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Play it right even once
I will not go into this episode on the merits of the great challenges that await the oil and gas sector in Iraq, but rather I will leave them for future sessions, but the logic of necessity and preserving the national interest dictates that we must harness what we have from the vast and accumulated experience in the oil industry in order to serve the public good, We send an appeal to the Ministry of Oil that includes presenting our point of view to help in the thorny and hazy situation resulting from the efforts of some licensing round companies to withdraw and sell their shares to other partners, which created, according to my follow-up, a state of turmoil and lack of clarity of visions.
In our assessment that unless this situation is dealt with with scientific and practical transparency based on the national interest, the returns will carry with them negatives not a few, and the problems will worsen until it ends in the end to a significant decline in the march of the oil sector as a whole. However, the picture is not completely pessimistic, and there is an opportunity. Gold at the second end of the river is emerging from new developments. It is imperative that the Ministry of Oil harness all its capabilities to create a new beneficial, working, fair and balanced situation in the licensing rounds contracts.
It is useful to briefly touch upon the negative and positive aspects, and perhaps the lapses, of those contracts, with a reminder of our opposite position to those contracts during the period of our management of the Southern Oil Company, although I still hold the same belief and conviction in the necessity of making the utmost efforts available to increase the rates of Iraqi oil production and gas investment. ; This is for clear reasons that lie in harnessing the wealth of the country in reconstruction and development.
My point of view that I have been trying to clarify regarding these contracts includes many chapters and phenomena, and I will put here a sentence of them:
1 - The contracts covered the vast majority of Iraqi fields, whether developed, under development, or those fields that are not completely developed. It is assumed that the path of those contracts will be based on scientific strategies, plans and programs, and the focus is on giant fields that are not developed and those under development, while the old and working fields are developed through mechanisms and contracts of various forms.
2 - Those contracts were drawn up hastily and urgently; As this number of contracts and their technical, administrative and legal procedures and sections at the highest levels were achieved within a very short period of time; In the end, during the periods of application, this led to the emergence of many lapses and problems.
3 - The contracts did not include any clauses in developing and engaging the national effort in the work process, which may lead to undermining this effort, which has made great and wide achievements in the Iraqi oil industry.
4 - The total ceiling set for the production of licensing rounds fields of 12 million barrels per day is a matter that lacks realism, science and transparency in all aspects, whether at the national level in the form of work volumes and the availability of logistical supplies that are far from reach, or at the external level in the distant global oil markets Far from absorbing and discharging such rates; The thing that, if achieved rates of production, will create turmoil and tension in the global market and a sharp drop in oil prices, not to mention the near-catastrophic consequences for Iraq in fulfilling its obligations in marketing these quantities.
5 - The elements of urgency and the absence of scientific standards and transparency led to the emergence of a state of confusion and imbalance in the evaluation and approval of the participating companies; There are giant oil companies with small companies that do not have sufficient experience in developing fields, even in their country of origin.
6 - The absence of basic and fundamental aspects related to the responsibility of these companies' participation in what is happening in the global oil markets and fluctuations in prices, supply and demand; This makes it imperative for Iraq to discharge and market all the quantities produced by these companies.
7 - The absence of companies ’commitment to the contractual and marketing specifications of Iraqi oil, which were adopted decades ago in oil marketing contracts, and this necessarily means the availability of many aspects of material losses to the country, in addition to the lack of clarity in the areas of measurements and control of the quantities produced.
8 - The mechanisms and methods that have been adopted in concluding such volumes of work for a complex, intertwined and scientific industry with its essence and nature lead to the clear conclusion that there is an imbalance and imbalance in the two sides of the equation between the Ministry of Oil on the one hand and the companies on the other hand. In the second party, all the factors of experience accumulated over decades in management, technology, etc., and in all joints and trends, were met by a state of desertification that afflicted the Ministry of Oil as a result of the circumstances the country went through.
9 - The factor of urgency and acceleration has resulted in the absence of those contracts including basic and important aspects and chapters in building the sector, such as: gas investment, water injection projects, storage and export facilities, and others.
10 - Excluding basic and very important requirements that correspond to the path of success of the entire process, such as building housing complexes, kindergartens, schools, water and electricity systems, and others.
11 - The contracts did not address important chapters in adopting scientific and practical standards and standards in technical and administrative performance and efficiency, based on the nature of work in Iraq.
This, and there are many important and basic aspects that are not available to delve into them.
Whatever happened, what happened happened! The wheel of licensing rounds proceeded at an accelerated pace dominated by turmoil and confusion in many joints, during which the phenomenon of corruption, low performance and the desired development of the national cadre grew, while managing the wheel of work - and at high rates - was left in the hands of companies during the first years of the companies ’work, which gave them good financial returns. It is useful here to recall that the initial calculations indicate that the total spending on licensing rounds may be equivalent in one way or another to achieving an average of about (7) million barrels per day! While the current rate is (5) million barrels per day.
After years without the work of these companies, they began to take a different direction through the introduction of fundamental changes in contracts that will inflict other pages of unfairness and harm on the Iraqi side, and some companies, including Shell, withdrew from Majnoon field, in which work was entrusted to the national effort. An experience that was associated with many complications and problems, but in the end it took the right path. On the face of it, this proposition adopts two different and intersecting directions for one goal: The first indicates the existence of reservations about many of the joints of the licensing rounds, while the second trend highlights the positives in the continuity of the companies ’business. The clear truth is that such conclusions and orientations stem from the preservation of the national interest and which overrides all other interests. To simplify matters, it is necessary to rely on the reality of the developments produced by those tours, the most prominent of which is the creation of new conditions, methods and work environment for the oil sector.
In light of the above, and according to the recent developments in the request of a number of companies to withdraw and sell their shares, I am fully and firmly convinced that it is a golden opportunity and a gift from heaven to the Ministry of Oil to deal with the issue with high professionalism and transparency and to develop programs within a strategic plan and a roadmap with stages Five years, during which we will reach the participation of national oil companies at rates not less than 40% for all licensing round contracts and within the following frameworks:
First: Reconsidering the provisions of the clause, the judge who is the victim of the decision to withdraw within a period of (90) days, and international oil companies must realize that these contracts are not temporary or limited according to their interests. Rather, there are higher interests for Iraq as well.
Second: The agreement between the two parties is accompanied by clear mandatory conditions, the most prominent of which is the commitment of the company requesting the withdrawal to submit plans and work programs for a period of five years to come, and include all stages of development and technical and administrative aspects so as to ensure that the withdrawal process will not affect in one way or another the effect of deviation or neutrality in Development plans.
Third: Every withdrawal or sale of shares includes the entry of an Iraqi oil company in percentages of not less than 30% in the new shares, and this condition is binding, and if the matter requires it, the central government must pay financial dues.
Fourth: Requiring licensing companies to submit periodic statements of fulfillment of qualification items and raising the performance of national cadres in all technical and administrative fields.
Fifth: The need to oblige the company that requested the withdrawal to submit proposals and alternatives to manage the work nationally or jointly in order to avoid the emergence of bottlenecks in the course of the production process.
Sixth: The necessity of activating and implementing the doors of training, raising performance and developing national cadres, as well as rehabilitating and developing the operational, service and administrative infrastructure in companies and the center of the ministry.
Seventh: Restructuring the Contracts and Licenses Department and ensuring the expansion and revitalization of the issue of reservoir management within the aforementioned department.
* Former oil minister
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