Dialogue on Contentious Oil Issues in Iraq

By Ahmed Mousa Jiyad.

Mr Jiyad is an independent development consultant, scholar and Associate with Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: [email protected], Skype ID: Ahmed Mousa Jiyad).

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The first independent newspaper in Kurdistan-Iraq, Hawlati, e-interviewed me on mid-July. The Q&A is in English then translated into Kurdish and the edited text was published in two parts: numbers 1104 and 1105 dated 23 and 24 July 2013, and their “Pdf” files are available upon request.

The dialogue covers nine intriguing issues mostly focusing, as expected, on the contentious oil maters between the federal and KR governments. Hawlati’ contact person and the Editor had assured me the edited translated text reflects the essence of my answers. May I take this opportunity to sincerely thank Aland Mahwi, Fazil Hawrami and the Editorial staff of Hawlati for their good work and for taking the initiative.

The following provides full text of the questions and my answers.

1: As you are aware, on 27 June, the UN Security Council removed Iraq from the Chapter 7 and now Iraq is preparing the energy strategy (2013-2030), after these important changes where is Iraq heading?

AMJ answer on Q1:

Though the two issues are not connected except in timing (both occurred in June 2013) they will likely have serious impacts on the future of Iraq if proper policies are adopted and implemented. The removal of Iraq from Chapter 7 simply restored full sovereignty to the country. This by itself will surely have significant ramifications from diplomatic, political, economic, legal and financial perspectives, among others.

By exiting Chapter 7 Iraq will be freed from the direct and indirect impacts of so many restrictions imposed by UNSC decisions and those imposed unilaterally by other countries, organizations, entities, companies, financial institutions and alike. Accordingly, international trade activities-export and imports-; international service activities; insurance premiums- on individuals, business and frights-; the country’s risk and credit ratings; financial charges-interest rates and various back charges and fees- all will be impacted by lowering the cost of such activities for Iraq.

The most immediate consequences for Iraq will be the orderly end of the requirements to despite oil export revenues in the Development Fund for Iraq-DFI account at the Federal Reserve Bank of New York- FRBNY. This matter entails reactivating and improving the Iraqi operational procedures and functioning modalities pertaining to oil export revenues that existed prior to the imposition of Chapter 7, involving the related Iraqi entities such as the federal Ministry of Oil including SOMO, the Central Bank of Iraq-CBI, the federal Ministry of Finance, and the Iraqi banks, as the case may require.

As for the second issue of the Integrated National Energy Strategy-INES, this is the first ever, most thoroughly researched and well-articulated study on Iraqi energy sector. The preparation and consultation process for INES lasted more than 18 months involve holding 40 workshops and more than 150 interviews, including several senior officials from Region of Kurdistan.

INES describes the current challenges facing and the opportunities presented by Iraq’s energy resources. Its scope includes all the major components of Iraq’s energy sector: upstream and downstream oil, natural gas, power, and linked industries, with time horizon extends to 2030.

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