5 May 2006
Talks on forming Iraq’s next government seem to be edging closer toward an agreement on the main portfolios, including the Oil Ministry, and an announcement could be made as early as next week, Iraqi sources said Thursday.
Two candidates emerged this week as the strongest candidates for the oil portfolio: former Oil Minister Thamer al-Ghadban, a technocrat who is backed by several parties including some in the largest parliamentary bloc, the Shiite United Iraqi Alliance, and Hussein al-Shahristani, a physicist who heads an independent bloc within the Shiite Alliance. Al-Shahristani served as deputy speaker of parliament in the previous National Assembly and carries political weight within the alliance.
Baghdad sources say politics might prove the deciding factor, especially as the oil job would compensate al-Shahristani for failing to be reappointed to his previous position of deputy premier, sources said. Al-Shahristani has no experience in the oil industry. He served a 10-year prison sentence under Saddam Hussein from 1981, then fled to Iran in 1991, where he was active in campaigning against the previous Iraqi regime. He has also lived in Canada.
International oil executives have been complaining of a void at the top of the Oil Ministry, even as they express willingness to hold preliminary negotiations ahead of a legal framework regulating future oil industry deals.
Companies have also been providing aid to Iraq, with US Chevron sending oil field equipment worth $1.8 million to southern Iraq in recent weeks and Royal Dutch Shell following suit with close to $1 million in material, according to Iraqi oil industry sources.
The choice of oil minister is crucial to the country, which has seen its crude output fall from close to 3 million barrels per day in early 2003 to less than 2 million b/d now. The oil sector provides the bulk of state revenues, but has been suffering from a lack of leadership since the portfolio was assigned to a religious political party, Al-Fadhila, in the previous coalition government almost a year ago. Al-Fadhila was not able to present a candidate acceptable to the previous government and instead made a deal with Ibrahim Bahr al-Uloum to serve as oil minister.
Bahr al-Uloum resigned at the turn of the year at the request of Al-Fadhila, which then named one of its members, Hashem al-Hashemi, as acting oil minister.
“The parties are still maneuvering but it looks like we should have a list of ministers for the main portfolios by early next week,” one Iraqi source told International Oil Daily from Baghdad.
Prime Minister designate Nuri al-Maliki has until May 21, one month from his appointment, to announce a national unity government, which has been long overdue since mid-December parliamentary elections. Early indications are that the Shiite United Iraqi Alliance, which won 128 seats in the 275 member National Assembly, has secured the Interior Ministry and possibly the Oil Ministry, and is still targeting the Finance Ministry. A secular bloc led by former Prime Minister Iyad Allawi is set to take the Defense Ministry, although the Sunnis are also targeting either the defense or finance portfolio in their quest for five ministries, as part of a deal to join the government.
The Kurdish parties are insisting — and are thought likely to keep — the Foreign Ministry, despite demands from other groups that Iraq’s relations with other Arab countries have suffered as a result of the Kurds controlling this key post for the past three years.
“There is a suggestion on the table that a state minister for Arab affairs be appointed to manage Iraq’s neighborly relations, but no firm decision has been made yet,” the Iraqi source said.
Al-Fadhila still has its eyes on the Oil Ministry and has put forward two suggestions for minister: London-based Mohammad-Ali Zainy, a consultant who advised the US administration in the early months after the 2003 invasion, and Kathem al-Yacoubi, who was appointed as adviser to Oil Minister Bahr al-Uloum two years ago.
Some Iraqi sources privately say a political appointee would be bad news, and that relations between the Oil Ministry and foreign firms have been hampered by this over the past year. While companies have lined up to sign memorandums of understanding with the ministry offering technical assistance, the Iraqi oil industry has enjoyed few concrete benefits from this help, the executives say.
Results of detailed reservoir studies commissioned by the Oil Ministry last year were handed over to local oil officials a few weeks ago, including one prepared by BP for the southern Rumaila oil field. That document contains recommendations on how to improve reservoir management and maximize crude oil production. Royal Dutch Shell, which has been involved in a study of the northern Kirkuk field by UK-based Exploration Consultants Ltd. (ECL), has been offering similar advice on managing declines there. Shell has also offered assistance on the Missan oil fields and sent equipment to allow Iraqi oil professionals to carry out certain tests to improve output rates.
By Ruba Husari, Dubai
(Published in International Oil Daily May 5, 2006)