• 2 days Shell Oil Trading Head Steps Down After 29 Years
  • 2 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 2 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 3 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 3 days Venezuela Officially In Default
  • 3 days Iran Prepares To Export LNG To Boost Trade Relations
  • 3 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 3 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 3 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 3 days Rosneft Announces Completion Of World’s Longest Well
  • 4 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 4 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 4 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 4 days Santos Admits It Rejected $7.2B Takeover Bid
  • 4 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 4 days Africa’s Richest Woman Fired From Sonangol
  • 4 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 5 days Russian Hackers Target British Energy Industry
  • 5 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 5 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 5 days Lower Oil Prices Benefit European Refiners
  • 5 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 5 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 6 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 6 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 6 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 6 days OPEC To Recruit New Members To Fight Market Imbalance
  • 6 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 6 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 6 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 6 days GE Considers Selling Baker Hughes Assets
  • 6 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 7 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 7 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 7 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 7 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 9 days The Oil Rig Drilling 10 Miles Under The Sea
  • 9 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 9 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 10 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

Kurdistan Proposes Immediate Ceasefire With Iraq

The Kurdistan Regional Government has…

Alt Text

Kurdistan Ready To Hand Over Oil For 17% Of Iraqi Budget

The Kurdistan Regional Government has…

IWPR

IWPR

IWPR helps people in the world's most challenging environments have the information they need to drive positive changes in their lives — holding government to…

More Info

Implications of the Iraqi Gas Auction: Trouble Between Baghdad and the Provinces

Implications of the Iraqi Gas Auction: Trouble Between Baghdad and the Provinces

The Iraqi oil ministry’s auction of three natural gas fields last month was angrily opposed by all the governorates in which they are located.

With provincial officials threatening legal action against Baghdad and warning that they will refuse to cooperate with the developers, IWPR assess the significance of the controversy.

What are the implications of the troubled gas auction on the already troubled relationship between Baghdad and the provinces?

The recent dispute between the oil ministry and local authorities has clearly widened the rift between Baghdad and the provinces. Provincial officials in Anbar, Diyala and Basra, where bids were awarded to develop gas fields, all claimed that they were not informed of the auction, leave alone consulted – a charge that the ministry of oil denies.

Baghdad controls all natural resources revenue, but both local and federal authorities claim they have the right to sign contracts and manage projects.

The ministry has been accused of forging ahead with natural resources development without consulting local authorities in the past, and has sparred with the Kurdistan Regional Government and the Shia-majority provinces of Wasit and Basra over natural resources management and contract issues. The addition of Sunni-majority Anbar and Diyala to the mix doesn’t bode well for the oil ministry. Moreover, there are again rumblings about creating a federal region in resources-rich Basra, potentially giving the local government more authority over oil and gas reserves in the province.

What do the provinces want?

Simply put, citizens want Iraq’s oil boom to improve their quality of life. Aside from security, day-to-day life in Iraq is challenging at best. Hospitals, schools, services and jobs are in short supply. Given Iraq’s high unemployment, jobs are especially crucial for the country’s growth and stability. Baghdad maintains that natural resources development will create local employment and has promised governorates one dollar for each barrel of oil that is produced – but citizens and local officials remain sceptical.

Local authorities are demanding more influence over the management of oil and gas in their provinces, and want assurances from the central government that the governorates will economically benefit from the contracts. Provincial officials interviewed by IWPR clearly felt snubbed by Baghdad’s decision to leave them out of the auction, and Anbar officials have threatened to sue the oil ministry. Some believe the provinces will keep quiet if they get a cut of the deals.

The main problem is the absence of a legal framework on natural resources management and contracts. Until a law is passed, the power struggle between the oil ministry and local authorities is likely to continue and could escalate.

Will the disputes affect natural resources development in Iraq?

Possibly. Without the support of local governments, international firms could face logistical challenges, or even possibly security threats, which could affect their operations. The biggest tests will be in Anbar and Diyala, where residents and officials are clearly angered by the deals. Both provinces have been hotbeds of the insurgency. Anbar’s provincial council, which warned Baghdad that it would not accept the deals, spearheaded governorate-wide protests that drew hundreds of demonstrators during the Baghdad auction.

However, David Bender, a Middle East analyst and oil expert with the Washington-based Eurasia Group, told me that despite the risks, international oil companies are eager to invest in Iraq given the country’s huge reserves. For example, Basra’s massive Rumaila field, which produces about 40 per cent of Iraq’s oil, is being developed by BP and the China National Petroleum Corporation. Reuters reported this week that the oil ministry is finalising a 12 billion US dollar Basra gas contract with Royal Dutch Shell and Japan's Mitsubishi.

As Bender points out, risks vary by province and region: Basra is considered more stable than Anbar and Diyala, while big firms are reluctant to work in the Kurdish north – Iraq’s safest region – until the Kurdistan Regional Government and Baghdad settle their dispute over who has the authority to sign contracts.

By. Tiare Rath

This article originally appeared in IWPR.net and is produced by the Institute for War and Peace Reporting, www.iwpr.net




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News