Middle East Economic Survey
VOL. XLIX
No 21
21-May
Letter To The Editor
Iraq’s Energy Law
Dear Sir,
I would like to comment on what Tariq Shafiq mentioned in his letter to you, published in MEES on 14 May 2007. Mr Shafiq states that: “Regions and provinces lack the institutions and expertise to negotiate or take complex managerial and technological decisions.” Does he really believe that the Iraqi National Oil Company (INOC), which does not exist yet, will do better? In fact some existing oil companies in Iraq, such as the South Oil Company, will have more experience, knowledge and expertise than the future INOC. Furthermore it is not impossible for the regions to acquire professional people locally and internationally. Technology, skilled manpower and contracts consultation can be bought in the international market. In my article in MEES on 7 May 2007, I listed a few factors necessary for the INOC to work efficiently and properly. These include the employment of professional staff and the elimination of corruption. If such factors are provided, the oil regions can negotiate with International Oil Companies (IOCs), and sign contracts with them under the supervision of the Ministry of Oil and with its approval which perhaps can serve the Iraqi economy and the oil industry better than INOC. We must not be afraid of inviting IOCs to utilize our oil and gas resources as long as they can do better than Iraqis and as long as they do it according to the Iraqi terms and conditions while keeping Iraqi sovereignty over these resources. With existing corruption in the oil sector, to say only Iraqis can do the job better is wrong.
To hand over 80% of Iraqi producing and discovered oil fields to INOC without making sure it will perform better than IOCs would be a great mistake which Iraq can not afford. As I mentioned in my article, the Iraqi economy is in complete ruins and a large part of the Iraqi people, ie 9mn, are living under subsistence level. Let us learn from our past experience, particularly in the oil sector. Law No 80 is a very good example. We all supported this law and considered it to be historical because it took more than 90% of Iraqi land from IOCs. After more than 40 years, Iraqi oil production is still 2mn b/d, while Saudi Arabia, with the help of IOCs in the past, produces now more than 11mn b/d. It is time to be wise and not emotional. It is time to be realistic. It is time we make sure we take the right decisions for the benefit of the Iraqi people and the Iraqi oil industry.
Yours faithfully,
Dr Ali Hussain