22 July 2007

Dr. Hussein Sharistani -- Iraq Minister of Oil

A meeting with Dr. Hussein Sharistani was arranged in the Cabinet room of the Prime Minister's residence. Dr. Sharistani is a Harvard graduate and was named the Minister of Oil a little over a year ago. In fact, during my last visit in July of 2006, Dr. Sharistani's acceptance of that position was felt to represent a turning point in Iraq being able to develop its own resources.

The minister quickly asserted that he was determined to succeed, overcome all obstacles and develop what is a huge natural resource. The oil sector will be critical for the economic development of the country of Iraq. Ninety-three percent of foreign currency in the current budget is derived from this source.

He stated that previously the oil industry was highly centralized in Iraq. Now it is subdivided into the North Iraqi Oil Company and the South Iraqi Oil Company. Out of over 500 structures only 80 have been properly assessed. There are possibly as many as 300 fields available for development. It is possible he stated that Iraq represented the largest oil reserves in the world.

He felt that security concerns were keeping companies out of his country. He did state that the Southern area has succeeded in keeping up at that other areas would require investment of scarce resources. One of their main concerns was the proper monitoring of measurements of production.

He stated that he welcomed private-sector development both local and international. He stated that the recent liberalizing legislation for oil refining policy would help in this regard. The Iraqi government was willing to provide crude oil at a discount over time as soon as laws governing investment are passed and signed. Then contracts can be signed which guarantees Iraq’s ownership. All of the right elements are in the law to give investors a fair return on their investment.

In response to a question about Chinese investment he did state that some contracts remained from the prior government and had been approved by parliament. Currently this represented only one small field that produced about 100,000 barrels per day.

In response to questions about the long-awaited hydrocarbon law he stated that the main objectives were to stimulate investments and refining, oil revenue sharing and what he termed the “oil and gas law.” He stated that the parliament was very close to coming to agreements on all of these items. In fact, when closely questioned, he felt that the revenue sharing law could be voted on as soon as two weeks time. But skepticism was expressed that the law has been written, and its current language is very fair but that people have difficulty understanding the meaning of the law. He stated that the media in his country had developed some antipathy for this legislation and that many of the Sunni areas, although they stood to gain greatly from this legislation, seem to want to recheck everything. It was his opinion that some of the people in control of the media felt that this may represent a threat to their control.

While he acknowledged it was his duty to clarify and explain the legislation so that the population could understand it, he felt it would also be of great help if the interference from the media and outside parties could be curtailed. He did seem to express some concern that there might be some interference coming from outside the country, and he mentioned Saudi Arabia as a concern, which was affecting the acceptance of the legislation by the Sunni population.

The congressional delegation stressed to the oil minister that it was time to get some measurable progress through the parliament. The ability to provide support indefinitely simply did not exist.

The minister stated that he knew that the Americans were anxious to see the oil on the market. It was stressed to the minister that it was important that Iraq be able to function as an independent nation, and this would take capital, and that the oil revenues seemed the most likely source of this financing. For those reasons it would be good to see the petroleum industry recover in that country.