This is what the Eni model is all about, and what we are doing in the Republic of Congo, in Angola, in Nigeria, in Kazakhstan and elsewhere around the world.
The growing role of NOCs is not just pushing IOCs to become more technically advanced and fairer in dividing up the benefits of oil. It also provides an added incentive for IOCs to invest in other areas of the industry where they are naturally positioned to take a leadership role, like the search for truly effective and efficient alternative-energy sources. These are not yet within reach, but they represent the long-term future of the industry and a conclusive answer to combining economic development with environmental preservation. For our part, we have invested $50 million in partnership with MIT looking into advanced solar technology. Others are focused elsewhere in the renewable debate. All are important initiatives.
Their oil, not ours. That's the key to understanding the role that IOCs can play in the global game that is 21st Century Oil. A role which will involve true partnership built on a real and sustainable commitment to the development of host country economies and infrastructures, coupled with research into technologies that will deliver increased production from today's oil fields and the alternative-energy sources of tomorrow.
Paolo Scaroni is chief executive officer of Eni SpA.
Begins Big Push to Revive Iraq's Oil
.By RUSSELL GOLD
BP PLC Tuesday awarded $500 million in contracts to drill wells in Iraq's giant Rumaila oil field, the first step in a mammoth initiative by foreign oil companies to revive the country's energy industry.
Iraqi workers are seen at the Rumaila oil refinery in December of 2009.
.If successful, the effort at Rumaila and several other fields near Basra could be one of the largest expansions of crude-oil production ever achieved anywhere. Increased Iraq production could be the difference between a well-supplied global market with oil steadily trading below today's $82 a barrel and a tight oil market with triple-digit prices, struggling to meet rising Asian demand.
"It could change the map of oil," says Paolo Scaroni, chief executive of Italy's Eni SpA, which is preparing to begin work on the giant Zubair field.
Any surge in Iraqi oil production must still overcome tremendous obstacles, including fractious politics and security concerns. Iraq oil production was forecast to rebound quickly after the U.S.-led invasion in 2003. But it took six years to get back to 2.5 million barrels a day, the level Iraq was producing in 2001.
The new drilling contracts are the beginning of a long effort by a dozen of the world's largest oil companies to revive Iraq's decrepit oil infrastructure and turn it into a rival of Saudi Arabia for world's biggest crude exporter, industry officials say.
.Iraq sits atop the world's third-largest supply of oil, after Saudi Arabia and Iran. But two decades of war, sanctions and neglect have left it in disrepair. Oil fields are in desperate need of investment. New wells need to be drilled. Massive amounts of water need to be pumped underground to restore pressure and revitalize reservoirs.
Iraqi officials say they plan to add 10 million barrels a day of oil production capacity by 2017. Most observers say that is too optimistic. However, they say that adding three to four million barrels is possible. Even that lower number would be a historic feat, lagging only Saudi Arabia's massive expansion in the 1970s.
Iraq has an estimated 115 billion barrels of crude-oil reserves. At current prices, that is valued at $9.5 trillion.
Numerous political and security concerns remain before this oil can be extracted. Ayad Allawi's Iraqiya bloc, which won the most seats in the recent parliamentary election, said it would like to review oil contracts signed with foreign companies. That raised concerns there could be further delays in starting work.
However, as the nation's leading parties engage in negotiations to form a new coalition government, there has been no talk thus far of renegotiating the oil contracts.
"The security situation will continue to be a challenge for some period of time," ExxonMobil Corp. Chairman and Chief Executive Rex Tillerson said earlier this month. "I think we're all hopeful that once the postelection forming of the new government moves forward and begins to reach its conclusion that some of that will subside."
The bottom line is that the lure of working in Iraq—with its plentiful oil—is too great for most big oil companies to ignore. "It makes commercial sense for us to increase production as quickly as we can," said Toby Odone, a BP spokesman.
BP and the South Oil Co. let contracts to drill 49 wells to Weatherford International Ltd.; a partnership between Schlumberger Ltd. and the state-run Iraqi Drilling Co.; and China's Daqing Oil Field Company Ltd., said Abdul Mahdy al-Ameedi, a senior official in the oil ministry. He said BP plans to increase production at Rumaila from 1.07 million barrels a day to 1.23 million barrels within 12 months.
These contracts are the first of what is expected to be a wave of oil-field-service related work let by BP, Exxon, Royal Dutch Shell PLC, Eni, Lukoil OAO and China National Petroleum Corp. over the next few months. The companies have been awarded contracts to increase production at separate fields.
Energy analysts at Sanford C. Bernstein recently wrote that developing seven major Iraq fields, including Rumaila and Zubair, would require $102 billion in investment. But they said they were "skeptical" all of the plans would be carried out.
The development of so many enormous projects—most clustered within 50 miles of each other—will create an enormous demand for workers, engineers and drilling rigs. It will also require the construction of a giant infrastructure build out, including roads, ports, oil export facilities and water plants.
Raising oil production so quickly in such a small area may prove too demanding. Recently, it took Saudi Arabia nearly five years to increase its crude oil production capacity by two million barrels a day—without overriding concerns about political stability or security, notes energy consultants IHS CERA. A new analysis by the consultants say Iraq's plan to increase production is "extraordinarily ambitious" and predicted an increase of just less than two million barrels of oil a day by 2015. "It will be incredibly complicated to pull this off," says Matt Simmons, a Houston investment banker.
Nonetheless, even a few million barrels a day of crude oil production capacity could have an enormous impact. The growth of Iraqi oil production and exports will play a "decisive role in shaping global oil markets," says Fatih Birol, chief economist of the Paris-based International Energy Agency, a watchdog for industrialized nations.
Without the boost in Iraqi production, Mr. Birol worries that global oil production over the next five years will have trouble pumping out enough barrels to match expected demand from China, India and the Middle East. Tight supplies amid growing Chinese demand sent oil prices soaring close to $150 a barrel in 2008.
—Hassan Hafidh and Margaret Coke contributed to this article.
JUNE 8, 2010, 1:20 P.M. ET
AMMAN—The former head of Iraq's largest state-owned oil company and advisor to the country's oil ministry criticized long-term deals that Baghdad signed with international oil majors to develop some of its biggest fields, saying the country instead should have agreed to short-term technical deals.
"There is no clear national plan on how to develop these huge oil fields," Jabbar Al Luaiby told Dow Jones Newswires in an interview.
BP PLC, Royal Dutch Shell PLC and Cnooc Ltd., Exxon Mobil Corp. and Italy's Eni SpA have bagged deals with Iraq to develop fields in the war-torn country, which holds the world's third-largest proven oil reserves after Saudi Arabia and Iran, according to BP.
Mr. Al Luaiby's remarks could increase pressure on Baghdad to revise contracts awarded to foreign companies. Ayad Allawi's Iraqiya bloc, which won the most seats in the recent parliamentary election, said it would like to review oil contracts signed with the majors.
"They're huge deals that need the infrastructure, the potential and management which Iraq is currently lacking because of years of war, economic sanctions and destruction," said Mr. Al Luaiby, who recently left his position as an advisor to Iraq's oil minister.
He added that international oil companies can still play a part in tapping Iraq's vast resources once better infrastructure and oversight is in place. Foreign investment could help reverse the impact of two decades of war, sanctions and neglect on Iraq's oil industry.
A spokesman for Iraqi Oil Minister Hussain Al Shahristani declined to comment on Mr. Al Luaiby's remarks.
Two auctions held last year led to the award of 11 major oil deals to international oil companies. Baghdad hopes the contracts will boost capacity to close to the 12 million barrels a day that Saudi Arabia pumps, from the country's current 2.5 million barrels a day. The 20-year deals give companies costs for development and remuneration for each barrel pumped.
Mr. Al Luaiby argues that Baghdad instead should have offered short-term technical deals originally negotiated with oil companies but canceled in 2008.
The veteran Iraqi oil technocrat, who was head of South Oil Co., or SOC, between 2003 and 2008, also said the current decline in Iraq's crude oil production from southern Iraq was "expected" because of failure to drill new wells and repair hundreds of existing spigots.
Iraq's exports in April of Basra Light crude dropped to 1.42 million barrels a day, a fall of 100,000 barrels from the previous month, according to officials. Output is expected to remain lower throughout the summer as the hot climate makes production harder.
"I told them several times that production would decline if we don't move quickly to check it," Mr. Al Luaiby said.
A popular tribal figure in Basra, Mr. Al Luaiby played a lead role in rebuilding the country's southern oil fields after the 2003 invasion. Headquartered in Basra, SOC is Iraq's largest state-run oil company accounting for 70% of total output.
Write to Hassan Hafidh
in $50bn plan to plug finances
Directors want to make sure they have sufficient cash to deal with claims and bolster market confidence in the stricken oil giant’s finances
Ben Marlow and Danny Fortson
Hayward spent yesterday on his yacht as BP had to halt its oil recovery operation (Chris Ison)
BP is working on a secret plan to raise $50 billion (£34 billion) to cover the cost of the Gulf of Mexico oil spill, more than twice the amount previously disclosed.
Directors approved the scheme last week. They want to make sure they have sufficient cash to deal with claims and bolster market confidence in the stricken oil giant’s finances.
Details of the fundraising emerged as Anadarko Petroleum, the junior
partner in the ruptured well, prepared to file a “wilful misconduct” lawsuit
that would shift its share of the multi-billion-dollar claims bill onto
The first influx of cash could come as soon as next week with a $10 billion bond sale. The company is in talks with banks on arranging another $20 billion in loans. The final $20 billion is expected to come from asset sales over the next two years.
Carl-Henric Svanberg, the chairman, declined to comment on the plan’s details but said: “We need to have an unusually strong cash position.”
BP is accelerating its fundraising because its cost of borrowing could be about to soar. The three large ratings agencies slashed the group’s credit status last week amid fears that the claims from America’s worst environmental disaster could reach $100 billion.
Since the crisis struck two months ago, BP shares have fallen 45% to 357p, valuing it at £67 billion.
