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Iraq's Deputy PM for Energy: Connecting
Kurdistan to Nabucco Pipeline Out of the Question
24.5.2011
By Salam Saddi and Hevidar Ahmed |
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May
24, 2011
BAGHDAD, — We passed through four
extremely strict checkpoints and in each one we had
to explain who we were, why we were there, and who
we wanted to meet. Each time they searched our bags,
examined our recorders and cameras, and body
searched us—by hand, electronic device, and sniffer
dogs.
Finally we were whisked away by car to Adnan Palace,
located in the Green Zone at the heart of Baghdad.
After waiting for half an hour we were called to
second floor, where Dr. Hessian Shahristani, Iraq’s
current deputy prime minister and former Minister of
Oil was waiting for us.
To many Kurds, the name Shahristani is synonymous
with conflict. He is perceived as one Iraqi official
who stands against anything that is in the interest
of the Kurdistan region. Shahristani, however,
smiles at this idea and calls it rather cruel.
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Iraq's Deputy Prime Minister for Energy Hussain al-Shahristani. Photo: Reuters |
“I have a soft spot for the Kurds because of all the
repression they faced during the former regime,”
said Shahristani. “I am myself one of the victims of
that regime and the sufferer knows the feeling of
other victims better than anyone else.”
Shahristani sees himself as a relative of the Kurds
through his brothers, who are married to Kurdish
women. It is also not lost on him that the negative
perception of him has to do with oil contracts. He
says that if he has criticized something in the
past, it is because it was against the Kurdish
interest. He blames the wrong idea people have of
him on some politicians who disagree with him on
different issues.
“Those perceptions mostly have to do with oil
contracts. I want the contracts to be transparent
and people to know about them,” said Shahristani,
“and make all the big companies fight for them so we
can receive the best possible bid.”
Shahristani says that he is only trying to make sure
that the oil remains Iraq’s property and that the
country gets the best deals with respectable
companies, for the benefit of all. He admits that
this style of work doesn’t resonate with that of the
Kurds.
“Everybody knows that we have signed the best
possible deals in the world, and that’s in terms of
the quality of the contracts, which state that the
oil will still be Iraqi’s property,” said
Shahristani. “Right now the price we pay to the
companies is the lowest in the world, and this is an
achievement for Iraqis. This view is not related to
the Kurds in any way.”
In the past Shahristani has been accused by some
Kurdish officials of attempts to prevent the
Kurdistan region from drilling and exporting its own
oil. But Shahristani dismisses those accusations and
in fact wants credit for encouraging the Kurdish
authorities to develop their oil industry.
“It’s the opposite. Last year when I was oil
minister, we made an agreement with the Kurdish
natural resources ministry to start exporting oil,
and signed the agreement in August 2010. They
postponed acting on it until February of this year,”
said Shahristani. “This means it was us who
requested that oil should be exported; however, we
asked that it be exported by a national system
according to the global market, and that its
revenues be sent back to central bank.”
At the moment the Kurdistan region of Iraq exports
one hundred to one hundred and thirty thousand
barrels of oil per day, and that, according to
Shahristani, is important to the country’s economy,
especially with oil prices so high in the global
market today.
“This is an important part and consists of 5-6
percent of Iraqi exportation, 2.1 million bpd
annually,” said Shahristani. “It’s very important to
the Iraqi economy, especially now that the price of
one barrel of oil in the global market is more than
100 dollars.”
In 2007 a draft law on oil and gas was sent to the
Iraqi parliament for discussion and approval, but
because of the sectarian violence that gripped the
country at the time, and deep political rifts among
members of parliament, the draft remained untouched.
That, in turn, caused the issue of oil and gas
between the central government in Baghdad and Erbil
to be suspended. According to Shahristani, the draft
is now out of date and needs to be changed.
“That draft is a bit old, and a lot of things have
happened regarding oil development in Iraq since it
was developed. That’s why the draft should be
reviewed and changes made,” said Shahristani. “In a
meeting with the oil and gas committee in
parliament, I talked about Iraq’s need for a new
law.”
The Kurdistan region’s Ministry of Oil and Natural
Resources is headed by Ashti Hawrami. In the past,
Hawrami was criticized for conducting shady deals
with foreign oil companies and in 2009 was called to
parliament to answer to these allegations. As Iraq’s
former minister of oil, Shahristani has his opinion
about Hawrami’s ministry, but he prefers to leave
judgment to the Kurdish government.
“I have a lot of reservations about the workings of
the ministry, but I don’t want to asses it. I’ll
leave that to the Kurdish parliament,” said
Shahristani. “It’s a KRG ministry and they are
responsible for it.”
Shahristani says that there is a good level of
cooperation between Baghdad and Kurdistan’s oil
ministry, but he is unhappy about the fact that the
Kurdish authorities do not submit the bills of the
oil companies who invest in Kurdistan to Baghdad to
be checked and processed.
“The thing that surprises me is that they haven’t
given the bills of foreign companies to the oil
ministry for checking,” said Shahristani. “The
companies that have spent money on oil fields should
be compensated. If a company has drilled a field and
put pipes in it, they should present the bill to the
oil ministry so they can check it and make sure the
amount they ask for is legitimate or not, but so far
neither the companies nor the KRG have given us the
bills, and I don’t understand this.”
Shahristani says that he doesn’t want to air his
personal opinions of the Kurdish oil minister Ashti
Hawrami, because they are not work-related. However,
he believes that the work of his ministry is not
transparent, as it is in Baghdad.
“I have my views on the way the agreement has been
signed, and I think it’s not transparent enough and
hasn’t been based on competition,” said Shahristani.
“Our style in the oil ministry, of revealing
everything to the foreign and local press, is very
different from that of one person sitting in one
room and only talking with one company.”
