Top Energy Stories

Iraq has rejected ExxonMobil's effort to sell its stake in the West Qurna 1 oil field to two Chinese companies, raising a cloud of uncertainty and potential conflict over a project responsible for about one-tenth of the country's oil output. In a letter to Exxon dated May 13, which two Iraqi oil officials confirmed as authentic, the state-run Basra Oil Company (BOC) said, "We'd like to let you know that we don't agree with the terms you've agreed to with the two companies listed above," which the letter identifies as the China National Petroleum Corp. (CNPC) and the China National Offshore Oil Company (CNOOC). BOC appears to be rejecting the proposed deal without offering to match the terms. "If BOC wants to buy your contract share," the BOC letter says, "this should be considered under new terms and conditions." Exxon, for its part, seems unlikely to relinquish an asset for free when it has already lined up a qualified buyer willing to pay hundreds of millions of dollars. And given the company's history of aggressive legal action to defend the sanctity of its contracts around the world, the stage appears to be set for further conflict. Read the full story on Iraq Oil Report.

An obscure Saudi company named Delta Oil has emerged as a potential partner to develop the Akkas gas field along with U.S. oil services company Schlumberger, as the Iraqi Oil Ministry seeks to overcome a decade of delay to fast-track new domestic gas supply. Resuming work to develop Akkas, which contains an estimated 5.6 trillion cubic feet of gas, could have high-profile political and economic consequences. It is an opportunity for Iraq to build economic ties with Saudi Arabia; it is one of the few hydrocarbon assets in the heartland of Iraq's Sunni minority, which is thirsting for investment; and it fits the Oil Ministry’s strategy of developing dry gas fields and capturing more associated gas from southern oil fields to limit exposure to Iranian imports of gas and electricity. In a February interview with Iraq Oil Report, Oil Minister Ihsan Ismaael said negotiations were ongoing with Schlumberger and an unnamed Saudi entity. According to three industry officials familiar with the talks, that company is Delta Oil Company, a private, Jeddah-based minnow with a Caspian focus, no previous presence in Iraq, and very little to show in overseas oil and gas assets. For more on Delta Oil and on-the-ground reporting from Akkas, read the full story on Iraq Oil Report.

A unilateral decision by the Kurdistan Regional Government (KRG) to delay payments to oil companies could deal a blow to oil production growth and investment. "Nobody looks at the news from last week and decides they want to invest more into Kurdistan," said one executive. Another IOC executive estimated the KRG's decision to pare back payments would deter new capital spending to such a degree that Kurdistan would miss out on up to a cumulative 70,000 barrels per day (bpd) of new production that would have come online if the KRG had maintained regular payments according to a previous plan that was set in December 2020 but only followed for a few months. For more on the likely impact of the new payment uncertainty, read the full story on Iraq Oil Report.

Adnan Sammarai, who died on May 1 after contracting the coronavirus, will be remembered for his expertise as a geologist and oil man in both federal Iraq and Kurdistan, and also for the energy and acuity that kept him professionally active well into his ninth decade. "I looked up to him. I admired him," said James Hunt, Chevron's country manager for Kurdistan, who spent years in weekly meetings and social gatherings with Samarrai. "He was already 80 years old and had the sharpest mind you could ever see. I used to razz him about retiring. He said, 'I'll retire when I get old.'" Read more remembrances of Sammarai on Iraq Oil Report.

National News

Iran has changed its militia strategy in Iraq. Instead of trying to closely control large paramilitary groups operating under the Iraqi government's al-Hashid al-Shabi (Popular Mobilization) program, Iran is investing in smaller factions that are highly trained and answer directly to the Quds Force, according to a new investigation by John Davison and Ahmed Rasheed of Reuters. "The new factions are linked directly to the Iranian Revolutionary Guards Corps," an Iraqi security official told Reuters. "They take their orders from them, not from any Iraqi side." The Reuters investigation builds on and reinforces reporting by Michael Knights and Hamdi Malik of the Washington Institute, which hosts the recently launched Militia Spotlight Project. In an October 2020 study for CTC Sentinel, Knights notes that one of the most powerful Iran-backed paramilitary groups, Kataib Hezbollah, began forming lower-profile sub-groups in 2019 on the orders of Qassim Soleimani, then the commander of the Quds Force. Those smaller, elite factions became more important after the January 2020 assassination of Soleimani and the Iraqi paramilitary leader Abu Mahdi al-Mohandis, who turned out to be irreplaceable in their ability to exert control over the larger network of Iran-backed armed groups. Under Soleimani's successor, Esmail Ghaani, "they're trying to create groups with a few hundred men from here and there, meant to be loyal only to the Quds Force," one unnamed Iraqi government official told Reuters. "A new generation."