Yesterday BP chief executive Tony Hayward, who has been fiercely criticised, was on his yacht off the Isle of Wight, where the Round the Island race was taking place. Greenpeace said he was “rubbing salt into the wounds” of devastated gulf communities. He is due to give the keynote address at the World National Oil Companies Congress in London on Tuesday.
Speculation about his job, and Svanberg’s, is growing. Hayward is to pass control of the day-to-day handling of the spill to Bob Dudley, an American BP executive. A source close to the company said that Chip Goodyear, the former chief executive of BHP Billiton, the mining giant, could be brought in to fill either post.
No change is likely before the well is plugged. That should finally come in August with the completion of two relief wells.
One investor compared BP to Railtrack, the private company that ran Britain’s railways and collapsed into administration in 2001. The shareholder, one of the oil group’s largest, said it needed a “top to bottom” revamp. “There needs to be a new BP after this,” he said.
Svanberg said: “I believe that every crisis presents opportunities. It is important that you bring an open mind to the situation. When something like this happens, it puts things in perspective.”
BP, which owns 65% of the Gulf of Mexico well, has spent $1.6 billion so far on the clean-up effort. It sent bills to its partners — Anadarko, which owns 25% of the well, and Mitsui, the Japanese group that owns the other 10% — for their share of the costs. Anadarko declined to pay and sources close to the situation said it was about to sue BP.
Jim Hackett, Anadarko’s chief executive, said the disaster was a “direct result of BP’s reckless decisions and actions”. If it can prove BP’s negligence, the firm will not be liable for damages caused by the disaster. Mitsui’s position is unclear.
BP had to halt the main oil collection effort temporarily this weekend because of a blocked vent. When functioning properly, the system capturs 25,000 barrels a day, it said. US government estimates put the flow rate at up to 60,000 barrels a day.
After a meeting with President Barack Obama last week, BP agreed to
put $20 billion into a clean-up fund. To pay for it, the dividend has been
cancelled for the rest of the year. The remainder, BP said, would come
from spending cuts, cash-flow and asset sales.
News of BP’s asset sale programme will lure predators. The company wants to sell exploration and production assets outside its key strongholds in the Gulf of Mexico and Russia, and minority, non-operated positions in older fields.
ABOUT KURDISH OIL: Q&A:
Ashti Hawrami, the Kurdish minister of natural resources
By BEN LANDO
Ashti Hawrami, the Kurdish minister of natural resources, in his office. (BEN LANDO/Iraq Oil Report)
ERBIL – Ben Lando: What are the percentages in your deals with Exxon?
Does the KRG have a different stake than in previous contracts?
Ashti Hawrami: It’s just a normal, standard agreement. We have a government interest, the same features we have in other contracts. And I will say that in due course it will be published as well.
BL: You said that the next step for the progress on the oil law,
agreed to, is you meeting with your counterpart Oil Minister Abdul Karim
Luaibi. When does this happen? It has to be soon, to meet the end-of-year
AH: We are looking forward to meeting in the next few days, or this month anyway. There is good will on both sides that we need to solve this problem and Mr. Maliki in particular is keen to get it out of the way. We respect that. And we have an overall agreement on the process so we just need to get down to the job.
From our point of view, we are ready to start now, and the target of December 31 is realistic. There is a draft law that has all sorts of little problems and big problems, maybe in it for everybody, because five years later a lot has moved on in the north and in the south. We can sit down, look at individual articles.
If we both think it is a good idea because we want this particular article to change and if we agree on the wording, (changes would) likely be (made) through a memorandum, or actually amending the document.
Anything we don’t agree, we don’t touch and leave it as it is. Each party has a right to put their comments, compiled or whatever they want to do, and send it to the Council of Ministers or to the Parliament. The important thing is we finish the process and it goes to he Council of Ministers with all the amendments and all the comments.
They can pass it on to the Parliament. Parliament has a process and its function in parliament has committees, has debates. We are happy to take our changes with that debate.
The reason for it is very simple: Mr. Maliki repeatedly reassured us, and he assured us he wants everything to be within the framework of the Constitution. Guess what? We want exactly the same. We don’t want anything outside the Constitution. We never demanded anything outside the Constitution.
Therefore, we believe that since the Constitution is the basis, at the end people debate – this word, that word, they come to a framework. It should be Constitutional. Therefore, that since we’ve been saying all the time that the Constitution is what we respect, we should respect the law coming out within the framework of the Constitution. Therefore Iraq will be a happier place to work and all these arguments, totally unnecessary, will be behind us.
BL: The February 2007 draft, that’s the one that will be the basis
of your discussion. At that time there were still some issues that needed
to be worked out with that draft. How much of the potential changes are
related to those unresolved issues, and how much is because of the new
situation on the ground, now that the KRG has signed dozens more contracts?
AH: There are a number of issues, practical issues, that we need to address and a lot of unfinished things. I don’t really want to start the debate before I have even had a meeting with my counterpart. Nevertheless, we do recognize the draft is out of date.
We may walk into our first meeting and just say, “Let’s leave it alone and send it to Parliament as it is.” That’s one option. And everybody can write a memorandum of their choices of what they want to see, amendments to it. And then Parliament they take the amendments under consideration. It might be easier, rather than trying to amend things (ourselves).
The second thing is, I don’t expect it to be a prolonged discussion. We don’t expect it to be committees around me or Mr. Luaibi to sit down doing this. What we want to do is go to the discussion and look at it pragmatically, look at our job to facilitate comments or amendments to this draft for the Council of Ministers, and after that, to send to the parliament.
Parliament represents everybody there and other healthy discussions. Hopefully, eventually, a federal law comes out and solves all of the problems for everyone concerned.
BL: What is the impact on the resolution of disputed territories
on the resolution on agreements for the oil law?
AH: I’m not going to talk about disputed territories, oil and anything like that. Whatever is in the draft – there are paragraphs, or whatever – it is there. How the parliament will look at that, we just need to leave it.
BL: But on a procedural level are there things that need to be decided
first before you can pass a law?
AH: No, I don’t think so. There are various things in the law for example that need to be reworked.
For example, the revenue sharing law, much talked about, is a different piece of legislation that sits outside.
The INOC law, this is something outside. Now, in that draft is actually all together and all piecemealed together so naturally it needs to be separated out.
Rather me doing that, or Mr. Luaibi doing that, my preference actually is that all recognize that parliament has more legal minds and legal framework and processes – let them go and put the proper structure on it and go for voting.
BL: Taking into consideration the development you have had, which
will be part of the discussion to update the draft law, how do you deal
with the contracts that are in disputed territories?
AH: No, we don’t have anything in disputed territories.
BL: There are blocks, such as the Hunt block…
AH: it is not, it is within Kurdistan.
BL: It’s not within disputed territories?
AH: We are administering, we have elections, we have everything which is run from Kurdistan. What are you talking about? We have everything contracted by Kurdistan, within Kurdistan.
Remember there is disputed territories; I’m not expert in that. There is no particular line. It comes down to who is in charge of it, now or then. It is bigger than where you draw a line. It needs to be fundamentally sorted out, so it’s a different article, different thing. It’s not my department. I don’t want to get involved with that.
BL: The refining strategy, what is your goal for refining capacity
in the Kurdistan region?
AH: There are two aspects to that questions. One, the local consumption needs of Kurdistan – we want to get to the level where locally refined and satisfied.
What I mean by that, if Iraq is consuming, say, 500,000 barrels per day (bpd) or 800,000 bpd – let’s say our quota is 17 percent – I want to refine that locally, because it employs more people, creates more spin-off type projects, and facilitates growth and expansion, training, and everything else.
So the crude oil consumption is a base that we are consuming as a per-head population in Iraq – that we’d like to get into a position where we can refine our needs locally. I may need less fuel oil, more benzene, or more white end of the products; as to other regions or governorates, they may need something different in the south.
What we have discussed with Mr Luaibi is the principle of the consumption. Internally, it should be based on the crude oil. Because if I don’t refine anything or Baghdad doesn’t refine anything, all of that crude oil can be available to be solved in the international market. It becomes revenue. Revenue comes back split at the budget level on the 17/83 percent. So if you choose to refine instead, we can refine it all in Baghdad and everybody takes the products; or, you are taking refining into the region and provinces, we’d like to grow our refining capacity to the minimum of that 17 percent consumption level.
BL: So you want to have refining levels of products that is 17 percent…
AH: Of the crude oil used, used for local consumption. So how I refine, what products I get out – might be different because of the needs, what the costs are – is different than what the authorities need in Baghdad or Basra or in Mosul. The raw material used should be the basis; not how much benzene used, fuel oil used, all of that. That’s number one.
Number two we want ot actually go beyond that, maybe get our refining up to 250,000 to 300,000 bpd. Ultimately, the market for the excess will be either domestic, because maybe we consume more because of the economy will be developing, or there might be more of a market for that product better than the crude oil.
For that, we should then look at excess used beyond the quota at international market value, for the crude oil. Because if I don’t refine it and put it in the pipeline, it becomes revenue and Iraq has the right to that revenue, and I will normally get only 17 percent of that. But that principle should apply to all of it. It simplifies the consumption and accountability of the revenue and the usage.
BL: Do you want extra refining capacity so that, in the future, if
you have export problems like in the past, whether political or technical,
you have options?
AH: No, I don’t think you can plan refineries for a back-up prospect and possibilities, because the cost involved in building such facilities are in the hundreds of millions, if not billions, of dollars. And nobody will go out heading for Plan B – if I’m interrupted we’ll use this.
We should be looking at the long-term model here. We have internal needs; they have to be satisfied. I don’t want to use products from outside. It is far too expensive, to be honest with you – irresponsible. I have the crude oil, I should be creating an environment where I can process and use the products.
I’m talking about going beyond that in order to satisfy the Iraq-wide market, and maybe tomorrow I can export products to Iran or southeast Turkey or whatever. Because with that, I can get more dollars for Iraq than just selling the crude oil. In addition to that, you basically create more employment and so on and so forth.
