Min. of Oil Statement on Maysan Refinery

Following the recent article by our Expert Blogger, Ahmed Mousa Jiyad, Iraq's Ministry of Oil has issued a statement regarding Satarem's involvement with the Missan [Maysan] refinery project. The statement is carried here in full and unedited:

Commenting about the news that was declared by the media, press & some websites about the memorandum of understanding "not the contract as the media said" between SATAREM Company and the ministry of oil to invest in Maysan refinery,

and in order to inform the public & press … the ministry of oil wants to clarify the following:

First: the ministry offered many opportunities in 2010 for the private sector (Iraqi & foreign) to invest in 4 refineries according to the formula of funding, build, operate & ownership, which are (Karbala, Maysan, Karkuk & Nasirya). During that period, many companies presented their offers to invest in those refineries, but for the reasons of the project economics, the technical, financial & experience capabilities of the presenting companies there was no opportunity, so the refinery of Karbala was awarded to the government investment, while the refinery of Nasirya was going to be according to the form of (Field & Refinery) And the ministry is now studying and analyzing the offers. While Karkuk refinery is still presented as an investment opportunity and the ministry is studying some of the presented offers.

Two: in relation to Maysan refinery. Many companies presented their offers, but for the reasons of weak financial & technical capabilities, commercial reasons, no communication to present the needed qualifications or the offers does not match the laws & instructions. none of those offers was adopted so the offer of SATAREM Company is now being considered.

2 Responses to Min. of Oil Statement on Maysan Refinery

  1. Ahmed Mousa Jiyad 22nd December 2013 at 15:32 #

    Skepticism on Missan Refinery-Satarem MoU gaining momentum
    The recent announcement by the Ministry of Oil is very well appreciated and deserves highest admiration. However, the content does not provide new information that could help in answering the main questions raised on the MoU and Satarem’ technical, managerial and financial capacities to execute such a project.
    I take note of the Ministry’s assertion, “is adopting the concept of dealing only with the well-known companies to apply the strategic projects”; but it is hardly accurate or even proper to consider Satarem among “the well-known companies”!!!
    On the evening of Saturday 21 Dec 2013 three officials from the Ministry were hosted by the “After Nine” program on the State TV Aliraqiya discussing this MoU. The three officials are Laith Alshaher (DG of the Legal Department), Saadi Aldujaily (Assistant DG of the Economic Dept., and who signed the MoU) and Asim Jihad (the Ministry spokesman)
    The TV program was meant to provide clarifications and answers to many questions pertaining to the issue. But again they only repeated what was mentioned in the ministry’s announcement. What attracted my attention are the followings:
    1- The absence of any technical person though the ministry has a well experienced Deputy Minister for Refining might indicate serious technical reservation. It is worth recalling that the former Deputy Minister for Refining, Ahmed Alshamma, was always involved in refinery deals and discussion as I mentioned in my earlier posting on IBN on this issue; the TV program did not invite others from outside the ministry!
    2- There were some inconsistencies in what the three gentlemen have said: in one part they say there was no interests expressed by international companies; while in other part they say they have received an offer from Japanese company based on loans. But they reject it!!. The reason they gave is they do not want to execute the refinery through loan but it should be through foreign investment. The answer is not convincing in the absence of proper economic evaluation of different financing modalities; something we used to do for such project during the eighties!
    3- What surprised me also is what they say that Satarem offer includes “A company ranked fifth on global scale”, without giving the name of this fifth ranked company!! Moreover, how is it possible for them to accept that such a fifth ranking company would ever accept to be in a consortium led by a small company with no proven track record in petroleum and with capital of only 400 thousand Swiss-francs!!!
    4- The most astonishing of what they said is that “Satarem can take 70% or 200%” but they did not say of what?? Though they emphasized that Satarem is an “investor”, reading through Satarem’ “Vision & Mission” on its website, there was no mention of it as “investor”. Moreover, how is it possible for the three gentlemen could ever believe that a company with such insignificant recently increased capital could be considered as investor for such a project?!!!!
    5- My conclusion after seeing the debate is the program left me more worried and less convinced by what the three officials of the Ministry have said.
    On the other front the Parliamentarian Suzan Alsaad (member of the oil and energy committee-OEC of the Iraqi parliament) said on 21 December the parliament formed a truth investigating committee to address the issue and the OEC will hold a meeting with the Ministry of Oil on Sunday 22 December on the same subject. Moreover, the Missan Provincial Council expressed “shock” to hear about the deal and requested parliamentary investigation.
    Many through various media sources and direct communications attempt to exploit the issue for obvious political reasons.
    Finally, information indicates that a meeting between the Ministry of Oil and Satarem will take place on Monday 23 December to hear from the company what it has done so far. Both parties to the MoU are under immense pressure as many are waiting for clear, concrete and convincing outcome.
    Ahmed Mousa Jiyad,
    Iraq/ Development Consultancy and Research,
    [email protected]
    22 Dec 2013

  2. zaid 2nd January 2014 at 16:39 #

    although the old regime committed similar blunders during the heydays of the mid 70's but there were usually enough competent personnel within the establishment to stop or at least highlight such blunders and stand firm by the codes of practice they were committed to. the petroleum sector was amongst the highest in the number of those competent. the present response or say reaction of officials in the Iraqi petroleum sector in spite of the strong indicators coming from reliable and neutral sources that the deal or even the procedure lacks basic codes of practice that would surely lead to misconduct and failure in the following stages of the contract which will turn it to another financial and technical failure added to the number of other failures we see all around us in the achievements of the present government.
    we are hearing stories of stealing the technical know-how of a similar ongoing project by a certain top official in the oil sector and handing it over to the company under question as well as certain under dealings by persons not officially connected to the client.
    a serious and open investigation by a neutral party and initiated by the prime minister should take place to establish the wrong doings that have occurred if true.