BAGHDAD (Reuters) – Iraq’s oil sector is rebounding after a catastrophic year sparked by the coronavirus pandemic, with key investment projects on the horizon, Iraq’s petroleum minister said on Friday. But he also warned that a lingering bureaucratic culture of fear threatens to stand in the way.
Iraq is currently trading oil at $ 68 a barrel, nearly the roughly $ 76 needed for the state to operate without depending on the central bank to meet government spending.
Oil Minister Ihsan Abdul-Jabbar Ismail has taken on the unenviable task of overseeing Iraq’s most vital industry at the height of falling oil prices that more than halved oil revenues last year . Since then, he has had to balance domestic demands for additional revenue to fund state coffers and pressure from OPEC to keep exports low in order to stabilize the global oil market.
With the industry rebounding, Ismail told The Associated Press, he can now focus on other priorities. In the interview, he offered a rare glimpse into the inner workings of the country’s most important ministry – the Iraqi oil industry is responsible for 90 percent of state revenue.
He said fierce Iraqi politics and fears of corruption have often derailed critical investment projects during his tenure and those of his predecessors – a source of long-term frustration for international companies working in Iraq.
“In the Oil Ministry, the big mistake, the big challenge, is delays in decision making or no decision making at all,” he said, attributing indecision to fears of retaliation. policies by groups or powerful legislators whose interests are not served. .
He described what he said is a distorted work culture where allegations of corruption are used as tools by political actors to get what they want. He alleged that the mere possibility is often enough to prevent senior ministry officials from signing important projects.
“It’s the culture: stay away from any business, stay away from inspectors, say ‘don’t do it’,” he added. “I think it is corruption that is slowing the economy.”
He said that during his tenure as minister he had sought to speed up projects, he said.
Topping its list is the development of the country’s gas sector, a central condition for Iraq to be eligible for waivers of US sanctions allowing energy imports from neighboring Iran. To this end, Iraq is seeking to develop long neglected gas fields and to capture gas flaring from oil sites.
Ismail said he hoped contracts would be signed in the coming months to develop key projects that could increase Iraq’s gas capacity by 3 billion standard cubic feet by 2025. But it all depends on the conclusion of the agreement with the oil companies; lucrative contract negotiations in Iraq have a habit of stagnating once trade terms are set.
Iraq currently imports 2 billion standard cubic feet to meet domestic needs.
The ministry is about to sign with Chinese company Sinopec to develop the Mansuriya gas field in Diyala province, Ismail said. The field could add 300 million standard cubic feet of gas to domestic production. He hopes to finalize the deal by mid-July.
The ministry is also in talks with the French group Total to develop an ambitious multibillion-dollar mega investment project in southern Iraq, including the Ratawi gas hub, the development of the Ratawi oil field and a program water supply to the oilfields needed to increase production.
Preliminary discussions are also underway to develop the Akkas gas field in Anbar province, with the American Schlumberger and Saudi oil giant Aramco, he said, expressing hope for an agreement there. too.
Although negotiations with international companies have accelerated, Ismail said entrenched indecision within his ministry persists. Investors blamed the icy bureaucracy and indecision within the ministry’s ranks for thwarting the plans.
One of his deepest regrets is the failure of talks – after five years of negotiations – between the ministry and Exxon-Mobil over a multibillion-dollar investment project that would have been essential to increase production and exports. Iraqi women.
“For me it was a big mistake on our part,” said Ismail, who was the former managing director of the state-owned Basra Oil Company.
Ismail himself came under scrutiny when lawmakers accused him of corruption. The Cabinet removed him from his post as head of Basra in October 2019 during a purge over corruption allegations. He was reinstated a few months later.
Iraqi media are often used as a tool of pressure, Ismail said
“Someone sends me a contract, and it would be illegal to say yes, so I say no, and he starts saying bad things in the media,†Ismail said.
In addition, he said 80% of his time is spent responding to requests from political parties and individuals asking for jobs, contracts or job transfers – requests he says he regularly rejects.
“They say, ‘Move that person from this post to this one, we need this post, we need this department, we need this business,†he said.