So, for that we say we can look beyond our normal quota. But we should be accountable for the value of that crude oil you are using, instead of selling it, putting it into the pipeline.
When I say this, we should all do this in Iraq, not just Kurdistan. Somebody else may build a refinery of a million bpd in Basra. Yeah, ok, by all means do 5 million, if you want. But I want to make sure the revenue transparently is treated as revenue, no longer considered “internal consumption.”
Internal consumption means what you need to satisfy your utilization as a consumer and as a public sector. So, use that within the revenue sharing agreement.
BL: You have limited number of exploration blocks left, and you are
in talks with some of the other major oil companies interested in coming
into Kurdistan for some fresh exploration?
AH The answer is yes, but I cannot name companies.
BL: How many companies or consortiums?
AH: There is simply every now and again we get approached, and people write to us and we meet them and sometimes we have something to offer, and the discussion progresses. And if we don’t have anything to offer, the discussion stops at that level. It is very dynamic as you know, the region, there is a lot going on.
I cannot really talk about what the possibilities are, but what happens is transparently – we publish and everything. All our work is available on the internet.
BL: When do you expect to have the next big announcement?
AH: I cannot really predict that. I think there will be a lot going on in the next couple of months. We have a lot of internal issues, legislation. We are working on that at the moment. We are trying to get a framework agreed to go to Parliament for the role of KEPCO. We want that to be separated out from the ministry completely; it should just be a regulation relationship between us and that company. The management of it needs to be nominated by Parliament and accountable separately.
Second, we prepare in parallel with the revenue sharing law in Baghdad, which the draft is going around – and there is also an older draft of June 2007 – we are actually framing something that is a mirror image of that. Whatever that is, we will also impose, we would like to have a law in Kurdistan also regulating and monitoring and policing that revenue that comes from Baghdad as well as what Kurdistan actually does. We are working on those pieces of legislation.
We are also working on a mining law. The first draft of the non-metallic mine is with parliament. That is regulating cement, factories, things like that, marble. The metallic one, we need a bit more time for metallic mining, like copper. We are looking at some other countries and how they get maximum balance and benefit. So we are busy with that, at the moment.
BL: What about the Kurdistan National Oil Company (KNOC)? When you
signed the blocks in 2007, you assigned some to the Kurdistan Exploration
and Production Company (KEPCO) and some to KNOC.
AH: In this piece of legislation we are taking to parliament, KNOC will be canceled and we will only have one company, and this is KEPCO.
BL: Foreign oil companies, the big ones, are still welcome to buy
into existing blocks, with your approval?
AH: Our contract allows for transfer of part and complete transfer, but we are always looking to improve the government’s position. So, if a company comes in and is looking to farm into an existing deal, as long as the new company brings better expertise and new finance, we approve it. If it is less, we will not approve it. Our policy is very clear on that.
IRAQ’S OIL INDUSTRY
By Aymenn Jawad Al-Tamimi (PDF version of this article)
This article provides an overview of Iraq’s oil and gas industry, focusing in particular on its history since 2003 under the Coalition Provisional Authority and the sovereign Iraqi government. It also examines the relationship between the development of natural gas reserves and local autonomy, as well as the controversy surrounding ExxonMobil’s dealings with the Kurdistan Regional Government. Finally, the article considers how the oil and gas industry relates to the wider economy both now and for the future.
Contributing 60 percent of GDP, 99 percent of exports, and over 90 percent of government revenue, the oil industry is by far the most vital sector of the Iraqi economy, with proven petroleum reserves of 143 billion barrels and a potential to recover and refine a further 200 billion barrels. The existence of substantial oil reserves in the area of Mesopotamia has been known since at least the end of the nineteenth century, with the monopoly of oil exploration and production originally lying in the hands of the Iraq Petroleum Company (IPC), which was owned by a consortium of foreign oil companies until the Ba’th government completely nationalized the IPC in 1972. It should be emphasized that since that time, the oil industry has remained a state-run enterprise in Iraq.
In the run-up to and in the aftermath of the U.S. invasion in March 2003, a common theory among critics of the war has been that the coalition forces invaded the country to take over its oil reserves. This speculation was fuelled in 2011 by a report in the Independent on UK government memos that had been obtained through a Freedom of Information request. According to this report, in October 2002, the petroleum firms BP, Shell, and BG had a meeting with Baroness Symons, who was Trade Minister in the British government at the time, and agreed to lobby the Bush administration on BP’s behalf.
BP officials also met with the Foreign Office the following month, discussing opportunities in Iraq “post regime change.” The meeting was summarized as follows: “Iraq is the big oil prospect. BP is desperate to get in there and anxious that political deals should not deny them the opportunity.” BP’s concern in particular was that Washington would not annul the contract that the French company Total had signed with Saddam Hussein’s regime, thereby allowing Total to become, in BP’s view, the world’s largest oil company.
However, what those memos revealed was merely a self-evident truth: that foreign oil companies would naturally take an interest in developing Iraq’s oil reserves. The idea of privatizing the oil industry was entertained among some quarters of the Bush administration, but this policy proposal was certainly not a consensus among government officials. In fact, it never became a matter of U.S. policy, even during the period of governance under the Coalition Provisional Authority (CPA), which lasted until June 2004. This was because the CPA under Paul Bremer justifiably feared that privatizing the oil industry would provoke resentment among the Iraqi population.
Furthermore, at an OPEC meeting on March 31, 2004, it was decided that global oil prices should be kept high by a 4 percent reduction in petroleum production. This equated to approximately one million barrels per day. As Daniel Pipes noted, “Not surprisingly, this Saudi-led step met with disapproval in Washington,” but then Iraqi oil minister Ibrahim Bahr al-Ulum, who was representing occupied Iraq at the Vienna-based meeting, came out in favor of the OPEC initiative.
It was not until August 2008 that the first oil deal was signed between the Iraqi government and a foreign company, in this case the China National Petroleum Corporation (CNPC), which is run by the Chinese government. As Joel Wing points out, this agreement was a reworking of a 1997 contract that Saddam had signed with the corporation and is to be classed as a “Technical Services Agreement,” which entails a fixed payment to the corporation in addition to a set fee per barrel for every extra barrel of oil produced. For this particular agreement, the fixed payment was $3 billion, and $3 per extra barrel. These terms were intended to work to the government’s advantage, and the fuel produced from the Ahdab oil field in Wasit province as part of this deal cannot be sold by the company, but must be used exclusively for domestic purposes.
Yet there was an angry response in May 2009 from local farmers in Wasit, fearing that the government would confiscate their agricultural lands. Further, as one anonymous farmer told the news outlet al-Zaman, “The Chinese have entered our land without permission, and extended their cables. The work has destroyed our farms.” Thus, the farmers attacked the cables and pipelines the CNPC had extended over the farms, thereby preventing the Chinese from beginning work. Eventually, the CNPC was able to resume activity on the Ahdab oil field.
The Iraqi government’s deal with the CNPC should be understood in light of a wider trend toward economic cooperation between China and Iraq. For instance, in a visit to Shanghai in 2011, Iraqi Prime Minister Nouri al-Maliki affirmed that he was willing to invite more Chinese companies to Iraq to assist in reconstruction, “pointing to what he saw as China’s advanced experience in technology and infrastructure building,” especially as regards the construction of harbors, airports, and railways, inter alia. Among Iraqi politicians more generally, there is an appreciation for the fact that China not only forgave all Iraqi debt but also helped remove Iraq from the authority of Article 41 of the United Nations Charter, which had been invoked to impose economic sanctions on Iraq in the years prior to the removal of Saddam Hussein’s regime.
In any case, 2009 saw two rounds of bidding for the country’s major oil fields among foreign companies. These corporations came from a wide variety of nations. For example, in October 2009, as part of the first round of bidding, it was agreed that a consortium of Eni (Italy), Occidental Petroleum (U.S.) and Korea Gas Corporation (South Korea) should work on the Zubayr Oil Field in the Basra area, which has oil reserves of approximately 6.5 billion barrels. As with the August 2008 deal with the CNPC, the terms were calculated to favor the Iraqi government, such that the remuneration fee was set at only $2 per barrel for extra oil production. Of the group managing the project, Eni controls almost 33 percent, Iraq’s Missan Oil Company almost 25 percent, Occidental Petroleum 23 percent, and Korea Gas Corporation almost 19 percent. In a similar vein, during the second round of bidding in December 2009, the giant Majnoon (Arabic for “mad/crazy”) oil field with reserves of roughly 12.58 billion barrels was won by a joint venture, consisting of Anglo-Dutch Shell and PETRONAS, which is a Malaysian state-run oil and gas company, with a fee per barrel of just $1.39.
The same year, BP won a joint venture contract with CNPC to develop the South Rumaila Oil Field in the Basra area, with estimated reserves of 17.8 billion barrels. The consortium is led by BP with a 38 percent share, followed by CNPC with a 37 percent share, and the State Oil Marketing Organization (SOMO)–representing the Iraqi government–with a 25 percent share. The aim is to nearly triple the oil field’s output to around 2.85 million barrels a day by 2015. To accomplish this goal, BP and CNPC are to invest around $15 billion over the 20-year lifetime of the contract. It is notable that it took BP several years to get into Iraq, despite its lobbying efforts.
The rounds of bidding in 2009 and the involvement of foreign companies were big topics of discussion within Iraq itself. While it is not uncommon to find Iraqis who believe that the driving force behind the invasion was an American desire to control the country’s oil reserves and that the contracts signed between the Iraqi government and foreign oil companies were the fulfillment of this objective, the fact is that by mid-2009, the country’s oil industry was unable to expand any further, producing around 1.9 million barrels of oil per day with profits of around $4 billion a month.
