Oil & Gas
The scale of the BP and Shell contracts underline the importance of Iraq as an energy provider to the world. Iraq has the world’s fourth largest proven oil reserves. It currently produces 2.7 million barrels per day and the Iraqi government has ambitious plans to increase production over the next decade. Iraq is the only country in the world with the potential for very significant increases in conventional oil production, and could become a major player in world oil markets if it is able to reach its potential. British companies are particularly well qualified to provide the expertise and resources to do just that, which will benefit the Iraq economy and its people, as well benefiting global energy security.
Iraq also has the 12th largest proven gas reserves in the world. But, despite this, it is currently experiencing major gas shortages due to insufficient infrastructure to capture, process and transport gas. Again, British expertise and resources can help to overcome these challenges.
None of these developments in Iraq’s infrastructure and exploration of their natural resources will be possible without development of Iraq’s service sector and their own technical capacity. British banks, insurers and universities have already established a presence in Iraq, but there is huge potential for growth in these sectors.
The small, but growing Iraqi private sector needs an expanded banking system. Both Standard Chartered and HSBC have established a footprint in Iraq. The British Council and the Department for International Development’s DeLPHE project in Iraq, has been forging links between Iraqi and British universities. And both the government of Iraq and the Kurdistan Region of Iraq, run large scale scholarship programmes to send civil servants and talented students overseas for degree and post-graduate courses.
The UK government will continue to support and lobby the Iraqi government on improving the investment climate. More needs to be done to develop Iraq’s regulatory and legislative framework to mitigate the risks for private investment. The passage of a Hydrocarbons Law and a Revenue Sharing Law will be key. These pieces of legislation will represent a further step in reducing tensions in Iraq by legally establishing the mechanism by which the Regions can negotiate contracts with international firms and what level of funding from central government they are entitled to. They will also allow UK firms to invest in oil and gas exploration and production across the whole country. This would greatly benefit the Iraqi economy.
There has been progress. The government of Iraq is working on such legislation and this year has also taken practical steps. The Ministry of Oil and the Kurdistan Regional government recently agreed a technical agreement permitting the exporting of oil from the Kurdistan Region of Iraq, with the revenues being received by the central government. The development of such technical agreements into full, transparent legislation will be a great step forward in the development of good governance in Iraq.
I would like to thank Baroness Nicholson and the IBBC for their unwavering commitment in pursuit of these shared goals for Iraq. I have no doubt that the IBBC Iraq Day Summit Conference will further develop the UK’s bilateral trading relationship with Iraq.
(Source: British Foreign and Commonwealth Office)