Oil to come under Iraqi control
By Carola Hoyos, Energy Correspondent
Published: August 19 2003 5:00 | Last Updated: August 19 2003 11:05
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The US has decided to leave the running of Iraq's oil industry to Iraqis after failing to put together an international oil advisory board. The move is likely to boost non-US oil companies' chances of winning lucrative investment contracts in the country.
Companies such as BP, Royal/Dutch Shell and Total have worried that US companies would be given preferential treatment in Iraq and some analysts have warned that companies from countries that had opposed the war against Saddam Hussein could be frozen out of making investments in Iraq. "In a way it's reality catching up with them [the US]," said one executive.
The reversal in strategy came after the US faced resistance to its plans from Iraqis within the country's oil establishment and a reluctance by Iraqi former international oil executives to join the international oil advisory board.
Instead, says Walid Khadduri, editor of the influential Middle East Economic Survey, the Americans are now considering a proposal for an oil ministry advisory board of nine Iraqis.
The group, which would include Iraqi government officials and oil experts from inside and outside the country, would oversee Iraq's oil policy, help advise the oil ministry on its investments and any decisions on what kind of role the country would play within the Organisation of Petroleum Exporting Countries.
Mr Khadduri said that, while many Iraqis are reluctant to sell their oil reserves, they would be amenable to the idea of opening the industry up to foreign investment. The advisory group would help Iraqi oil officials with that task, which would represent a new departure after years of monopoly rule.
Such a group would also be less likely to abandon Iraq's membership of Opec, thus strengthening the hand of the oil producers' group and in particular Saudi Arabia, which has steered many of its decisions.
Iraq's temporary governing council is expected to announce a new oil minister soon. Barring compromises, Thamir Ghadhban, the US-picked head of the Iraq's oil ministry, is expected to be named. It is still unclear whether the new oil minister would be deemed adequately representative for Opec to invite him to its meeting next month in Vienna.
For now, Iraq could play little part in Opec's production discussions because of its struggle to export significant, reliable volumes of crude oil. At the weekend, Iraq was forced to close its main export pipeline to Turkey when saboteurs blew it up. See Editorial Comment |
