Archive for the ‘After the Pow comes Power’ Category

Eternal Flame or NOT?

September 20, 2008

Photo by Khaeld Mohanned, AP



Lebanon, Beirut paper Daily Star say today that Iraq’s Minister of Oil, Al-Shahristani is critical to the Kurds tactics regarding the proposed new oil-hyrocarbon law.

There have been discussions about the law and also a number of contracts that the Kurds in the north has signed with different oil companies. Also the central government ahs signed deals but they claims those are in correlation with the old and the new law.

Some critics claim that the central governments approach will put the oil companies in position that has not been seen in a long time in the region.

The Kurdish government has on the other hand quiet openly provoked the central government by signing a number of contracts, knowing that the new law was in the pipeline.

The problem for the Kurds will initially be significant. Today the north is filled with geological expertise all over the place and Iraqi Kurdistan starts to look like a Swiss cheese. The larges reserves are supposed to be in the north and in the south. So what will the Sunni’s get? Sand?

There has also been fierce debate over the construction of the agreements. The Kurds has even hired one of the world’s most renowned experts on oil contract to prove their case. And Dr Pedro van Meurs indeed came up with a support. How convenient.

The report du to Kurdistan Regional Government finds, “Under the KRG-PSC, the investor and the host government are fully aligned on all economic issues”, and “the performance of international oil companies under the KRG-PSC will be far superior than under the EDP-RSC [as proposed by the Baghdad MOO]”, and that the KRG contracts “would be considered in the national interests by many host governments because it does provide the framework for an optimal level of production and recovery of oil and gas from the reservoirs while creating a high value of government revenues.”  

Further on:

Further, Dr van Meurs’ study finds that the proposed service contract model of the Federal Ministry of Oil (EDP-RSC) “completely misaligns the interests of the investor and the host government in terms of cost efficiency”, pointing out that under the proposed model “a poor development plan and high costs result in a reward of high profits for the investor”, and concluding, “by fundamentally misaligning the interests of the investor and the host government and actually strongly encouraging investors to incur and declare higher costs, the EDP-RSC contract [proposed by the MOO] exposes Iraq to considerable risks of lower government revenues than would otherwise be obtainable.”

The discussion is pointing at the heart of the problem in Iraq. Power.

Quiet honestly, what’s Iraq to the rest of us? You can hardly call the country beautiful except from some parts in the north, a sand bunker stricken by war and internal fighting. The worlds third most corrupt country with three main fractions fight each other and countries like Iran, Syria, Saudi and Syria looming  in the dark for cutting a piece of the cake. Well the rest is Oil and some dates.

So who is selling out? Is it the Kurds in the north or the Shia in the south? The Kurds have had problems the last couple of years to get their share from Baghdad,  ashare that is 17 percent until it is decided what their share of the population will be in acensus that also have been delayed for more than three years.

As is for now the Kurds are depending on the finance from the south until they can produce reasonable amount of oil from their own resources.  And that will take time even if they drill at several places and plan to fuel a brand new 500 Mw Electricity Plant with gas.

The outcome and status of Kirkuk is another problem that is to be solved. Oil has been pumped in Kirkuk since the 20: ies and was one reason why League of Nations chooses to integrate Kurdistan with the rest of Iraq.

I recon that these problems will not be solved today so I will take my hopefully clean and dry laundry from the cellar, pack a bag and take “Spike” to my mother in law at the countryside were we will play Bingo tonight and get rich as usual. Se you Monday. Have a nice weekend!