…with the majors licking their chops at reentering since Iraq’s oil was nationalized in the 1970s.
Plus:
*Iraq and Europe to develop the gas sector
*Rumormill: $$ for Iraq oil law votes?
*Austria’s OMV joins SK Energy in having oil supply cut
*Tet and the Iraq offensive
Iraq’s Oil Ministry, in talks with oil majors to boost production in crucial fields, may give long-term deals to firms that offer technical support.
This comes as Baghdad is preparing a first round, though somewhat cloudy in details, of bidding and negotiated contracts to improve its struggling oil sector.
Oil Minister Hussain al-Shahristani told Argus Media on the sidelines of the OPEC meeting in Vienna that all deals would be fully transparent. Work would be carried out by Iraqi workers, he said. There are no legal controls, though, and without it and the re-establishment of the Iraqi National Oil Co. the country’s oil sector is moving away from being nationally controlled.
Officials from the world’s largest oil companies have been meeting with Iraqi Oil Ministry officials in Amman, Jordan, to fix the terms of technical support contracts. Such contracts, which are shorter-term deals, will “help Iraq fast track the purchase of necessary equipment and train the Iraqi people to install them,” Shahristani said.
He said those companies will be favored in a bidding round for longer-term contracts on the fields — some of Iraq’s largest producers — set for later this year, Argus reports. Another bidding round is expected to take place next year.
Iraq produced about 2.3 million barrels per day in December and intends to hit 2.8 million bpd in two years, a projection based on enhancing currently producing fields. Iraq’s oil sector, the third-largest in the world, manages despite years of misuse by Saddam Hussein, U.N. sanctions and the ongoing war. It needs tens of billions of dollars of investment and Iraq’s government chronically been unable to invest its own capital budget, lacking institutional capacity.
Read the entire story by Ben Lando for United Press International. Click HERE.
Iraq is moving closer to being a key non-Russian source of Europe’s gas as Shell leads oil firms in courting development of a key western gas field. Iraq and European Commission’s oil chiefs met in Brussels to discuss transporting the gas through the Arab Gas Pipeline through Syria and through Turkey in the fledgling Nabucco pipeline, UPI reports. Both Shell and Total have made overtures to develop the Akkas gas field, with 7 trillion cubic feet of gas reserves and capable of producing about 50 million cubic feet per day initially. It’s located in Anbar province and, even more than the rest of Iraq, it depends on security increasing.
Many other news organizations picked up on the importance of this. I’ve linked to them below. Stay tuned for a wide-ranging analysis next week looking at the importance of this and key issues you likely did not know about.
EU, Iraq seek closer energy ties — Agence France-Presse
EU’s Ferrero-Waldner, Piebalgs discuss enhanced energy links with Iraqi minister — Thomson Financial
EU, Iraq Pursue Closer Energy Ties — The Associated Press
Iraqi, EU Officials Discuss Energy Security — Voice of America
Royal Dutch Shell has submitted a plan to develop natural gas resources in Iraq and the government will respond to the idea soon, Iraq’s oil minister, Hussain al-Shahristani, said on Thursday, Reuters reports. This is also reported by Alsumaria TV. What remains to be seen is how Iraq’s government reacts in the face of wide overtures for deals, the need for investment, limited staffing in the ministries, and no oil law to guide it. The head of Shell says an oil law is necessary, Thomson Financial reports.
There is an as-yet unproven rumor in Middle East media that U.S. oil companies are offering $5 million a pop to Iraq Parliamentarians who vote for the draft and highly controversial oil law, the Tehran Times reports. The original story, at least the earliest I could find, was published in the respectable Gulf Daily News out of Bahrain. It only cites anonymous MPs, however. The oil law is contested on many fronts. Some want the central government to have control over oil policy and planning, others want it decentralized. Plus there’s the issue of allowing international oil companies into the oil sector, and on what terms.
Austria’s OMV joins South Korea’s SK Energy among the ranks of companies who signed deals with the Kurdistan Regional Government and now have their Iraq oil supplies cut, Reuters reports. Shahristani and, apparently Ali Jawad in his article for Azzaman, claim hero status for rebuking the Kurds in their oil dealings. Alissa J. Rubin writes for The New York Times that the Kurds’ power wanes as Arab anger rises.
Iraq progress in its oil sector is being predicted for next year, as high oil prices and recent success spark hope, Martin Fletcher and Robin Pagnamenta report for The Times of London. But increased Iraqi oil revenues stemming from high prices and improved security are piling up in the Federal Reserve Bank of New York rather than being spent on needed reconstruction projects, Sharon Behn reports for The Washington Times. For more details on the inability of the United States to assess Iraq’s ability to spend its capital budget, read Ben Lando’s report for UPI.
When President Bush signed the 2008 U.S. defense funding bill, he issued a signing statement saying, in part, he won’t abide by certain sections if it prevented him from carrying out his “constitutional obligations.” James Rothenberg writes in Energy Publisher that it includes a measure preventing U.S. control over Iraq’s oil. Cynics beware.
Society, Security & Politics
Violence in Iraq struck hard this week. U.S. troop deaths were higher last month than since September, ending a seven month drop. More than 60 were killed in two bombings Friday in Baghdad alone, while British troops pulled back into Basra’s airport faced rocketfire in the dozens.
Iraq’s Presidency Council is unlikely to sign off on a new law that would give thousands of former members of Saddam Hussein’s Baath party their old jobs back, Vice President Tareq al-Hashemi said on Thursday,
The Iraqi National Police Headquarters in Baghdad held a ceremony celebrating the completion of a project giving it continuous electricity, UPI reports.
The Iraq Press Roundup, a summary of Iraq’s editorial pages today, by UPI’s Hiba Dawood.
Tet’s Echo and Iraq, a comparison by Center for a New American Security CEO and co-Founder Kurt Campbell and Bacevich Fellow Shawn Brimley.”For a generation of Americans, the Tet Offensive is remembered as a defining moment in America’s involvement in Vietnam, a psychological turning point from which there was no return. Forty years after the Tet Offensive, the gunfire still echoes. General Petraeus can hear it –one hopes the White House can too.”
—-
