U.S. Energy Secretary Calls on Iraq Puppets To Open Oil Sector

[NNN0LHI]

http://usinfo.state.gov/xarchives/display.html?p=washfile-english&y=2006&m=July&x=20060721170041SAikceinawz0.3766596

Washington -- U.S. Energy Secretary Samuel Bodman has urged Iraq to establish a legal framework that would be instrumental in attracting foreign investment to its oil sector.

"Iraq will only realize its very considerable potential as an oil producer with the help of investors," he told reporters July 18 during his visit in Baghdad, Iraq.

Iraq has been seeking to attract as much as $20 billion in foreign investment to increase its oil production capacity and upgrade oil infrastructure.

Bodman said the Iraqi government is working on a hydrocarbon law designed to regulate investment by foreign oil companies and that Iraqi officials he met, including Prime Minister Nuri Al-Maliki and Minister of Oil Hussein al-Shahristani, told him that they hope the parliament will pass the law by the end of 2006.

"We got every indication that they were willing and also felt a necessity to open the sector," Bodman said. "Iraq has enormous wealth, and it needs to take advantage of that."

The country has the second largest oil reserves in the world, following Saudi Arabia. Only about 10 percent of these reserves have been explored, according to a July report by the International Energy Agency. Iraq could become a particularly desirable, and potentially lucrative, destination for foreign oil companies because 60 percent of proven reserves are in undeveloped fields.

The Iraqi oil sector, left dilapidated by Saddam's regime, additionally has been crippled by corruption and by terrorist and insurgent attacks on oil infrastructure, after the 2003 U.S.-led operation in Iraq. In the two years since it resumed exporting petroleum in June 2003, Iraq has lost more than $11 billion in oil revenue due to theft and sabotage against oil infrastructure, according to the Iraqi oil ministry.

In May, Iraq's crude oil production dropped to 1.9 million barrels per day (bpd) from a pre-war level of 2.6 million bpd in January 2003, according to the U.S. Energy Department.

The Iraqi oil minister said July 18 that the government hoped to increase oil production to 3 million bpd by the end of 2006, a goal Bodman described as "somewhat optimistic."

The U.S. energy secretary said that, in addition to a transparent legal investment environment, substantial improvements in security would be essential to attract foreign investment.

"I think everyone has got security very much on their minds and recognizes that it is going to be important for the future of this country that foreign or international oil companies feel more comfortable than they do today in coming here," he said.

Bodman announced several U.S. initiatives designed to help the Iraqis -- mostly through technical assistance -- to deal with problems related to oil development and regulation and electricity generation and transmission, the two challenges he described as "closely intertwined."

The "Iraqis need electricity to get oil production up, and they need the revenue from crude oil sales to build the electricity infrastructure," he said.

Another U.S. official -- Commerce Secretary Carlos Gutierrez -- also called on Iraq to "carry through on promising liberalization and reform measures."

Gutierrez, who visited Baghdad a day earlier, told Iraqi officials and businessmen at the American Chamber of Commerce that his department will focus its initial assistance on developing local domestic investment. He signed several agreements with his Iraqi counterparts that promise U.S. aid, mostly in the form of training, advising and building capacity, according to a Commerce Department news release.

He expressed hope that U.S. aid will encourage Iraq to move from a centralized economy to a free market economy.

On July 18, Gutierrez also visited Kuwait, where he discussed promoting stronger bilateral commercial ties, including a potential free-trade agreement, and ways to improve investment climate in that country.

The full text of a news release on Bodman's trip is available on the Energy Department's Web site. The texts of news release on Gutierrez's trip and his prepared remarks are available on the Commerce Department's Web site.


(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

[Skidmore]

1. So Chalabi now has to work for a living? He's been on retainer

long enough. He is the go-to person for oil now in Iraq.

[dipsydoodle]

2. He would say that wouldn't he

"Iraq will only realize its very considerable potential as an oil producer with the help of investors"

The USA wrote the Iraqi Constitution under which Iraq receives more or less all of the income from existing wells but only a paltry royalty from all future ones.

Don't really give them much of an incentive until they re-write their Constitution. Mind you -if it gets partitioned it could well be Constitutions.

[Hubert Flottz]

3. They invest while the taxpayers pay for their security in Iraq

and are still raped at the gas station? We need to shut down EXXON's RAPE ROOMS on every corner in America!