6 May 2003
The new chief executive of the Iraqi oil sector, Thamer al-Ghadban, issued instructions to his staff Sunday to draw up an accelerated plan setting oil production targets for an interim period of several months.
In an interview with International Oil Daily, the first since the Saturday announcement of his appointment by the US-led Office of Reconstruction and Humanitarian Assistance (ORHA) as chief executive of the interim management team of the Iraqi oil sector, al-Ghadban said the plan would be drawn up by upstream companies in northern and southern Iraq; the three refining companies in the north, south, and central Iraq; and the northern and southern gas companies. It is due to be presented to him early next week.
“We’re talking about a detailed plan with precise production targets and precise target dates for the next two to three months. Once the plan is ready and approved, we will function according to it but it will only be limited to the domestic market,” al-Ghadban said.
Although his management team is temporary, al-Ghadban said he does not know how long the interim period will last.
“It’s not very important how long it lasts. What counts is that the directors of the oil sector from all over Iraq have met and debated what to do in the present situation, and that the ministry’s structure is back managing the sector,” al-Ghadban said.
Since the collapse of the Iraqi regime almost a month ago, the upstream North Oil Co. (NOC) and South Oil Co. (SOC) have restarted oil production in coordination with the US Army Corps of Engineers (USACE), but on a limited scale.
USACE moved in immediately after the US military occupied southern Iraq and started inspecting oil facilities and putting out fires at oil wells in the giant Rumaila field. It also announced that it had rehired oil workers in the south and brought them back to work.
Until Saturday, when all directors general of all companies were called for a meeting at the oil ministry to announce the new appointments, communications between Baghdad and the north were limited and with the south were almost inexistent.
The relationship between USACE and the Iraqi oil management is not quite clear. Brig. Gen. Robert Crear, who is heading USACE’s effort in Iraq, made his first visit to Baghdad Monday to meet with ministry officials. “The southern oil fields and facilities are the ownership of Iraq, and the ministry is in charge of them and it will run them. They [USACE] restarted them and did the repairs, and we thank them for that. But I don’t think there’s any doubt that it’s ours,” Ghadban said.
According to the latest crude production report from the north, the Baba dome of the Kirkuk field was pumping an average 60,000 barrels per day until May 3. The majority of the production, 48,000 b/d, is being sent to the Daura refinery in Baghdad and the rest into storage. Production from Kirkuk is expected to remain stable until the northern Baiji refinery is up and running.
SOC officials, on a visit to Baghdad Sunday, said production from the South Rumaila field is 85,000 b/d, with 60,000 b/d feeding one crude unit at the Basrah refinery and the remainder going into storage.
In his first meetings with the directors generals of the oil ministry and the 15 companies under its auspices on Saturday and Sunday, al-Ghadban focused on the need to relieve the severe shortages in gasoline at filling stations across Iraq that have raised gasoline prices five to 10-fold. A black market has developed in Baghdad to the consternation of the local population, which continues to suffer from power shortages. LPG supplies for households are almost non-existent.
“We made an important decision to improve the gasoline situation by drawing on emergency storage but the problem will not be solved drastically until the refineries are back and functioning normally,” al-Ghadban said in the interview.
Daura refinery’s runs are dependent on power stations in Baghdad drawing on fuel oil to relieve bottlenecks. After cutting runs to 23,000 b/d last week from an earlier 43,000 b/d, Daura is now processing 55,000 b/d. Daura has a refining capacity of 80,000-100,000 b/d.
At the 290,000 b/d Baiji refinery, where a small 10,000 b/d skimming refinery has been functioning intermittently since power was cut off several weeks ago, the first crude unit is not expected to restart at 70,000 b/d until next week at the earliest. At Basrah, a second crude unit in addition to the current 60,000 b/d unit is also expected to restart next week.
“We might be able to bring refining capacity back to around 400,000 b/d since a major 150,000 b/d unit at Baiji will have to undergo maintenance before it’s restarted,” al-Ghadban said.
Oil exports are not a priority, he insisted, and will have to wait until a political decision is made.
“My role is purely executive, not political. I did not discuss oil exports with staff or with the US officials, and I don’t expect to be discussing it in the near future,” al-Ghadban said.
“Once we’re back to normal production, it is certain that we will have more production capacity than our refining capacity and I’m confident we will be exporting again. But it’s still too early to start thinking about when do we export, how much and how. It’s not of concern to us right now,” he added.
On Sunday, al-Ghadban also issued instructions to the finance department of the oil ministry to draw up budgets for all companies and define their requirements to bring operations back to normal. Selling oil products has been the only source of revenue since the fall of the regime.
“The financing issue is still under discussion. We need to pay salaries regularly and we need to make finance available for the companies. We don’t know yet how and when funds will be available to us,” he said.
By Ruba Husari, Baghdad
(Published in International Oil Daily May 6, 2003)