Remarks on Recent Statements from the Ministry of Oil

Remarks on Recent Statements from the Ministry of Oil

By Ahmed Mousa Jiyad.

In the past two weeks, several statements reportedly attributed to the Minister of Oil, Mr. Adel Abdul Mahdi, have been circulating.

An earlier one advocates the benefits of the Production Sharing Contracts, while the recent one deals with the alleged Iraqi indebtedness to IOCs; both are shaky and stand on thin ice!

I have written a brief commentary on each of the two statements and shared them among my very wide international network of contacts. In this intervention I am addressing both beginning with latest issue.

Please click here to read Ahmed Mousa Jiyad’s expert analysis.

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).

9 Responses to Remarks on Recent Statements from the Ministry of Oil

  1. Ahmed Mousa Jiyad March 4, 2015 at 10:16 am #

    I received the following statement issued by the Ministry of Oil

    Press Release by Mr. Adil Abd-Al Mahdi.
    The ministry of oil represented by Mr. Adil Abd Al-Mahdi denied the media news about changing the Licensing contracts to shared contracts, or it has negotiated to offer new oil areas as shared contracts.
    It is worthy to mention that The joint ventures means the establishment of companies that the government shares them with the national or international companies to apply the work and enforce the national capabilities in the exploration, drilling, pipeline extension, reservoirs, refineries, associated gas extraction, distribution, gas stations as well as the importation … etc. These companies such as the (Basra Gas Company) allow the governmental partner to have 51% of the shares while Mitsubishi & Shell companies have 49% of the shares.
    The ministry of oil ensures that the licensing contracts was a significant step to develop the Iraqi oil & gas production and it is normal that some obstacles would appear especially with the new experience after 5 years from the application and before the formation of the current government, there are some modifications was made with some of the companies to lower the peak and the governmental partner rate to 5% instead of 25% while the contracts durations was extended.
    After the formation of the government there are two problems which are the Accumulation of the companies dues for the year 2014 which are about 9 billion dollars and the oil prices drop. (The costs + the profit) for 2015 are estimated with 4.5 billion dollars for the season which means about 18 billion dollars for the 4 seasons of the year, while the budget allocations barely covers the year 2014 so that the ministry included previously in the budget law what allows it to request from the prime minister and the minister of finance to launch about 12 billion dollars from the financial inventories to assure the companies dues in order to prevent any harm for the two parties and enforce the mutual trust, as well as to preserve the Iraqi reputation and its capability to keep its commitments and keep the negotiations positive to achieve the best results that are suitable with the conclusions from the past experience and the current circumstances in order to allow the commitment with the agreed programs to remove the obstacles.
    Generally, the ministry negotiates the companies in order to return the governmental partner`s share to 20-25% in addition to the discuss about the production programs, the peaks and the contract application durations … etc. As well as improving the motivations of the companies and reducing the financial burden on the government. There are other suggestions to connect the companies profits to the oil prices not with a fixed price for each extra barrel. So that the profit will be elevated with the oil prices and reduced with the oil prices drop. The other suggestion is to connect the profit with the reduction of the costs in order to prevent the accumulation of the companies dues. These ideas do not mean that there is an aim. So that the target is to achieve the best conditions that preserves the current & future higher interests for the oil and gas fortune of the country. And keep the relations balanced between the oil companies. As well as enabling Iraq to occupy its place between the exporter and oil derivatives producer countries. In addition to keeping the oil & gas for the Iraqi people and contribute in growing the other economic industries. And God blesses everyone.
    Send by: Site Manager | Date: 03-03-2015