Dr. Kubba’ letter to the Prime Minister was circulated among Iraqi oil professionals but so far no formal response has come from Baghdad. Surprisingly, someone phoned Dr. Kubba (Saturday 14 December) informing him that he could offer the Missan Refinery to his company! (Dr. Kubba mentions in his letter that he owns a small company “TRASCO” with a capital of 500,000 Swiss francs). The caller name could be false but his mobile number is recorded!
The qualification requirements to execute a modern refinery project with such a capacity should be similar to those adopted by the ministry for other refineries. For the Nassiriya Integrated Project (NIP), as a relevant example, the ministry uses legal, technical, financial and HSE criteria (for both parts: the field development and the refinery). Interested companies had to submit comprehensive data and tables covering the years 2009, 2010 and 2011 in order to assess their technical capacity for either part of the NIP.
For Satarem I doubt very much that a proper qualification was ever made. Moreover, credible information indicates that the MoU was not signed by a high ranking officer within the Ministry (assistant DG) and many technical people inside the ministry know now that Satarem is incapable of executing this project. They are only waiting the expiry of the four-month period of the MoU to put an end to it, since they do not expect this company to come up with the expected comprehensive plan that includes among other things the financing, constructing the refinery and marketing its products.
Undoubtedly, with so many reservations the Satarem deal is facing uphill bleak prospects and could be destined to collapse. Such bad deals are very damaging to the Ministry’s image and reputation, wasting a good deal of time and effort, and backfiring politically.
Finally, the Ministry of Oil has to come out with formal statement on this matter and a decision on the fate of the signed MoU needs to be made sooner rather than later. Needless to say offering a modern refinery at such cost should be thought through seriously, carefully and with credible comprehensive due diligence! Quick deal-fixes and photo opportunities do not build modern refinery, if any things else!
[Following publication of this article, Iraq's Ministry of Oil issued a statement on the matter which can be read here.]
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: firstname.lastname@example.org, Skype ID: Ahmed Mousa Jiyad).