The oil capacity was already overstretched and required much investment just to maintain the levels of production at the time, something that could not be achieved without the know-how offered by foreign petroleum firms. Foreign investment though is not the same thing as privatizing the oil industry. In any event, it was only in January 2011 that export statistics reached their pre-2003 levels, and even before the invasion, the United States and other Western countries were buying oil from Saddam’s Iraq in spite of the economic sanctions. As Daniel Pipes noted, invading Iraq in the hope of controlling and profiting from the country’s oil reserves amounts to financial absurdity.
In short, therefore, the slogan of “No blood for oil!” which was widespread among critics of the U.S. invasion, overlooks what actually transpired in Iraq after 2003, wrongly assumes monolithic consensus among the Bush administration, and diverts attention from the real role that oil probably played behind the decisionmaking in the lead-up to the invasion: namely, that Saddam Hussein, through his alleged possession of WMDs, would in the long-term pose a threat to the free flow of oil through the Persian Gulf.
NATURAL GAS AND AUTONOMY
Besides the large oil reserves, Iraq is home to huge quantities of natural
gas, with known reserves of around 110 trillion cubic feet and another
150 trillion cubic feet in probable reserves. However, owing to a lack
of development of the gas industry in Iraq, around 70 percent of the natural
gas that has been recovered from oil fields during the process of extracting
petroleum has gone to waste, amounting to losses of more than 874 million
cubic feet per day. This wastage through burning off the natural gas
is known as “flaring,” and is thought to cost the country around $5 million
a day in lost fuel.
It is also true, as Simon Bowers notes, that the “capture and use” of natural gas “in power stations has been billed as the answer to Iraq’s domestic power shortages.” Indeed, since 2003, electricity generation and output have failed to keep up with exponential increase in demand. This surge in demand is partly due to the fact that import tariffs were lifted by the Coalition Provisional Authority, meaning that cheap consumer goods from Iran, Turkey, and China flooded the country.
Yet as for power generation itself, Dr. Nimrod Raphaeli has highlighted the massive extent of problems of corruption in the power sector. In 2011, the Ministry of Electricity signed a $1.2 billion contract with a Canadian company going by the name of CAPGENT, and a $650 million contract with a German company called Maschinerbrau Halberstadt. Both of these firms turned out to be non-existent, and the execution of these contracts was only narrowly averted by Jawad Hashim, a resident of Vancouver who had been a minister of planning in Iraq during the early years of the Ba’th regime. Even so, natural gas that is currently captured and transported by truck to local power stations is frequently stolen by people working in tandem with some officials in the Electricity Ministry, according to Ala’a Muhiddin, the Inspector General of the Ministry of Electricity. The stealing of natural gas is thought to lead to losses of around 300-400 megawatts of electricity generation every day.
In September 2008, Iraq’s Oil Ministry entered into preliminary negotiations with Royal Dutch Shell on capturing natural gas from the oil fields in Basra province. However, the negotiations came under criticism from a member of the Iraqi Parliament’s Oil and Gas Committee, who saw any deal with Shell on natural gas capture as a “long-term monopoly” for the foreign company on the country’s gas industry. Furthermore, Jabir Khalifa Jabir, another member of the Oil and Gas Committee and a member of the Shi’i Fadhila Party, stressed the need for local government to be included in the decisionmaking regarding the negotiations.
Conflict thus emerged between the Oil Ministry–which believed that only cabinet approval was required for a deal with Shell (something that was granted at the time)–and the parliament–which saw itself as having a right to participate in the negotiations–with some political factions deeply suspicious of any foreign involvement in planned development of the gas industry. It is therefore unsurprising that negotiations stalled. Besides the political disputes, questions regarding specific terms of the proposed deal were left unanswered. For example, the proposed contract with Shell did not specify how much gas was to be used for domestic consumption as opposed to exportation.
In addition, as Walid Khadduri pointed out:
The agreement also stipulates that Iraq would sell natural gas to Shell at international prices, which the company would then sell back to Iraq at international prices as well. This means that petrochemical products, whether industrial or agricultural (using fertilizers), in Iraq will not be able to compete with similar products in neighbouring countries, where the state subsidizes the price of natural gas for local industries.
No mention was made in the provisional agreement as to whether there
had been consideration on subsidizing the gas for domestic purposes.
These lacunae in the terms of negotiation, as well as a series of announcements, objections, and counter-objections, led to an impasse for more than three years, with extensions given periodically to negotiations that also came to involve the company Mitsubishi. For instance, in April 2010, it was revealed that the national government did not have the financial means to fund its proposed 51 percent share of the natural gas venture with Shell, and foreign oil companies that had already signed development deals with Baghdad expressed reluctance to provide the project with any natural gas produced from the oil fields they were working on, pointing to the fact that they needed to reinject this gas into the oil reservoirs in order to meet the ambitious production targets set by Baghdad. For these reasons, a six-month extension was granted to talks. Then, in February 2011, the Deputy Oil Minister Ahmad al-Shamma’a noted that there was a conflict of interest, for under the oil and gas law established in the Saddam Hussein era, only SOMO had the right to export gas or crude oil, a right that would understandably be claimed by Shell as part of the proposed deal.
Finally, in November 2011, with billions of cubic feet of natural gas wasted since negotiations first began, a $17 billion contract between Iraq, Shell, and Mitsubishi was approved for the capture of natural gas from three oil-fields in the south: Rumailah, Zubayr, and West Qurna. The divisions of the stakes were as follows: Iraq with 51 percent, Shell 44 percent, and the remainder for Mitsubishi. The contract’s duration is 25 years, and the aim is to collect more than 2 billion cubic feet of natural gas per day from the three oil-fields. The agreement was then finalized on November 24, 2011.
However, officials in Basra objected to the deal even after its signing. On November 25, 2011, officials from the Basra Provincial Council filed a lawsuit against the Iraqi Oil Ministry and called for the agreement to be cancelled. As Sabah al-Bazouni, head of the provincial council, put it in an interview with Reuters, “In principle, we don’t have any problem with developing the gas but when the contract is signed, there has to be an article that shows the provincial council has agreed…. Unfortunately, we did not know anything about this contract.’ Even more revealing, he added that “Basra is the most suitable province to become an autonomous region.”
For observers of local politics in Basra, al-Bazouni’s remarks linking economic problems for the city with the lack of autonomy do not come as a surprise. For years, a pro-federal trend has been apparent in Basra and the surrounding area. The concept of autonomy and federalism is endorsed in Basra by the Fadhila party, many local tribes, independent Shi’i politicians, and some lower-rank members of Nouri al-Maliki’s Da’wa party. Yet the Prime Minister himself and the Sadrists are hostile to the idea, favoring instead a strong, centralized government in Baghdad. So far, all bids for autonomy in Basra have been unsuccessful. A case-in-point was the failed attempt in 2010, when a formal request for autonomy was sent by Basra province to Baghdad with no response subsequently coming from the latter.
Basra’s grievances against the central government are numerous and not without basis in reality. A notable example concerns a law passed in January 2010 regarding the distribution of oil revenues. According to this law, “each Iraqi province is entitled to $1 of each barrel of oil it produces and refines.” Under these terms, Basra province is due around $90 million a month, but the governor of Basra, Khalid Abd al-Samad, complained in November 2011 that the government had not implemented this law and was deliberately depriving the province of its fair share of oil revenues.
The autonomist leanings in Basra are therefore easy to understand, given that autonomy would allow the local government more control over revenues. As Joel Wing put it in December 2011, “All the revenues Basra produces from its petroleum… go to Baghdad, with only a fraction being sent back in the form of the provincial budget. Basra’s officials fear that this will be repeated with the new gas deal.”
Nevertheless, local objections to the Oil Ministry’s deal with Shell and Mitsubishi have had little impact. In March 2012, Shell announced that it had awarded a $63 million contract to the Swiss engineering firm ABB Ltd. in order to build two 25 megawatt power plants at Khor Zubair in the south of Iraq. These power plants are to be fuelled with natural gas produced and captured by Shell as part of its agreement with the central government. Thus, just as Baghdad has brushed aside attempts in Basra to push towards autonomy, so the central government has easily disregarded–without fear of consequence–local concerns about the natural gas deal. The problem is that Basra has not pressured Baghdad forcefully enough with its demands.
Indeed, a case worthy of comparison is that of Anbar province, where in October 2010, the Oil Ministry successfully auctioned off the Akkas natural gas field to a consortium consisting of the South Korean firm KOGAS and the Kazakh firm known as KazMunai Gas. On the day of the auction, however, local politicians in Anbar staged a protest, with demands that the province should have control over Akkas and that gas produced be used for nearby power plants. They also threatened to withdraw all security protection for the field and stir up a revolt (besides plans to sue the Oil Ministry) if their demands were not met.
Fearing local anger, KOGAS and KazMunai Gas refused to finalize the deal until Baghdad addressed the demands of Anbar politicians and residents. The delay dragged on for a year, with the Kazakh firm subsequently withdrawing from the agreement, but in the end the central government was able to confirm the deal with KOGAS with promises to locals of building a new electricity plant in Akkas and constructing a natural gas pipeline from the field to supply power plants in Anbar. Hence, unless Basra tries to follow Anbar’s example, it will achieve nothing in forwarding its grievances.
Even so, it is questionable whether the central government will act on its promises towards the Sunni-dominated western province. At the end of February 2012, various officials in citizens in Anbar reaffirmed a desire for autonomy, citing a failure on the part of the central government to address the concerns raised in the previous three months. In particular, Muzhir al-Mulla, a local council official, complained that improper allocation of revenues to the province has meant that Anbar even lacks funds to set up an investment or service project in the electricity and energy sectors.
In light of all this evidence, one cannot help noticing how similar the central government’s policies here are to the outlook of the Roman Republic towards its provinces outside Italy. Namely, the provinces were viewed as estates designed to be exploited for the benefit of the Roman people, and thus local grievances were overlooked by the central state, whatever verbal promises officials might have made in response to complaints and threats of revolt.
