15 July 2008
The Iraqi cabinet has decided to establish a new body to speed up the award of contracts for strategic projects, including in the oil sector, Iraqi Prime Minister Nouri al-Maliki told International Oil Daily in an interview in Baghdad Monday. It will invite companies directly to compete for and negotiate one type of yet-to-be-determined model contract, even if the long-awaited hydrocarbon law has still to be adopted, he said.
The Higher Council for Reconstruction will be headed by the prime minister and include the deputy premier, as well as cabinet members whose ministries are involved in the projects.
“Although we are happy with the licensing round announced recently and the interest oil companies have expressed, we decided [Sunday] in the council of ministers that we need to speed up the process and reduce the complications of the contracting process. We will avoid many of those complications by defining one type of contract which we think will serve the country best and invite companies to compete directly for those contracts,” al-Maliki said.
On Jun. 30, Oil Minister Hussein al-Shahristani launched Iraq’s first bid round since the US-led invasion of 2003, offering eight producing oil and gas fields for competition to prequalified international firms. But the ministry has yet to announce bidding criteria or terms of the awards, which it said it is targeting for June 2009.
Al-Maliki said the security situation — and not the absence of a hydrocarbon law — has been the prime reason for the delays in securing foreign help developing Iraqi fields, especially the big producing fields that need urgent assistance to stop their decline.
“The absence of the oil and gas law was not a big obstacle because even the old law could be the basis for contracting. The major problem we faced was that the security situation was not conducive even to our own companies, let alone international companies, to play a role in development [of the oil fields]. But we see more interest now by foreign companies following successes by the government in enforcing stability,” he said.
“Even if we fail now to reach agreement on the new oil and gas law, we would still revert to the old law to award contracts, but we hope to adopt the new law because it gives better guarantees to [oil] companies as well as to the national interest.”
Despite some assertions that the US invasion of Iraq was motivated by oil, al-Maliki said US majors have been less aggressive in competing for contracts than their counterparts from Asia, Europe and Russia.
“We welcome US investments essentially because the major companies have the best expertise, but also because we have a special relationship now and the US has made sacrifices for Iraq. We would like them to be present in the reconstruction process as they were present in the security field and that gives them a priority, but not without securing the national interests of Iraq,” al-Maliki said.
Baghdad and Washington are negotiating several agreements to end the occupation of Iraq and grant it full sovereignty, including the withdrawal of US forces. Al-Maliki said Washington has accepted the principle of a scheduled withdrawal and the two sides are negotiating three documents, including a framework strategic agreement, a short agreement regulating the movement of US forces within Iraq, and a third that defines the terms of withdrawal initially to defined bases before a complete pull-out.
“There is almost agreement on the framework document and also on the second one” defining US troop movements, al-Maliki explained.
“There was some sensitivity about the third one, which we called an evacuation agreement, so it was changed to a memorandum of withdrawal. All the agreements depend on the acceptance of the idea of withdrawal and I think it has been accepted [by the US], which would make it easier to sign all agreements as one package and to get it endorsed by the legislative council.” Two-thirds of the council’s 275 members need to approve the agreement.
Baghdad wants to reach an agreement with the US before December, when a UN resolution extending the presence of multinational forces expires, and for its designation under the UN charter as a threat to international security to be terminated.
“The agreements will not be passed by the legislative council if they breach Iraq’s sovereignty. But we can convince the council to endorse them if they include a withdrawal and an end to the presence of US forces,” he said.
The Iraqi premier did not spell out a timetable for US troop withdrawal, saying it depends on several factors, including Iraqi readiness to take charge.
“We have to make sure if they withdraw, Al Qaeda and terrorists will not come back,” he said. “Security and military experts will make the assessments and once they say every part of Iraq is under total control, then we will declare the time frame. It will definitely not extend for a long period.”
By Ruba Husari, Baghdad
(Published in International Oil Daily July 15, 2008)