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| Baiji: Workers are seen in an oil refinery in Baiji, north of Baghdad in this April 2007 file photo. Nuhad Hussin/Reuters/file |
Iraqi oil exports to north rise
Attacks fall sharply on oil pipeline to Turkey thanks to new security measures.
from the September 27, 2007 edition
Page 3 of 3
The greatest obstacle to oil production and oil export in Iraq is security, and then investments, says Abdullah. Iraq's oil industry needs investment in two areas – rebuilding oil infrastructure now and field development in the future. And this depends on "how companies look at Iraq, because any company wants profit," he added.
However, oil legislation has been stalled in Iraq's parliament for over a year, with Kurds, Shiites, and Sunnis fighting to divide the national oil wealth in a manner that favors their ethnic or sectarian interests. In the meantime, the regulatory framework remains unclear to foreign companies.
Iraq's Oil Minister Hussein Shahristani told Reuters earlier this week that his ministry will start to sign development deals by the end of the year, whether the legislation is finished or not.
But the legal vacuum has already created a great deal of confusion, particularly with the semiautonomous Kurds signing a number of recent oil deals that Mr. Shahristani alleges are illegal. The most prominent of the deals signed with the Kurds was made by Hunt Oil, whose owner, Ray Hunt, has been a key fundraiser for President George Bush.
The deals being made by the Kurds are predicated on the fact that the region is much safer than the rest of the country. But there, too, oil companies should take care, argues Amy Myers Jaffe, energy fellow at the James A. Baker III Institute for Public Policy at Rice University in Houston.
"The Kurds would like to give the impression that it's this stable oasis in the state, but it's much more complicated than that," says Ms. Jaffe.
Given Turkey's concerns about a separate Kurdish state, Jaffe says that if the north of Iraq begins to break away from the rest of the country, Turkey, and even Iraq's south, may not allow the Kurds to export oil through their territories. "If you're an international oil company, you have to be concerned with the politics of the north," says Jaffe.
As a member of the Iraq Study Group, Jaffe interviewed people about the Bayji oil refinery nearly a year ago. At the time, the plant was subject to so many attacks that those Jaffe spoke with suggested that the best option would be to close down the refinery. "So if [the security situation there] has changed, it's a big improvement."
Staff writers Tom A. Peter in Boston and Dan Murphy in Cairo contributed to this story
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