Iraq Oil Report

There was lots of chatter about any movement of the oil law at the opening reception of the second Iraq oil conference this week here in Dubai. Nothing has changed since my story from Tuesday.

Today’s Iraq Oil Report includes updates on various aspects of Iraq’s oil and energy sector, and plenty of context to the issue. Oil and politics are not mutually exclusive topics in Iraq, where one compromise can lead to the next, and one fight may be retaliation to the last, so it’s important to keep an eye on issues that don’t necessarily have the word oil in it. How are the current and wannabe political leaders interacting? What’s the status of human rights in Iraq, quality of life for citizens and the growing refugee crisis?

So, keep reading the Iraq Oil Report, and pass it along. The Iraq Oil Report is the source for all things Iraq energy, as well as providing the background on the political and security situation to keep you informed.

Iraqi Kurds unveil translation of oil law, controversial PSA contracts

The Kurdistan Regional Government has published its regional oil law in English and Arabic (it was approved in Kurdish on Aug. 6) as well as its model of a production sharing agreement. The PSA is a controversial contract, but one the KRG feels is the best for its development. The entire law is controversial since the federal government still hasn’t moved on its law.

Iraq Wants Wide Range Of Foreign Firms To Develop Oil Sector

After the US-led invasion of Iraq in 2003, many observers assumed that American firms would automatically win most future oil development contracts. But former Iraqi oil minister and leading candidate to head the reconstituted Iraq National Oil Company Thamir Ghadhban, interviewed in the latest issue of Middle East Economic Survey (MEES), says the aim will be for diversity.

When the day comes for invitations to be sent out to foreign oil firms to compete for contracts in Iraq, the companies concerned will be required to form consortia before bidding. This, Mr Ghadhban told MEES, is because “we believe in the benefits of diversification and we want the maximum number of international oil companies to work in Iraq to help in providing technical expertise and managerial skills and financial capabilities, but also to help in enhancing the strategic balance of Iraq.”

The likelihood is that the Iraq National Oil Company (INOC), which is scheduled to be re-established soon, will also be a partner in many of the consortia of foreign firms.
Under the terms of the draft oil law, which awaits approval by the Iraqi parliament, INOC’s mandate will differ from that of most other state oil companies.

Most importantly, Mr Ghadhban says “it will not have a monopoly on the Iraqi land in terms of exploration. INOC has the right to compete and in this way we will be assured that there is competency for INOC to compete with international oil companies in exploration. It is a unique model.”

Another important change in the way Iraq’s oil sector will be managed, as envisaged in the draft law, concerns the role of the oil ministry. Under Saddam Hussain’s rule, the ministry’s authority was paramount.

But in the new Iraq, while the oil ministry will have regulatory powers and negotiate with foreign consortia, final decisions will be taken by a new body, the Federal Oil and Gas Council (FOGC). This will be chaired by the prime minister and be composed of a number of cabinet ministers, oil executives, and economists, plus three independent experts.
The introduction of all these proposed changes awaits parliament’s ratification of the draft oil law. Mr Ghadhban and other senior officials told MEES that the signs were now looking more hopeful than they had done in the past.

“What I have been hearing and [after] counting numbers, I think the law has a good chance of being passed,” Mr Ghadhban said. “But I don’t want to give forecasts – I think it is better to leave it to parliament to handle as it likes and as it deems right.”

Former oil minister and government advisor Ibrahim Bahr al-’Ulum said he was “optimistic, but don’t ask me about the timing. The majority of MPs are ready to approve it, but there will probably be some slight changes.”

Even as the law awaits approval, Iraqi oil officials have been carrying out preparatory work on identifying oil fields and gathering data ahead of a licensing round that will be announced once the legislation is in place.

Asked how long it would take to launch a licensing round and make awards to successful consortia, Mr Ghadhban replied: “Let us say within a year. If you take other countries’ experiences of bid rounds, they usually take some time.”

As for security concerns among foreign oil firms contemplating entry into Iraq, Mr Ghadhban said “there are areas that are relatively secure. Kurdistan is safe, and areas like Basra, Amara and Nasseriya are fairly safe now.”

An oil boom in Iraq, so confidently predicted by many experts before and immediately after the 2003 invasion, may still be far off. But senior Iraqi oil officials are now striking a more positive tone than at any time since the breakdown of law and order in the country.