While Baghdad may have its way over Anbar and Basra on issues of oil and gas in the coming years, there is an underlying risk of stirring up widespread provincial unrest in the long-term, perhaps even triggering a “periphery against center” conflict analogous to the beginnings and development of the revolt against Asad’s regime in Syria. That said, it should be borne in mind that Anbar is weary of provoking the central government too far, especially in light of the disastrous outcome of the 2006-2007 sectarian civil war for Sunni Arabs.
BAGHDAD, KURDISTAN, AND EXXONMOBIL
More problematic for the central government has been its relationship with Kurdistan on oil and gas issues. By 2011, eight years after the invasion, the Kurdistan Regional Government (KRG) had signed a total of 37 production-sharing contracts, hosting 41 companies from 17 nations. Many of these deals involve exploration rights, and while much of the oil that is produced is consumed for domestic purposes, some of it is also smuggled to Iran, whether in crude form or in the form of refined products through fractional distillation. KRG officials have made public statements promising to crack down on illegal oil exports, but as Joel Wing notes, these affirmations have only ever referred to stopping the outflow of crude oil, and not refined products, “so they [the KRG] are using that as a loophole.” Not only does this smuggling bring in lucrative profits for the two ruling parties of the KRG coalition–namely, the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP), both of which have used their leverage over finances to punish opposition parties that were perceived as supporting the 2011 protests that were subject to a decisive crackdown at the end of April of that year–but also allows the Kurdistan region to assert autonomy to the chagrin of Baghdad.
Until ExxonMobil signed a deal with the KRG on October 18, 2011, the contracts–all negotiated by the KRG without Baghdad’s permission–had involved only minor oil companies. While the central government regards all these agreements as illegal–invoking Article 112 of the Iraqi Constitution to justify its belief that Baghdad must oversee all contracts with foreign petroleum firms–and has accordingly blacklisted oil companies that have signed deals with the KRG and barred them from working elsewhere in Iraq, these measures have not prevented those very firms from operating in Iraqi Kurdistan. One month after the signing of the deal with ExxonMobil, public disclosure unsurprisingly caused a furor.
In particular, the central government was enraged over the fact that the agreement granted ExxonMobil exploration rights for oil and gas in six areas, at least two of which are considered to be “disputed territories.” The most interesting case here is that of Bashiqa (in Ninawa province), whose population is largely a mix of Yazidis, Assyrians, and Sunni Arabs. Although the Yazidis speak Kurdish, they do not identify ethnically as Kurds, and there has been much dispute over the fact that the KRG constitution does not recognize the Yazidis as a separate ethnic group.
Both the Yazidis and the Sunni Arabs in Bashiqa are generally opposed to being incorporated within the jurisdiction of the KRG. The only significant pro-KRG sentiment that exists there is to be found within Bashiqa’s Christian community, which is itself deeply divided over whether to join the KRG–fearing the risk of attacks at the hands of Sunni Arab militants–or push for the Assyrian Democratic Movement’s goal of an autonomous province for Christians in the Nineveh plains, centered around Christian towns like Alqush. As Reidar Visser points out, “It is not unlikely that Bashiqa and its oil will end up remaining outside the final KRG borders and hence outside Kurdish jurisdiction.”
Upon learning of ExxonMobil’s deal with the KRG, the Oil Ministry immediately declared the contract to be illegal and issued rhetorical statements effectively declaring an ultimatum for ExxonMobil: either cancel the deal with the KRG and continue to work on the West Qurna Phase One (WQP-1) oil-field in the south, which ExxonMobil won in an auction in 2009 as part of a consortium with Shell and which is home to approximately 9 billion barrels of petroleum reserves, or proceed with the agreement, risk losing the right to continue working on WQP-1, and face exclusion from the fourth round of bidding for oil and gas fields in 2012. The last threat has already been implemented, and Baghdad’s rhetoric and actions deterred other major oil companies from dealing with the KRG.
The central government was not alone in denouncing the KRG agreement with ExxonMobil. The Governor of Ninawa Province, Atheel Nujaifi, expressed similar sentiments, and the provincial council even went so far as to vote for troops to be called in by the central government to prevent ExxonMobil from working in the areas designated for the company to explore and develop. Ninawa’s objections should only have been expected. After all, the prominent Nujaifi family in Mosul (including the speaker of the Parliament Osama al-Nujaifi, a senior Sunni-Arab politician) is currently spearheading the campaign to keep Bashiqa out of KRG jurisdiction.
However, it would appear that after initially stumbling, ExxonMobil got the better of Baghdad. This is because there were additional complications regarding relations between the two parties. Specifically, Baghdad owed ExxonMobil millions of dollars in unpaid work since it began developing WQP-1, with regular payments not made on account of the inefficiencies of the Iraqi bureaucratic system. This led to protracted negotiations that were finally resolved on March 12, 2012, when Iraq agreed to pay ExxonMobil in crude oil rather than cash payments. This was despite the fact that the week before, the Chief Executive of Exxon, Rex Tillerson, affirmed that the petroleum company was pressing ahead with plans to work in the Kurdistan area and with its existing work in the oil-fields awarded to it by Baghdad for development. The next day, the French oil giant Total SA announced that it was in talks with the KRG, despite being previously deterred from dealing with the autonomous Kurdish government on account of Baghdad’s objections.
Indeed, the situation as of June 2012 suggests that in practice ExxonMobil has been able to have its cake and eat it, for though the central government barred the firm from the fourth round of bidding for energy exploration rights, Baghdad has not cancelled the company’s contract to continue its important work on the WQP-1 field. On June 19, an aide to Nouri al-Maliki told Reuters that a letter had been sent to Obama to seek his intervention and stop Exxon from working in the Kurdistan region, even as the KRG put a halt to its oil exports in April amid a payment dispute with the central government.
However, the KRG remained defiant, with natural resources minister Ashti Hawrami making it clear that “in the next few months, we expect to see another two or three major companies coming and working in Kurdistan…We expect more discoveries this year to bring us to our new target of 2 million barrels per day by 2019.” Given the fact that U.S. influence has been on the wane in Iraq for some time now and that the preferred approach among policymakers in Washington and the U.S. embassy in Baghdad is currently one of ‘hands-off,’ it seems unlikely that Maliki’s letter will translate to any mediation on the part of the United States.
The problem for the central government is that the KRG tends to offer more friendly terms for foreign corporations and can be expected to be more reliable in paying them as the KRG economy is more liberalized and less impeded by bureaucracy. Thus, even if the Oil Ministry in Baghdad threatens sanctions, it is probable that more oil firms will come to express an interest in negotiating with the KRG. Yet what has so far allowed the central government to hold more sway is the fact that most of the country’s oil is located well outside the KRG areas (though that could change if exploration yields further significant reserves in Iraqi Kurdistan), with the pipelines and export routes for petroleum also under the control of the central government.
Lacking immediate access to the sea, the Kurds can transport oil to the international market via Basra. Hence, the KRG engages in oil smuggling with Iran. Alternatively, the Kurds could work toward obtaining a pipeline route via the Turkish Mediterranean port of Ceyhan, but this would require the KRG to persevere with Massoud Barzani’s conciliatory approach toward Turkey, even as relations could periodically sour because of Turkish bombings of PKK hideouts in northern Iraq. More recently, there has been speculation on the construction of direct pipelines to Turkey by which the KRG can export its oil and gas. On June 19, 2012, Ankara signaled that it was ready to begin low-level importation of oil from Kurdistan, with plans to exchange crude oil by tanker truck for Turkish refined oil products such as diesel and kerosene, which Kurdistan currently lacks owing to the fact that it receives only 15,000 barrels per day of fuel from the south of Iraq. As for the talk of direct pipelines to Turkey, the aim here would be to have two independent routes, one for oil and one for gas, to export said resources directly to Turkey.
Nonetheless, there are certain factors to consider regarding whether the independent pipeline hopes will come to realization. With a pipeline route not relying on Baghdad, the KRG could break its dependence on Baghdad for revenue: In fact, the central government currently provides for 95 percent of the KRG’s annual budget. Escaping from this dependence would prove a significant step on the road to Kurdish independence. Yet, it should be stressed, in light of confusion in numerous media reports, that the talk of independent routes remains just that: talk. There has been no formal agreement, and Turkey has made it clear it will not accept any pipeline deals without the approval of the Oil Ministry in Baghdad. Further, would Turkey itself tolerate the prospect of an independent Kurdistan in what is currently the KRG area, at risk of considerable unrest and perhaps even a revolt in the Kurdish areas of southeastern Turkey? At least half of the geographic region known as Kurdistan is located in Turkey.
In light of these points, it is plausible that any Turkish and Iraqi Kurdish talk of an independent pipeline deal is merely rhetorical posturing against Baghdad. Relations between the central Iraqi government and Turkey have been on the decline since Maliki issued an arrest warrant against Vice President Tariq al-Hashimi in December 2011. Hashimi has taken refuge in Turkey, with Ankara and Baghdad hurling accusations of sectarianism at each other. Thus, Turkey may simply be aiming to persuade the Iraqi government to drop the charges against Hashimi.
CONCLUSION: OIL, THE FUTURE, AND THE WIDER ECONOMY
There is no doubt that Iraq’s oil industry and exports will continue
to expand. On March 13, 2012, the first of four planned oil terminals off
the southern coast was opened. This terminal immediately increased
Iraq’s export capacity by 300,000 barrels per day. Ultimately, it is expected
that each of the four terminals will boost export capacity by 850,000 barrels
per day. Along with the deals agreed with foreign oil companies, the
long-term (i.e. within the next seven years) goal is to achieve an output
of around 12 million barrels per day. This is an unrealistic
goal, primarily because of problems of infrastructure–damaged by sanctions
and subject to disruption at the hands of insurgent attacks and smuggling
as well as inclement weather conditions–that cannot be overcome so quickly,
even when foreign investment is taken into account.