A Kurdish-Iranian asylum seeker set himself on fire in front of the UN building in Erbil on Tuesday afternoon. According to Anis Ari, reporting for Rudaw, Behzad Mahmoudi, 25, had reportedly been living in the Kurdistan region for four years and took action to protest against his dire living situation and joblessness. He is now in critical condition in hospital with burns on 91 percent of his body. He told Rudaw that he had asked UNHCR for help but was dismissed. Social media users expressed outrage that reporters filmed the man self-immolating without intervening. The KRG issued a statement expressing sorrow and criticizing the coverage. UNAMI said it was "shocked and saddened with the whole incident."

Eight Iraqis who worked as translators for the British Army face "almost certain death." They have called on Sefton Council in Merseyside, northern England to save them, according to Christopher McKeon, reporting for the Liverpool Echo. The former interpreters went into hiding last year along with their families after their details were leaked to Iran-backed militias who threatened to kill Iraqis who work with foreign armies. McKeon writes that they have asked the British government for asylum, but so far, nothing has been done. They decided to write to Sefton Council after learning that the Merseyside authority agreed in March to take 25 Afghan translators who faced similar threats.

Interview of the Week

Mohammed al-Halbusi, the speaker of Iraq's Parliament, is a self-professed night owl. "I, like any person — I seek some hours of alone time in my life, to watch television, to check my phone and see what's up," he told Sharqiya TV in an April interview. "I can't just finish my work and go straight to sleep. I always need an hour or two."

Halbusi acknowledged some some criticism he has received for scheduling Parliament sessions to begin in the afternoon rather than the morning. "Halbusi is never awake during the day," he hears people say. But he's not just avoiding early-morning sessions because of his need for late-night alone time. Rather, he says, Parliament has "suffered" in previous years from sessions scheduled too early in the day, because MPs need the morning hours to "follow up on citizens' issues at the ministries."

But he's also not in favor of bothering ministers too much. Some MPs have tried to bring ministers before Parliament for questioning too soon in their tenure, when they hardly have a track record to answer for. This is part of the reason Halbusi used his powers as speaker to delay the questioning of Finance Minister Ali Allawi. Another concern, he said, was that Iraq could not hope to get support from the international community and global financial institutions while not supporting its own finance minister.

So what is in Halbusi's future? He denies a popular rumor that he was promised a second term as Parliament speaker in exchange for his support in passing a 2021 budget. His interviewer also suggests Halbusi might become the president of Iraq, but Halbusi demurs. "It's too early to talk about that."

Argument and Analysis

Iraq desperately needs to grow its private sector — and it can. Mohammed Hussein, who is both a reporter for Iraq Oil Report and an economic expert and fellow with the Iraqi Economists Network, argues in a recent paper that reform-minded Iraqi leaders can take concrete steps now to lay the groundwork for stronger private sector development (PSD). "Given the political constraints and challenges that have hindered the PSD strategy... any reform or PSD programme should start with practical steps from where the interests of the ruling elite do not contradict development goals," he writes, highlighting tourism, agriculture, and light food as industries where there is quick growth potential. One way for policymakers to start taking advantage of that opportunity is simply to keep the government out of the way. For example, lawmakers could streamline legal obstacles that make it costly and time-consuming for businesses to get licenses to operate. "Although Investment Law Number 13 (2006) is supposed to facilitate a single-window system and provide the investor with a business license within two weeks, the reality is different," Hussein writes. "The law contradicts several other laws and the investor still needs a business license from investment offices of all relevant ministries." He also recommends that the Central Bank of Iraq make loans accessible to young start-ups by easing eligibility requirements. In the longer term, he concedes, Iraq can only achieve the kind of total overhaul envisioned in the government's White Paper if political power shifts toward committed reformers and away from an entrenched elite supported by militias and corrupt patronage networks. Until then, Iraq will likely suffer from "an unbalanced playing field" created by and for "corrupt business people to bypass competition, benefiting their links to the political parties and armed groups. As a result, they have kept the investment climate very unfriendly and the private sector too weak."

Free speech is under threat in Iraq. Writing for the Tahrir Institute for Middle East Policy, Ruba al-Hassani argues that Iraqi activists and protestors have been subjected to "vicious and persistent hate speech campaigns, both online and offline that aim to discredit them and the movement. Iran-affiliated militias and media outlets have been using the term ‘jokers’ as a label to delegitimize activists and protestors, falsely accusing them of being foreign agents hellbent on destruction.' Hassani points to internet blackouts used by the government of former Prime Minister Adil Abd al-Mahdi as a way of policing Iraqi voices. Between October 2019 and March 2021, 1,035 protesters were killed by security forces and paramilitary groups and 26,300 were injured, according to Hassani. Meanwhile, in the Kurdistan region, security forces killed at least six protesters and arrested 400 in December 2020. Forced disappearances continue with no consequences, including 7,663 in the last three years alone.

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