TTPCO, a joint venture of Canada’s Appex Petroleum and Turkey’s Genel Enerji (!!) has has success, again, in the fourth of six wells drilled in the Iraqi Kurdistan’s Taq Taq field.

While Baghdad has yet to set a national oil policy, the Kurdistan Regional Government sees continued progress in the handful of contracts, albeit controversial, it has signed with private oil firms.

Two very broad looks this week at the oil and oil law situation in Iraq in Time Magazine and Washington Post.

The BBC reports on a shorfall in the Iraq Development Fund, pinning the blame on corruption and a non-transparent oil regime.

The Kuwait News Agency, KUNA, reports President Talabani, a Kurd, is against the execution of Iraq’s former defense as well as “Chemical Ali,” who was found guilty of using organizing the gassing of Iraqi Kurds in 1988. The two are in U.S. custody and, despite Saudi reports they will be hanged Friday, in order to kill the two before the Holy Ramadan begins next week, the U.S. says they have not been moved yet. Talabani, as president, must sign death sentence orders. He didn’t sign Saddam Hussein’s, but the execution was carried out anyway, to much fanfare and criticism. Talabani represents the Patriotic Union of Kurdistan party, which in its economic policies is hoping Iraq moves toward the free market. But Talabani is a socialist at heart, and attended the Socialist International conference held in June in Geneva. Yet the biggest proponents of moving Iraq’s oil sector into the free market is the Kurdistan Regional Government (see my stories for UPI: Iraqi Kurd leader urges oil to free market and Iraq Kurd leader on oil law) Iraq’s oil sector has been nationalized since the 1970s and many Iraqis, especially the powerful oil union, point to that move as the only good thing Saddam Hussein did as leader. So, does Pres. Talabani side with the socialists or capitalists on the oil law?

For an interesting look at arguably the most powerful person in Iraq, check out Jon Lee Anderson’s Profile in the New Yorker.

Iraqi president oppose execution of ex-defense minister.

Iraqi women face harsher life during war, now gov’t makes it harder to organize

Iraq Oil Report is republishing a letter from the President of the Organization of Women’s Freedom in Iraq

Dear Friends and Supporters,

OWFI has spoken in a recent report over the CNN about the masses of Iraqi women who are part of human trafficking currently inside and outside Iraq. The report shows OWFI executives challenging the officials who choose to look the other way.

OWFI has also challenged the rapists of 7 Iraqi female prisoners who are still free and work in the Iraqi Ministry of Interior.

OWFI has initiated a secular youth movement based on Poetry, Music and Art under the name of “Freedom Space”. Hundreds of youth from the so called “Sadre City” are enthusiastic members and some are leaders of this rapidly growing movement.

OWFI is still sheltering women who are threatened by honor killing or retaliation from militia members / after these militias kill the males of the family.

As a result, the Iraqi government decided on September 4th to freeze the funds of OWFI in the Iraqi banks so as to paralyze our movement and make our work impossible.

Dear Friends and supporters do not let the intimidation of the Iraqi officials stop you from supporting one of the few freedom initiatives inside Iraq.

We are writing you this letter so that you do not send us any funds or donations into our official bank account in Iraq as the government has put its hand on it.

As for our activities, do not worry. We will still voice the pains of Iraqi women and keep on creating bigger “freedom spaces”, especially that we run mostly on volunteer will-power.

The farce of “Democracy” in Iraq will not sway our determination to a free, secular and egalitarian life for all in Iraq.

Freedom and equality for all

Yanar Mohammed, President

Politics and Security

Be sure to check out Hiba Dawood’s daily report for UPI of what the Iraq media is saying, the Iraq Press Roundup. Today’s is somewhat slimmer than usual, but still a necessary read.

Juan Cole writes on the Bush vs. Bremer battle over who said he could/should fire the Iraq Army; Diyala Province moving from U.S. to Iraqi security control; and more.

Basra security chief dodges bombing.

The Independent Commission on the Security Forces of Iraq’s Report published by the Center for Strategic and International Studies.

The International Organization for Migration says internally displaced Iraqis — and estimated 2.2 million – are being restricted from moving to most of Iraqs provinces.

Meanwhile Syria denies the charge that it is restricting Iraqis from finding refuge there. Syria has the largest of growing 2+ million externally displaced Iraqis.