Nonetheless, it is clear that Iraq is set to play a much bigger role in OPEC as its output and exports increase, and in turn hold much more influence in the global energy market. In its 2011 report, the International Energy Agency (IEA) predicted that Iraq would become the largest contributor to growth in global oil production over the next 25 years, and in any case, Iraq was not expected to reach peak oil until at least 2036. Peak oil is the point at which a given oil-well or oil-producing country achieves maximum output and then enters into terminal decline. The IEA’s chief economist, Fatah Birol, further predicts that Iraq could produce 6.5 million barrels per day by 2015 and around 8 million barrels per day within the next 20 years, warning that “if this 8 million bpd–which as I said is the highest growth among all the producing countries–doesn’t take place, we will definitely be in difficulty… in terms of tightness in global oil markets.”
How might this growth in the energy sector affect Iraq’s economy and the general quality of life? Indeed, high hopes have been pinned on the projected and potentially dramatic increase in oil revenues for an improvement in living standards across the country. Yet such optimism is mistaken.
One of the chief hindrances to reconstruction efforts in Iraq is the legacy of the centralized command economy system inherited from the days of Saddam Hussein. The bureaucracy is modeled on the Soviet system, and issues of “red tape” have constantly delayed building and repair projects. While Iraqi politicians have talked for years about the need for an expansion of the private sector, such words have proven to be little more than empty rhetoric. Since the oil industry is not labor-intensive, the government compensates for the lack of employment opportunities available in the industry simply by using revenues to create more bureaucratic jobs.
Such a trend is particularly evident in Iraq, where the public sector has effectively doubled in size since 2005, “employs 43% of all workers,” and “provides almost 60% of full-time work”; in addition, some “70% of income in the country is linked to the government.” This not only makes it harder to begin breaking away from the heavy top-down management of the economy, but also perpetuates corruption in government; and with so much revenue coming in from the production and exportation of petroleum, Baghdad feels no need to diversify the economy. Corruption is important to mention, because it means that any potential benefits from oil wealth are unlikely to trickle down to the population at large. The situation is thus more analogous to Nigeria rather than, say, Saudi Arabia, which was able to use its oil wealth to create a reliable welfare system for its population.
While analysts such as Joel Wing have expressed hope that the development of natural gas reserves can shift the country to a more diversified economy, there is no reason to think that revenues from natural gas will make the government think beyond the energy sector on which it has become so dependent for income. In short, the expansion of the oil industry– together with the coming development of natural gas resources–is only creating a vicious cycle in terms of over-dependence on revenues from the energy sector and problems with liberalizing and diversifying the economy. This should be contrasted with the economic situation in Iraqi Kurdistan, where, for example, the construction boom in Irbil has often been counterpointed with the vast areas of Mosul that are still in ruins and badly in need of reconstruction.
Another problem, noted by Joel Wing, is that oil revenues have increased the Iraqi dinar’s exchange rate, such that exporting products not related to the petroleum industry becomes a more difficult task because they become more expensive, while the cost of importing goods is reduced. This development, along with the fact that import tariffs were lifted in the aftermath of the invasion, has contributed to the flood of cheap consumer goods from China, Turkey, and Iran since 2003–something that has naturally had a negative impact on Iraqi businesses and hindered job creation outside bureaucracy.
In conclusion, therefore, the growth of the oil industry is unlikely to lead to any considerable reductions in poverty among the Iraqi population and is only helping to entrench the problematic, centralized command system of the economy. Ironically, it seems that the Iraqi government’s approach to the energy sector and the wider economy is guilty of the very thing that laissez-faire capitalism is accused of fostering: namely, short-termism, in which the focus is on maximizing revenue in the short-term. If general recommendations be appropriate here, there is a need for planning for the long-term and appreciating that Iraq must move beyond dependence on one source of income.
*Aymenn Jawad Al-Tamimi is at Brasenose College, Oxford University and is an adjunct Fellow at the Middle East Forum.
 “Oil and Gas Factsheet,” October 2011, Inter-Agency
Information and Analysis Unit, http://www.iauiraq.org/documents/1563/Oil%20Factsheet%20-%20English.pdf.
 Paul Bignell, “Secret Memos Expose Link Between Oil Firms and Invasion of Iraq,” The Independent, April 19, 2011, http://www.independent.co.uk/news/uk/politics/secret-memos-expose-link-between-oil-firms-and-invasion-of-iraq-2269610.html.
 Daniel Pipes, “The Bush Administration: Member of OPEC,” Lion’s Den, Daniel Pipes Blog, April 1, 2004, http://www.danielpipes.org/blog/2004/04/the-bush-administration-member-of-opec.
 Joel Wing, “Wasit Residents Protest Against Chinese Oil Company,” Musings on Iraq, September 13, 2009, http://musingsoniraq.blogspot.com/2009/09/wasit-residence-protest-against-chinese.html.
 Salah al-Rubai, “Angry Farmers Sabotage Chinese Oil Equipment in Southern Iraq,” al-Zaman, May 5, 2009, http://www.azzaman.com/english/index.asp?fname=news%5C2009-05-05%5Ckurd.htm.
 Aymenn Jawad Al-Tamimi, “China Makes a Bid for Favour in Baghdad,” The Daily Star (Beirut), July 26, 2011, http://www.dailystar.com.lb/Opinion/Commentary/2011/Jul-26/China-makes-a-bid-for-favor-in-Baghdad.ashx#axzz1orBuVLZl.
 Andrew Davis, “Eni, Partners Reaches Key Production Target at Zubair Oil Field in Iraq,” Bloomberg, December 5, 2010, http://www.bloomberg.com/news/2010-12-05/eni-reaches-key-production-target-at-zubair-oil-field-in-iraq.html.
 Joel Wing, “2nd Round of Bidding on Iraq’s Oil Fields Ends as a Success,” Musings on Iraq, December 14, 2009, http://musingsoniraq.blogspot.com/2009/12/2nd-round-of-bidding-on-iraqs-oil.html.
 “BP and CNPC to Develop Iraq’s Super-Giant Rumaila Field,” BP and CNPC Press Release, November 3, 2009, http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7057650.
 Joel Wing, “Iraq’s Oil Industry Hits a Plateau,” Musings on Iraq, April 2, 2010, http://musingsoniraq.blogspot.com/2010/04/iraqs-oil-industry-hits-plateau.html.
 “Iraqi Oil Exports Highest Level Since 2003,” Reuters, February 2, 2011, http://www.alarabiya.net/articles/2011/02/02/136029.html. Export levels reached around 2.163 million barrels a day in January 2011. Prior to the invasion, Iraq was producing around 2.6 million barrels of oil per day, of which 500,000 barrels were used for domestic consumption, while the remainder was exported. See also Rick Jervis, “Pessimism Surrounds Falling Oil Production in Iraq,” USA Today, November 10, 2005, http://www.usatoday.com/money/industries/energy/2005-10-10-iraq-oil-usat_x.htm.
 Pipes, “The Bush Administration.”
 “Iraq: $17 B Gas Deal to Boost Power Grid,” UPI, November 16, 2011, http://www.upi.com/Business_News/Energy-Resources/2011/11/16/Iraq-17B-gas-deal-to-boost-power-grid/UPI-55361321463233/.
 Simon Bowers, “Shell Signs £11 Billion Deal to Fuel Iraq’s Power Stations with Gas,” The Guardian, November 27, 2011, http://www.guardian.co.uk/business/2011/nov/27/shell-fuel-iraqi-power-stations.
 Dr. Nimrod Raphaeli, “Corruption in Iraq: A Case Study of Massive Fraud in the Power Sector,” Middle East Media Research Institute (MEMRI), August 12, 2011, http://www.memri.org/report/en/0/0/0/0/0/854/5564.htm.
 Ben Lando and Alaa Majeed, “Gas Deal No Monopoly, Shell and Iraq Say,’ UPI, November 6, 2008, http://www.upi.com/Business_News/Energy-Resources/2008/11/06/Gas-deal-no-monopoly-Shell-and-Iraq-say/UPI-81171225988211/.
 Joel Wing, “Shell Natural Gas Deal Held Up by Iraqi Politics,” Musings on Iraq, September 11, 2009, http://musingsoniraq.blogspot.com/2009/09/shell-natural-gas-deal-held-up-by-iraqi.html.
 Walid Khadduri, “Oil in a Week: Iraqi Oil 2008-9,” al-Hayat, January 12, 2009, http://admin.iraqupdates.net/scr/preview.php?article=43156.
 Tamsin Carlisle, “Iraq’s Kurdish Region Aims to Resume Oil Exports,” The National, April 12, 2010, http://www.thenational.ae/business/iraqs-kurdish-region-aims-to-resume-oil-exports.
 Hassan Hafidh, “Shell-Iraq Natural Gas Venture Delayed by Legal Issues–Official,” Dow Jones Newswires, February 14, 2011, http://www.rigzone.com/news/article.asp?a_id=104108.
 Nayla Razouk, “Shell, Mitsubishi Win Government Approval for $17 Billion Iraq Gas Project,” Bloomberg, November 15, 2011, http://www.bloomberg.com/news/2011-11-15/iraq-approves-17-billion-contract-for-gas-capture-with-shell-mitsubishi.html.
 Sinan Salaheddin, “Iraq Signs Deal with Shell and Mitsubishi to Tap Natural Gas,” Associated Press, November 27, 2011, http://www.huffingtonpost.com/2011/11/27/iraq-shell-natural-gas_n_1114991.html.
 Rania El-Gamal, “Iraq Oil Hub Basra Wants Bigger Say, More Autonomy,” Reuters, December 5, 2011, http://www.reuters.com/article/2011/12/05/iraq-basra-autonomy-idUSL5E7N51YM20111205.
 Joel Wing, “Proposition to Form Basra Federal Region,” Musings on Iraq, November 18, 2008, http://musingsoniraq.blogspot.com/2008/11/proposition-to-form-basra-federal_18.html.
 Raysan al-Fahad, “Iraq’s Basra Says Government Blocking Share of Oil Sales,” al-Zaman, November 2, 2011, http://www.azzaman.com/english/print.asp?fname=news%5C2011-12-02%5Ckurd.htm.
