Iraq Petroleum Conference 2015 : a New Kind of Dialogue

Iraq’s inability to pay for many of the key elements that define good governance and social and physical infrastructure (including salaries and defence), have left the country reeling. The major immediate impact has been felt in two particular areas critical to national importance; honest dialogue and perspectives around this underpinned the communicational direction of Iraq Petroleum 2015.

• The first is the battle against ISIS which is hampered by lack of financial muscle and ability to pay those who are fighting.
• The second is the relationship with the KRG, and the terms of the agreement made to pay a percentage of the federal budget and a fair valuation of the export of a set amount of oil facilitated by the KRG.

As a first step it was clear that, in a formal setting at least, speakers were united in the faith they had in Iraq’s long term ability to recover and take its rightful place as a leading global player in global energy security. A couple of examples were particularly resonant.  Simon Hatfield, CEO of Western Zagros shared the company’s direct and continued investment of nearly half a billion USD in the:

 “ significant, sustainable production and long term development of the Kurdistan region”.

The successful establishment of the Basra Gas company as a public/private joint venture (between  majority shareholder, South Gas Company, Shell and Mitsubishi) in 2013, offered another perspective, this time from the  South – showing  how faith in the future of Iraq, linked to current need,  could turn natural gas into nation-building for current and future generations.

The clamour of voices united in calling for an honest dialogue between the KRG and the federal government was the second key indicator of progress.  According to HE  Ashti Hawrami, the KRG’s Minister for Natural resources the KRG are currently receiving just over 30% of the payment agreed earlier this year. Instead of the usual dialogue of negativity and distrust, speakers and delegates alike were determined to showcase an Iraq united in the desire to facilitate real movement, despite the overall budget squeeze. Falah Alamri, head of the State Oil Marketing Organization (SOMO) shared the fact that regular meetings were now taking place between all parties. There seemed to be a consensus from all sides that resolving this issue was essential to Iraq’s long-term future, underpinning a consistent energy policy on payments for oil export. This is of course where the IOC’s see their return on investment…

Falah Alamri,Director General SOMO

Shared knowledge of strategic direction was an important takeaway also. HE Dr Rowsch Shaways, Iraq’s Deputy Prime Minister, announced that the federal government was in discussions with international financial institutions such as the IMF and the World Bank to support Iraq’s financial investment and development. Iraq has the third largest oil reserves in the world (tenth for gas) but, if there is not enough liquidity within the economy currently to support the infrastructure required to get at them, this is meaningless. Understanding that the government is taking immediate measures to resolve this was of critical importance, highlighting as it did also, a transparent dialogue in terms of being able to meet KRG expectations also.

UK Energy Minister, Andrea Leadsom

Ultimately this leads to the next step, which is the ability to collaborate in a way that is based on mutual respect. In her maiden speech, UK Energy Minister, Andrea Leadsom was very clear in her determination to make British business Iraq’s primary partner of choice. Britain’s Ambassador to Iraq, Frank Baker put some flesh on the bones of intent, sharing that he saw the development of the private sector within Iraq as a prerequisite for Iraq being able to meet its potential on an international stage. He linked tackling corruption into his plan for action, with the economic standing of individual Iraqis being part of the overall motivation for wider change. Within individual opportunity comes responsibility, with levers of transparency and strong internal leadership driving clarity of purpose. The Ambassador’s vision called for some tough choices, including privatisation of swathes of the public sector, but also promised a tangible way forward.