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Iraq Government Focusing on Rebuilding Oil
Industry
3.1.2007
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Washington, D.C.,
January 2, -- Iraq's Kurds, Sunnis, and Shi'ites are
bickering over how to distribute the nation's
potentially vast oil revenue. In the meantime,
energy officials are trying to rebuild the battered
industry while saboteurs are busy attacking
pipelines and other facilities.
Insurgents often attack Iraq's pipelines and other
key oil facilities, leaving them in flames.
The damage is frustrating efforts to rebuild Iraq's
crucial oil industry, which is the most important
sector of the nation's economy.
Iraq currently produces around two and a half
million barrels of oil a day, far below its
potential. Iraq's Oil Minister, Hussain al-Shahristani,
wants to change that. "Our current plan is to
increase production of crude oil over the coming
five years to between four and four-and-a-half
million barrels per day."
Al-Shahristani says he hopes to quickly make deals
with major foreign oil companies, and use their
advanced technology to help Iraq reach its huge
potential.
But former Iraqi Oil Minister Issam Al-Chalabi says
the dangerous security situation has kept all but
some small foreign companies out of the country.
"There is no way that any company, any proper
company, an international oil company or national
oil company or anybody with some sense in his mind
would be willing to go into Iraq invest money and
develop those services."
Al-Chalabi says major oil companies, like ExxonMobil
or Shell, are also discouraged by uncertainties over
Iraq's proposed laws governing their industry. The
political situation is complicated by the uneven
distribution of Iraq's oil.
The bulk of the petroleum is in the southern part of
the country, mostly populated by Shi'ites. Some
Shi'ite leaders are pressing for autonomy for their
region. Another portion of the oil is in northern
Iraq where many Kurds live. The area already enjoys
considerable autonomy from the central government.
The center of the country is thought to contain much
less oil and is home to the Sunni Arabs who ruled
the nation under Saddam Hussein.
Each of the Iraqi factions is bargaining hard for
laws that favor their access to this crucial
resource. Iraq's new constitution says the nation's
oil belongs to all Iraqis, but the rival factions
interpret the document in different ways. Kurds have
already signed agreements with small foreign oil
companies searching for new oil.
But Iraq's Oil Minister al-Shahristani says such
contracts should be signed or approved by the
central government. That prompted the Prime Minister
of the Kurdistan Region of northern Iraq, Nechirvan
Barzani, to threaten to break away from the country.
And prompted visiting U.S. Secretary of State
Condoleezza Rice to try to smooth things over with
Kurdistan President Massoud Barzani.
"As for the revenues of oil, stipulated in the
constitution, we are for a fair distribution of the
oil revenues all over Iraq," said the president.
The Kurdish leader did not repeat his colleague's
strong rhetoric in public.
Meantime, the Kurdistan regional legislature has
been working on a new "Petroleum Law" while the
central government has been working on a new
"Hydrocarbon Law."
It is not clear if these different pieces of
legislation will resolve the dispute between the
central government and the Kurdistan regional
government, or ease friction over oil between Sunni
and Shi'ites in the south.
But an influential study of Iraq by leading U.S.
experts [the Iraq Study Group] called an oil law
guaranteeing equitable revenue distribution of
revenues crucial to national reconciliation. And
experts say clarifying the legal status of foreign
oil companies will make it easier for Iraq to
attract the foreign expertise and technology needed
to rebuild the oil industry.
Iraq has opened some new facilities, such as a
refinery in Najaf, with ceremony and heavy security.
"God willing, this refinery could process 30,000
barrels a day," said an oil engineer at the
refinery.
If political disputes are solved and security
improved, many experts say Iraq could eventually
produce about six million barrels of crude oil per
day.
Former oil minister Al-Chalabi says current high oil
prices mean a healthy oil industry could bring in
$100-billion a year in revenue, enough to easily
rebuild the oil sector -- and fund reconstruction of
much of the rest of the troubled nation.
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