 Joel Wing, “Baghdad and Basra Arguing over New Shell-Mitsubishi Natural Gas Deal,” Musings on Iraq, December 8, 2011, http://musingsoniraq.blogspot.com/2011/12/baghdad-and-basra-arguing-over-new.html.
 “Shell-led Iraq Gas Project Signs ABB Generator Deal,” Reuters, March 8, 2012, http://uk.reuters.com/article/2012/03/08/iraq-gas-idUKL5E8E87H120120308.
 Joel Wing, “Iraq Finally Inks Natural Gas Deal with South Korean Company,” Musings on Iraq, October 18, 2011, http://musingsoniraq.blogspot.com/2011/10/iraq-finally-inks-natural-gas-deal-with.html.
 “Officials, Citizens for Anbar as Autonomous Region to End ‘Marginalization,’” February 29, 2012, Aswat al-Iraq, http://en.aswataliraq.info/%28S%28bh4fir45mblpm1rri53o5y45%29%29/Default.aspx?page=article_page&c=slideshow&id=147195.
 This contrasts with the Augustan policy of developing the provinces and moving toward urbanization. Note especially the following comment by Tacitus, who was hardly a fan of the Principate under the Julio-Claudian dynasty: “Neque provinciae illum rerum statum abnuebant, suspecto senatus populique imperio ob certamina potentium et avaritiam magistratuum, invalido legum auxilio, quae vi, ambitu, postremo pecunia turbabantur” (“and the provinces were not refusing that state of affairs [i.e. under Augustus], having suspected the power of the Senate and people of Rome because of the struggles of powerful men and the greed of magistrates, along with the invalid aid of the laws, which were corrupted by violence, electoral canvassing, and bribes” – Annals I.2).
 Aymenn Jawad Al-Tamimi and Oskar Svadkovsky, “Demography Is Destiny in Syria,” The American Spectator, February 6, 2012, http://spectator.org/archives/2012/02/06/demography-is-destiny-in-syria.
 For more on this, see Aymenn Jawad Al-Tamimi, “Assessing the Surge in Iraq,” Middle East Review of International Affairs (MERIA) Journal, Vol. 15, No. 4 (December 2011), http://www.gloria-center.org/2011/12/assessing-the-surge-in-iraq/.
 “The Oil and Gas Year: Kurdistan Region of Iraq 2011,” TOGY Books, http://shop.wildcatpublishing.com/togy-books/the-oil-gas-year-kurdistan-region-of-iraq-2011.html.
 Joel Wing, “Kurds Continue with Their Oil Smuggling to Iran,” Musings on Iraq, July 24, 2010, http://musingsoniraq.blogspot.com/2010/07/kurds-continue-with-their-oil-smuggling.html.
 Aymenn Jawad Al-Tamimi, “Spring Comes, But Not for Iraq’s Kurds,’ The Daily Star (Beirut), August 12, 2011, http://www.dailystar.com.lb/Opinion/Commentary/2011/Aug-12/Spring-comes-but-not-for-Iraqs-Kurds.ashx.
 Reidar Visser, “Exxon Moving into Seriously Disputed Territory: The Case of Bashiqa,” Iraq and Gulf Analysis, November 17, 2011, http://gulfanalysis.wordpress.com/2011/11/17/exxon-moving-into-seriously-disputed-territory-the-case-of-bashiqa/.
 Christopher Helman, “The World’s Biggest Oil Reserves,” Forbes, January 21, 2010, http://www.forbes.com/2010/01/21/biggest-oil-fields-business-energy-oil-fields.html?boxes=businesschannelsections.
 Joel Wing, “What’s Next for Exxon’s Oil Deal with Iraq’s Kurds?” Musings on Iraq, February 2, 2012, http://musingsoniraq.blogspot.com/2012/02/whats-next-for-exxons-oil-deal-with.html.
 Visser, “Exxon Moving into Seriously Disputed Territory.”
 Pierre Bertrand, “ExxonMobil and Iraq Agree on Oil Development Payment,” International Business Times, March 12, 2012, http://www.ibtimes.com/articles/312756/20120312/exxonmobil-shell-iraq-oil-development-payment.htm.
 Benoit Faucon, ‘Total in Talks to Enter Iraqi Kurdistan,” Market Watch (The Wall Street Journal), March 13, 2012, http://www.marketwatch.com/story/total-in-talks-to-enter-iraqi-kurdistan-2012-03-13.
 Ahmed Rasheed, “UPDATE 2- Exxon dropped from Iraq bidders over Kurdish deal,” Reuters, April 19, 2012, http://www.reuters.com/article/2012/04/19/iraq-auction-exxon-idUSL6E8FJ3VB20120419.
 Ahmed Rasheed and Peg Mackey, “WRAPUP 1- Iraq asks Obama to halt Exxon’s Kurdish deal,” Reuters, June 19, 2012, http://uk.reuters.com/article/2012/06/19/iraq-oil-kurds-idUKL5E8HJGGP20120619.
 Aymenn Jawad Al-Tamimi, “Iraqi Petroleum and the Damage Done,” The Daily Star (Beirut), November 21, 2011, http://www.dailystar.com.lb/Opinion/Commentary/2011/Nov-21/154675-iraqi-petroleum-and-the-damage-done.ashx#axzz1p0YCGz2t.
 Rasheed and Mackey, “WRAPUP 1.”
 Joel Wing, “Iraq’s Kurds’ Gambit on Pipelines to Turkey May Not Pan Out,” Musings on Iraq, May 29 2012, http://www.aknews.com/en/aknews/8/309721/?AKmobile=true.
 The confusion is as follows: The talk of independent pipelines has been conflated with the deal signed in May 2012 between Turkey and the KRG, which must have been approved by the Oil Ministry in Baghdad, to build a connection route between KRG oil fields and the Kirkuk-Ceyhan route that is already in existence and under control by the Oil Ministry. At present, the KRG must deliver its oil to this pipeline by truck: It is the talk of independent pipelines to export oil and gas to Turkey that is angering Baghdad. Many thanks to Joel Wing for the clarification.
 Denise Natali, “Baghdad and Erbil Clash over Oil,” al-Monitor, June 5, 2012, http://www.al-monitor.com/pulse/originals/2012/al-monitor/iraqs-energy-imbroglio.html.
 Henri Barkey, “Turkey-Iraq Relations Deteriorate with Accusations of Sectarianism,” al-Monitor, May 1, 2012, http://www.al-monitor.com/pulse/originals/2012/al-monitor/turkey-iraq-ties-sour-brover-syr.html.
 “First Tanker Leaves New Iraq Export Terminal,” Reuters, March 13, 2012, http://www.reuters.com/article/2012/03/13/idUSL5E8ED88Q20120313.
 Andrew Kramer and Julia Werdigier, “Exxon Spars with Iraq over Lack of Payment,” New York Times, December 22, 2011, http://www.nytimes.com/2011/12/23/business/energy-environment/exxon-mobil-and-iraq-clash-over-payment.html?pagewanted=all.
 Ibrahim Sami Nashawi, Adel Malallah, and Mohammed Al-Bisharah, “Forecasting World Crude Oil Production Using Multicyclic Hubbert Model,” American Chemical Society, February 4, 2010, http://pubs.acs.org/stoken/presspac/presspac/full/10.1021/ef901240p.
 Yara Bayoumy and Ahmed Rasheed, “Iraq Capable of Doubling Oil Output by 2015- IEA,” Reuters, February 29, 2012, http://www.guardian.co.uk/business/feedarticle/10119679.
 Joel Wing, “How Iraq’s Oil Plans May Set Back the Country’s Economy,” Musings on Iraq, November 28, 2011, http://musingsoniraq.blogspot.com/2011/11/how-iraqs-oil-plans-may-set-back.html.
 Contrary to popular perception, Saudi Arabia ranks fairly well in indexes on corruption, coming 50th out of 178 countries on Transparency International’s Corruption Perceptions Index in 2010, and outperforming several EU states like Romania, the Czech Republic, and Italy. See http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results.
 See, for example, Joel Wing, “Shell-Mitsubishi Natural Gas Deal Takes Another Step Forward After Three Years of Delays,” Musings on Iraq, November 22, 2011, http://musingsoniraq.blogspot.com/2011/11/shell-mitsubishi-natural-gas-deal-takes.html.
 See, for example, Ernesto Londoño, “In Iraq, Growing Gap Sets Kurdistan Apart,” Washington Post, March 10, 2012, http://www.washingtonpost.com/world/middle_east/in-iraq-growing-gap-sets-kurdistan-apart/2012/03/05/gIQAcT5t2R_story.html.
 Joel Wing, “How Iraq’s Oil Plans May Set Back the Country’s Economy.”
Filed Under: Iraq, MERIA Journal Volume 16, Number 02 (June 2012), Middle East Politics , Regional
The Global Research in International Affairs (GLORIA) Center
Interdisciplinary Center (IDC) Herzliya, P.O. Box 167, Herzliya, 46150, Israel
email@example.com - Phone: +972-9-960-2736
© 2011 All rights reserved | Terms and Use | Design By: Gregg Roman | Developed By: Gregg Roman
Warns Total over KRG Oil Deal
By John Lee
Total HQ, Paris
Iraqi authorities have warned France’s Total that it must freeze its energy deal with Iraqi Kurdistan or sell its stake in the Halfaya oilfield, reports Reuters.
Faisal Abdullah, a spokesman for Deputy Prime Minister for Energy Hussain al-Shahristani, said: “Iraq has officially asked Total to freeze or cancel its contract with the Kurdish region and respect Iraqi law or sell its stake in Halfaya oilfield … We have made it clear to Total they have only two choices. There is no third option.“ He did not specify any deadline for Total to comply with Baghdad’s request. According to a report from Bloomberg, Total declined to comment.
The Halfaya oil field has reserves of 4.95 billion barrels. PetroChina, a subsidiary of China National Petroleum Corp (CNPC), China’s largest energy producer, holds 37.5% of the Halfaya consortium, while Total and Petronas each hold a 18.75% stake in the consortium, with Iraq’s state partner holding the remaining 25%.
