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Iraqis must back nation's development - Opinion piece
There is no other option but to stay the course and learn from firms like BP that are willing to invest
August 23, 2011
Iraqi Prime Minister Nouri Al Maliki
*****The Iraqi government has been trying its very best to honour its agreements with different foreign companies to kickstart the new development and rebuilding process in the country.***** Iraqi Prime Minister Nouri Al Maliki, who is truly revealing new traits in his political and manoeuvring abilities, knows that for his government and State of Law Coalition to stay on top of the people's preference charts, many infrastructure issues have to be fixed.
Electricity, water, jobs and dozens of other issues are on the list of Al Maliki's priorities. However, to achieve his government's goals, the country has to be rebuilt and big dollars have to start pouring in. Thus, oil concessions had to be devised in a transparent manner, and this is precisely what happened.
The highest bidders received oil contracts in the new concession rounds as did the highest bidders in the rounds before that.
Oil companies across the globe prefer Iraqi oil for several reasons: it is light, with very little residue, and it is easy to get out of the ground, the cost of production is minimal, and most British refineries have been built to accommodate Iraqi oil. These companies came to Iraq knowing that the country's infrastructure had started falling apart since the mid 1980s, during the Iraq-Iran war, and deteriorated further during the 13 years of UN sanctions. It collapsed with the 2003 US invasion and war. And the situation in the country worsened with internal strife, Al Qaida attacks, foreign security companies marking their territories with blood and, lastly, with insurgents from many groups and factions fighting everyone else.
In the last few weeks, a particular brand of irrationality has emerged, which is amazing even by Iraqi political standards.
A British journalist who is a pathological hater of the oil industry wrote an article in the UK's Guardian newspaper. The headline was to the effect that BP is allegedly getting an iron grip on the Iraqi economy.
There are many refuting this statement made by people in the UK and elsewhere who — as it seems — have a problem of sorts with the company. The contract with the Iraqi government indicates a few clauses that need to be applied in war zones and locations where insurgencies and unrest prevail, making the allegations completely absurd.
However, looking at the issue from a political-economic point of view is both easy and hard. It is easy if we agree and realise that Iraq has no valid infrastructure for producing anything after 13 years of UN sanctions — one of the harshest economic sanctions applied on any nation in history — while it is hard for us to imagine that an oil field half as big as the entire North Sea is going to be exploited by BP.
In layman terms, Iraq's oil concessions and production-sharing contracts (PSCs, also called production-sharing agreements, or PSAs) mean that oil companies come in and invest machinery, pipes, train Iraqis for the future, develop sites and take $2(Dh7.34) for every barrel pumped out from the oil field.
Biting the bullet
As we emerge from 28 years of continuous wars and confrontations and 36 years of a tyranny of monstrous dimensions, I truly do not believe we have any other option but to bite the bullet, stay the course and learn from BP and all the others who are willing to invest in our country and train our youth.
The British journalist also argued that because the BP contract stated that if the government prevented the company from producing oil, it would be compensated. And that this amounted to stifling Iraq's economy. This is, of course, illogical. If you have a contract, then both sides must honour it. If BP is producing, but the Iraqi government will not allow it to export, then BP should be compensated.
BP is producing 1.2 million barrels of oil a day, it only receives $2 for each barrel (but only when production is above 1.15 million barrels per day), the rest is going directly to the Iraqi government. And it must be noted that BP also pays tax to the Iraqi government on the $2 it receives for each barrel when production rises above 1.15 million barrels per day. In other words, this is an amazing deal for the Iraqi nation.
The company, as the Iraqi ministry of oil documents indicate, has achieved the production gains that were called for under the contract, two years early! Moreover, if BP is allowed to continue to develop this field properly, then it will be producing enough to make it the second largest oil field in the world by 2016. This will do wonders for Iraq.
However, this type of politics written about by foreign media that does not know anything about how things function and work in Iraq does great damage to Iraq's attempts to join the modern world and develop its economy.
It is a serious issue for the Iraqi economy and for its future. Those of us who care about this country need to stand up and support its economic and political development.