Another area of discontent for Shahristani is in the
Kurdish reluctance to share any information about
the resources in the Kurdistan region with Baghdad.
This makes it difficult to accurately assess Iraq’s
overall natural reserves.
“The proven reserve in Iraq is about 143 billions
barrels, excluding the Kurdistan region,” said
Shahristani. “And this is one of our conflict points
with the KRG: that unfortunately it isn’t giving any
information as to its assessments of it.”
According to Shahristani, the world will not trust a
survey that isn’t conducted by experts from the oil
ministry and foreign companies. It is a multi-stage
process and releasing any numbers without it will
not gain anyone’s trust.
“When Iraq announces that it has this much oil
reserves, the world accepts it easily, but when
other people reveal some numbers, people will doubt
them, because they haven’t been arrived at through
taking those proper steps,” said Shahristani.
Shahristani says that there are unproven reports of
about 30 billion barrels’ worth of oil reserves in
the Kurdistan region, and he hopes that the Kurdish
authorities provide more information, which would
only help maximize Iraq’s reserves.
“We are hopeful that our brothers in the KRG give us
the statistics they have so we can assess it and
increase Iraq’s proven oil reserve,” said
Shahristani. “I can estimate it currently at 173
billion barrels; the 200 billion barrels I talked
about in an international conference is not our
proven reserve. I said that in some regions that
have not been checked, there is a strong possibility
of more oil being found, thus making the reserve
reach 200 billion barrels.”
In the past few years there have been talks of
connecting the Kurdistan region to the Nabucco
pipeline project that extends from eastern Turkey to
Europe,www.ekurd.netand send Kurdish gas to European markets
that way. But as Iraq’s deputy prime minister and a
still-influential figure in the oil industry, Shahristani says such a project is out of the
question, and that the Kurds aren’t allowed to get
involved in it.
“Connecting the Kurdistan region to that project—a
European project—is impossible, because this gas is
Iraqi gas and exporting Iraqi oil and gas is only
done by the Iraqi national oil company,” said
Shahristani. “It’s not like any province or a region
can just go ahead and export its oil and gas as they
wish.”
Shahristani says that this project has in reality
been one of the major areas of dispute between the
Kurdistan region and Baghdad.
“I will say it openly: this has been one of our
problems with the KRG,” he said. “We are against
producing oil and other things and exporting it by
trucks to Iran and other places. We think this is
illegal and we have said that oil and gas should be
exported by the federal government, and we are sure
that the European countries won’t go anywhere near
something that is not through the federal
government.”
In speaking with Shahristani it is easy to sense
that Kurdistan’s exporting its own oil and gas
through a project like Nabucco—or any other means
without the federal government’s consent—is a
personal matter to him, and a taboo.
“We have told Turkey and the EU that contracts for
oil and gas exports are only done with the federal
government,” said Shahristani, “because this is the
property of all Iraqis, and we will not allow anyone
or any region or governorate to export oil and gas
as they wish. This response is a clear response and
this is not only Hessian Shahristani’s view.”
There is already an agreement between Kurdistan and
Baghdad about oil and gas exports, and Shahristani
expects the Kurdish authorities to remember it.
“According to our agreement with KRG, they will send
us their oil and we will export it, recognizing that
such work should be done this way,” he said. “And in
the case that any gas is not needed locally, which I
don’t believe will occur any time soon since Iraq is
planning to build a few big electricity stations
that need gas, it should be dealt with by the
federal government.”
Shahristani says that the entire dispute between
Baghdad and Erbil has been over this very issue of
independent initiatives of oil export, which can’t
be overlooked by the central government. He says
that even if the Kurdish authorities manage to
export oil or gas, other countries have been warned
not to buy it.
“For four years we fought about this issue,” said
Shahristani. “Only the federal government can export
oil and it’s same for gas. Turkey or the EU
countries will not buy gas if it doesn’t have the
federal government’s approval.”
In his post as Iraq’s oil minister, Shahristani kept
a black list of companies that had signed contracts
with the Kurdish government. Even though he isn’t in
charge of Iraq’s oil anymore, he still carries
substantial weight in the oil ministry, and he
emphasizes that the list is still in place.
“Our view was that any oil and gas exploration
contract signed by any company without the federal
government’s consent won’t be recognized,” said
Shahristani. “This view is fixed and will continue
be like that.”
At the end of this year, US troops are due to leave
Iraq. There are concerns among some Iraqi and
Kurdish officials about a surge in violence and even
a civil war once the Americans are gone. But as
Iraq’s deputy prime minister, Shahristani is
confident that Iraq is capable of running itself, so
long as other countries do not interfere in its
affairs.
“Let me tell you openly that we are worried about
interference by other countries,” said Shahristani.
“We have spoken with Iran, Turkey, and other
neighboring countries. We have even spoken with
faraway countries, because some of them talk about
Iraq’s future and meet with some Iraqi factions and
this is a dangerous matter. It’s better for our
politicians to talk about Iraqi problems inside
Iraq.”
The current Iraqi government was formed—after months
of negotiations and disagreements over several
ministerial posts—following the general elections of
2010. Still, it is not a fully functional government
and Shahristani says that he is unable to predict
how the next three years will be.
“I really can’t predict how this government will
continue for the next three years,” he said. “And I
don’t fancy any government staying too long. I think
change in a government is healthy and not a weak
point. In fact, it’s the opposite; one good thing
about democratic systems is that new faces and blood
come to the government frequently.”
Finally, Shahristani is proud of having friendly
relations with the Kurdish members of the Iraqi
government.
“I’ll proudly say that in the last and current
governments, they [the Kurdish ministers] were
always some of my closest friends,” said Shahristani.
“Ask them and I’m sure they will tell you that this
guy helped us a lot.”
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