(Sources: Reuters, Bloomberg)
Ölförderung im kurdischen Teilstaat
Der Irak als erstarkende Erdölnation
Der Irak und seine Erdölproduktion haben unter Kriegen und Sanktionen gelitten. Seit einiger Zeit geht es aber wieder bergauf. Bagdad steht jedoch im Konflikt mit internationalen Konzernen, die mit dem kurdischen Teilstaat im Nordirak zusammenarbeiten.Die Arbeiten auf irakischen Erdölfeldern, wie hier südöstlich von Bagdad, laufen zurzeit auf Volltouren.Bild: Nabil al-Jourani / ap
Der Irak fördert so viel Erdöl wie seit 20 Jahren nicht mehr. Der irakische stellvertretende Ministerpräsident Hussein Shahristani sprach von einer täglichen Produktion von 3,2 Mio. Fass, was die zweitgrösste Fördermenge innerhalb der Organisation erdölexportierender Länder (Opec) bedeutet. Im Opec-Bericht für August geht das Kartell von einer etwas geringeren Menge aus, ebenso sprechen andere Beobachter wie die Internationale Energieagentur oder der Informationsanbieter Platts von knapp niedrigeren Werten. Aber auch nach diesen Zahlen hat der Irak im Juli Iran, Kuwait und die Vereinigten Arabischen Emirate überholt. Saudiarabien ist weiterhin führend. Die Entwicklung zeigt nicht nur die Stärke des Iraks, sondern auch den Umstand, dass die von den Vereinigten Staaten und der EU verhängten Sanktionen gegen Iran Wirkung zeigen. Damit stärkt der Irak auch seine Position innerhalb der Opec.
Kriege und Sanktionen
Nach vorläufigen Zahlen der Internationalen Energieagentur soll im Juli der Export iranischen Rohöls gegenüber dem Vormonat um rund 740 000 Fass Erdöl auf 1 Mio. Fass pro Tag zurückgegangen sein. Offizielle Importstatistiken belegen, dass im Juni, vor den Sanktionen, einige asiatische Staaten wie China, Japan, Südkorea oder Indien die Einfuhren aus Iran noch erhöht hatten. Diese Staaten hatten aber eine Art Ausnahmeregel von Washington erhalten, sofern sie die Importe von Rohöl aus Iran im Zuge der Sanktionen «signifikant» gesenkt hatten. Der Handel wird aber auch indirekt erschwert, weil beispielsweise EU-Gesellschaften nicht mehr Tanker mit iranischem Erdöl versichern dürfen. Es heisst, dass Iran nun selbst Versicherungsleistungen anbieten könnte.
Wenn die erwiesenen Reserven als Massstab herangezogen werden, liegt Iran mit rund 155 Mrd. Fass immer noch vor dem Irak mit 141 Mrd. Fass an Reserven. Damit befindet sich der Irak laut der Branchenstatistik von BP weltweit auf Platz 5. Der Aufstieg der irakischen Förderung und der Niedergang der iranischen Produktion zeigen die Kräfte der Geopolitik auf: In den 1980er Jahren forderte die iranische Delegation bei der Opec, dass die Förderquote, die das Kartell für jedes Land festlegt, für Iran doppelt so gross sein soll wie diejenige für den Irak. 1988 wurde mit dem Ende des Iran-Irak-Krieges einer paritätischen Quote zugestimmt. 1990 marschierten irakische Truppen in Kuwait ein. Unter den darauffolgenden Sanktionen der Uno exportierte der Irak kein Erdöl mehr, bis im Jahr 1997 das Uno-Programm Öl für Lebensmittel-eingeführt wurde. Die Produktionskapazitäten blieben eingeschränkt. Der Einmarsch der USA und einiger Verbündeter in den Irak führte dann zum dritten Golfkrieg, von dem sich das arabische Land noch erholen muss. 2009 lud Bagdad internationale Konzerne ein, für Lizenzen zu bieten. Seither steigen die Fördermengen wieder.
Das Verhältnis zwischen der irakischen Regierung und den Erdölkonzernen ist jedoch getrübt. So ist den Gesellschaften die Art der Verträge ein Dorn im Auge. Der Irak vergibt Dienstleistungsverträge an die Konzerne mit einer fixen Vergütung je Fass. Diese ist den Gesellschaften zu niedrig. Ausserdem verlaufen auch die Auktionen schleppend: Im Mai dieses Jahres konnten nur 4 von insgesamt 12 Blöcken in Gebieten vergeben werden, die noch erkundet werden müssen. Es kamen ausschliesslich russische und asiatische Gesellschaften zum Zug. Ausländische Konzerne, die Verträge mit der Regierung des kurdischen Teilstaates im Nordirak geschlossen hatten, waren zudem von den Auktionen ausgeschlossen. In den vergangenen Jahren hatte die kurdische Regionalregierung mit mehreren Erdölfirmen Verträge vereinbart, die attraktiver als diejenigen der Zentralregierung waren.
Bagdad erachtet diese Abkommen als illegal. Das Problem dabei ist die Verteilung der Erlöse aus der Förderung. Der stellvertretende Ministerpräsident Shahristani bekräftigte die Absicht der Regierung, Geschäftsbeziehungen mit Unternehmen aufzukündigen, die irakische Gesetze verletzten. Davon sind vor allem der amerikanische Konzern Exxon-Mobil, das französische Unternehmen Total und der russische Produzent Gazpromneft betroffen. Diese Konzerne sind auch an Projekten ausserhalb des irakischen Kurdistan beteiligt, womit sie verletzbar sind.
Exxon-Mobil hatte im vergangenen Jahr die Bemühungen der internationalen Konzerne, mit der kurdischen Regionalregierung ins Geschäft zu kommen, angeführt. Total, Gazpromneft und Chevron sind jüngst gefolgt. Exxon-Mobil war dabei von den Mai-Auktionen ausgeschlossen gewesen. Der amerikanische Konzern Chevron, der über keine Projekte im Südirak verfügt, wurde für zukünftige Erdölgeschäfte auf die schwarze Liste gesetzt. Und Total hat die Regierung laut Agenturmeldungen dazu aufgefordert, entweder den Vertrag mit der kurdischen Regionalregierung aufzulösen oder den Anteil am Halfaya-Erdölfeld zu verkaufen. Die Erdölunternehmen gehen aber von einem Bluff der Zentralregierung aus. Trotz diesen Problemen schreitet der Ausbau der irakischen Erdölindustrie voran, auch wenn das Ziel der Regierung von einer Tagesproduktion von 13 Mio. Fass als sehr ambitioniert gilt.
The magnitude of Kurdish oil trumps diplomatic
Oil majors back Kurdistan
by Lawrence Solomon
Iraq’s Kurdistan region in the country’s north may not be recognized as an independent state by the United Nations, let alone by Iraq’s central government, but Kurdistan has all the recognition it needs from those who count — the U.S.’s ExxonMobil, France’s Total, Russia’s Gazprom, European trading houses Trafigura and Vitol, and other players in the world’s energy markets.
Last year, ExxonMobil signed an independent exploration deal with Kurdistan despite threats from a livid Iraq, which threatened to bar ExxonMobil from Iraq if it did. Chevron and others, also ignoring Iraq’s threats, soon joined ExxonMobil. This week, Kurdistan sent its first independent oil exports into international markets, in a deal with Gemel, a British-Turkish company headed by former BP chief Tony Hayward, and backed by international financiers Nathaniel Rothschild and Paulson & Co.
Iraq’s threats against these companies, and its demands that its sovereignty over Kurdistan be recognized, have come to naught because the magnitude of Iraqi Kurdistan’s oil and gas trumps diplomatic niceties. While Iraq’s massive but underperforming energy resources in the south of Iraq languish due to government infighting and bureaucratic neglect, Kurdistan in the north has become one of the world’s hottest and most profitable regions for energy exploration, its largely untapped potential already boasting an estimated 45 billion barrels of oil, and six trillion cubic metres of natural gas.
Kurdistan’s clout relative to that of the rest of Iraq may well increase,
too, should the pro-Western Kurds declare independence and formally break
away from Iraq in a civil war. South of the current borders of Kurdistan
lie oil-rich lands, including the major Kurdish cities of Mosul and Kirkuk,
its traditional capital, from which Kurds had been expelled by Saddam Hussein
in order to Arabize the region.
If the Kurds succeed in establishing sovereignty over all their historic lands within Iraq, a much diminished Iraq would lose its recently regained status as OPEC’s No. 2 oil exporter while Kurdistan would emerge as one of the Middle East’s largest energy exporters. The oil majors’ willingness to rebuff Iraq in their play for Kurdish oil is, as much as anything, a bet that Iraq will not be able to regain control over Kurdistan.
It’s a good bet, largely because of the way the Iraq war has played out. With the U.S. Army having unexpectedly pulled out of Iraq without securing an ongoing military presence through a Status of Forces agreement, the country and its oil wealth is increasingly falling under Iranian control, to the West’s chagrin. The West would back Kurdistan’s survival in the event of war — a pro-Western Kurdish state would deny Iran energy resources that would help it finance mischief. Moreover, a Kurdistan would create a potent ally of the West in the Middle East, blunting the Muslim Brotherhood’s advance throughout the region and joining Israel as the West’s only reliable partner.
While an Iran-backed Iraq might seem a formidable foe in a war against a breakaway Kurdistan, it would likely not succeed. For one thing, the Kurds are fierce fighters and have been throughout their 2,500-year-history — it was a great Muslim Kurd, Saladin, who defeated the Crusaders to retake Jerusalem. For another, the dream of a country of their own — as promised to them after the Ottoman Empire collapsed in the First World War — is a national imperative. With arms from the U.S. and Israel, which have helped Kurdish resistance for decades, Kurds are likely to be more than a match against strife-torn Iraqi opposition.
The oil industry knows how to play geopolitics.
Lawrence Solomon is executive
director of Energy Probe. LawrenceSolomon@nextcity.com