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There is no other option but to stay the course and learn from firms like BP that are willing to invest
August 23, 2011
Iraqi Prime Minister Nouri Al Maliki
*****The Iraqi government has been trying its very best to honour its agreements with different foreign companies to kickstart the new development and rebuilding process in the country.***** Iraqi Prime Minister Nouri Al Maliki, who is truly revealing new traits in his political and manoeuvring abilities, knows that for his government and State of Law Coalition to stay on top of the people's preference charts, many infrastructure issues have to be fixed.
Electricity, water, jobs and dozens of other issues are on the list of Al Maliki's priorities. However, to achieve his government's goals, the country has to be rebuilt and big dollars have to start pouring in. Thus, oil concessions had to be devised in a transparent manner, and this is precisely what happened.
The highest bidders received oil contracts in the new concession rounds as did the highest bidders in the rounds before that.
Oil companies across the globe prefer Iraqi oil for several reasons: it is light, with very little residue, and it is easy to get out of the ground, the cost of production is minimal, and most British refineries have been built to accommodate Iraqi oil. These companies came to Iraq knowing that the country's infrastructure had started falling apart since the mid 1980s, during the Iraq-Iran war, and deteriorated further during the 13 years of UN sanctions. It collapsed with the 2003 US invasion and war. And the situation in the country worsened with internal strife, Al Qaida attacks, foreign security companies marking their territories with blood and, lastly, with insurgents from many groups and factions fighting everyone else.
In the last few weeks, a particular brand of irrationality has emerged, which is amazing even by Iraqi political standards.
A British journalist who is a pathological hater of the oil industry wrote an article in the UK's Guardian newspaper. The headline was to the effect that BP is allegedly getting an iron grip on the Iraqi economy.
There are many refuting this statement made by people in the UK and elsewhere who — as it seems — have a problem of sorts with the company. The contract with the Iraqi government indicates a few clauses that need to be applied in war zones and locations where insurgencies and unrest prevail, making the allegations completely absurd.
However, looking at the issue from a political-economic point of view is both easy and hard. It is easy if we agree and realise that Iraq has no valid infrastructure for producing anything after 13 years of UN sanctions — one of the harshest economic sanctions applied on any nation in history — while it is hard for us to imagine that an oil field half as big as the entire North Sea is going to be exploited by BP.
In layman terms, Iraq's oil concessions and production-sharing contracts (PSCs, also called production-sharing agreements, or PSAs) mean that oil companies come in and invest machinery, pipes, train Iraqis for the future, develop sites and take $2(Dh7.34) for every barrel pumped out from the oil field.
Biting the bullet
As we emerge from 28 years of continuous wars and confrontations and 36 years of a tyranny of monstrous dimensions, I truly do not believe we have any other option but to bite the bullet, stay the course and learn from BP and all the others who are willing to invest in our country and train our youth.
The British journalist also argued that because the BP contract stated that if the government prevented the company from producing oil, it would be compensated. And that this amounted to stifling Iraq's economy. This is, of course, illogical. If you have a contract, then both sides must honour it. If BP is producing, but the Iraqi government will not allow it to export, then BP should be compensated.
BP is producing 1.2 million barrels of oil a day, it only receives $2 for each barrel (but only when production is above 1.15 million barrels per day), the rest is going directly to the Iraqi government. And it must be noted that BP also pays tax to the Iraqi government on the $2 it receives for each barrel when production rises above 1.15 million barrels per day. In other words, this is an amazing deal for the Iraqi nation.
The company, as the Iraqi ministry of oil documents indicate, has achieved the production gains that were called for under the contract, two years early! Moreover, if BP is allowed to continue to develop this field properly, then it will be producing enough to make it the second largest oil field in the world by 2016. This will do wonders for Iraq.
However, this type of politics written about by foreign media that does not know anything about how things function and work in Iraq does great damage to Iraq's attempts to join the modern world and develop its economy.
It is a serious issue for the Iraqi economy and for its future. Those of us who care about this country need to stand up and support its economic and political development.
[You must be registered and logged in to see this link.]
