Flop to some Iraq oil sale may be victory to others
Reuters, Wednesday July 1 2009
By Suadad al-Salhy and Ahmed Rasheed
BAGHDAD, July 1 (Reuters) - To oil executives, Iraq's first auction of energy contracts since the U.S. invasion was a giant flop. To Iraqis, basking in a renewed sense of sovereignty and nationalism, it may turn out looking like a victory.
Iraq's embattled Oil Minister Hussain al-Shahristani did not look particularly pleased on Tuesday after Iraq secured just one deal to develop an oilfield out of the eight massive oil and gas fields it had put out to tender.
Despite the lure of the world's third biggest and largely underexplored oil reserves, energy firms balked at the cheap price Iraq was willing to pay them for helping it boost lacklustre oil production so that it can raise the billions it needs to recover from six years of war.
But by standing up to global oil majors and refusing to give up Iraq's prized oil wealth at any cost, Shahristani may end up bolstering his position, some Iraqi politicians say.
"Yes, we set tough contractual terms with foreign oil firms, but all that is to make it clear to all Iraqis we are keen to safeguard Iraqi oil revenues," Shahristani told reporters after bidding for the oil and gas fields had concluded.
The auction coincided with the pullout of U.S. troops from Iraqi cities under a bilateral security agreement, the first step toward a full U.S. withdrawal by the end of 2011. That has fuelled a sense of national pride as Iraqis start to believe they can throw off the shackles of a foreign occupation.
Having staked his ambitions for increasing Iraq's oil output on successfully attracting foreign expertise and capital into the country, the lack of deals at the auction has prompted questions about Shahristani's future as oil minister.
Only a BP-led group managed to secure a contract, for Iraq's biggest oilfield, Rumaila.
TACIT BACKING
Yet Shahristani's stance won the tacit backing of some of his colleagues on Wednesday when the cabinet also rejected the proposals from energy firms for developing the seven oil and gas fields that were not awarded.
"If the cabinet rejected these offers, that means, the rejection was for technical reasons not personal reasons," said Kamal al-Saadi, a lawmaker from Prime Minister Nuri al-Maliki's Dawa Party.
"I do not think that Shahristani will resign, because he knows that the prime minister was the person who invited him to encourage companies to invest in this country and develop the oil wealth."
Nabil Ismail, of the Supreme Islamic Iraqi Council, which while partnered with Dawa in government is also its main rival for Shi'ite votes, said the cabinet and the minister were right to reject deals that failed to meet Iraq's needs.
"Shahristani will not resign," said Ismail, a member of parliament's finance committee.
"What he did was to preserve public funds. Shahristani proved that his policy is serving the people, not the reverse."
Political analyst Mazin al-Shammari said Shahristani's trump card was that he appeared to have the prime minister's support. To challenge Shahristani would be to challenge Maliki, and few would contemplate doing that at this moment in time.
"Maliki's attendance (at the bidding) is a blessing for Shahristani. I think he succeeded in his job," Shammari said.
Yet politics in Iraq is volatile and allegiances can be fleeting. The minister also faces vocal critics.
The Oil Ministry and the Shi'ite Arab-led government as a whole are embroiled in a dispute with semi-autonomous Kurds over land, power and Iraq's monumental oil wealth.
"It was definitely a failure," said Ali Balou, the Kurdish head of parliament's oil and gas committee.
"We advised Shahristani to work with parliament to provide legal cover for these contracts. Shahristani turned his back on parliament and then the oil firms turned their backs on him."
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Reuters, Wednesday July 1 2009
By Suadad al-Salhy and Ahmed Rasheed
BAGHDAD, July 1 (Reuters) - To oil executives, Iraq's first auction of energy contracts since the U.S. invasion was a giant flop. To Iraqis, basking in a renewed sense of sovereignty and nationalism, it may turn out looking like a victory.
Iraq's embattled Oil Minister Hussain al-Shahristani did not look particularly pleased on Tuesday after Iraq secured just one deal to develop an oilfield out of the eight massive oil and gas fields it had put out to tender.
Despite the lure of the world's third biggest and largely underexplored oil reserves, energy firms balked at the cheap price Iraq was willing to pay them for helping it boost lacklustre oil production so that it can raise the billions it needs to recover from six years of war.
But by standing up to global oil majors and refusing to give up Iraq's prized oil wealth at any cost, Shahristani may end up bolstering his position, some Iraqi politicians say.
"Yes, we set tough contractual terms with foreign oil firms, but all that is to make it clear to all Iraqis we are keen to safeguard Iraqi oil revenues," Shahristani told reporters after bidding for the oil and gas fields had concluded.
The auction coincided with the pullout of U.S. troops from Iraqi cities under a bilateral security agreement, the first step toward a full U.S. withdrawal by the end of 2011. That has fuelled a sense of national pride as Iraqis start to believe they can throw off the shackles of a foreign occupation.
Having staked his ambitions for increasing Iraq's oil output on successfully attracting foreign expertise and capital into the country, the lack of deals at the auction has prompted questions about Shahristani's future as oil minister.
Only a BP-led group managed to secure a contract, for Iraq's biggest oilfield, Rumaila.
TACIT BACKING
Yet Shahristani's stance won the tacit backing of some of his colleagues on Wednesday when the cabinet also rejected the proposals from energy firms for developing the seven oil and gas fields that were not awarded.
"If the cabinet rejected these offers, that means, the rejection was for technical reasons not personal reasons," said Kamal al-Saadi, a lawmaker from Prime Minister Nuri al-Maliki's Dawa Party.
"I do not think that Shahristani will resign, because he knows that the prime minister was the person who invited him to encourage companies to invest in this country and develop the oil wealth."
Nabil Ismail, of the Supreme Islamic Iraqi Council, which while partnered with Dawa in government is also its main rival for Shi'ite votes, said the cabinet and the minister were right to reject deals that failed to meet Iraq's needs.
"Shahristani will not resign," said Ismail, a member of parliament's finance committee.
"What he did was to preserve public funds. Shahristani proved that his policy is serving the people, not the reverse."
Political analyst Mazin al-Shammari said Shahristani's trump card was that he appeared to have the prime minister's support. To challenge Shahristani would be to challenge Maliki, and few would contemplate doing that at this moment in time.
"Maliki's attendance (at the bidding) is a blessing for Shahristani. I think he succeeded in his job," Shammari said.
Yet politics in Iraq is volatile and allegiances can be fleeting. The minister also faces vocal critics.
The Oil Ministry and the Shi'ite Arab-led government as a whole are embroiled in a dispute with semi-autonomous Kurds over land, power and Iraq's monumental oil wealth.
"It was definitely a failure," said Ali Balou, the Kurdish head of parliament's oil and gas committee.
"We advised Shahristani to work with parliament to provide legal cover for these contracts. Shahristani turned his back on parliament and then the oil firms turned their backs on him."
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