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Iraq Looks Inward To Rebuild Oil Industry

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by Ben Lando
UPI Energy Editor
London (UPI) Nov 30, 2007
The leader of Iraq's oil workers, attending an anti-war conference here, says Iraq could be producing more oil by investing its own money, without an oil law or large scale foreign oil company involvement.

"National expertise and resources are capable of enhancing production in the oil industry," Hassan Jumaa Awad, president of the umbrella Iraqi Federation of Oil Unions, told United Press International Friday.

"If they are prepared to allocate more funding and spend the resources that already exist," he said, sporting the Asia Cup winning Iraqi National Soccer Team jersey, "there would be improvement and we could recruit more workers."

The IFOU is headquartered in the oil capital of Basra, where nearly 80 percent of Iraq's 115 billion barrels is located in or near and almost all the 1.9 million bpd of exports head to the Persian Gulf.

Although Saddam Hussein terrorized his population and mismanaged the oil infrastructure, many of the workers of the oil sector there received Western education in industry skills and became a large base of the so-called Iraqi middle class.

Now "there's a huge level of unemployment," Awad said. Some estimates have unemployment across industries as high as 60 percent.

Iraq's oil production dropped as the war began but quickly was brought back online, a fact the unions in Iraq boast. It has averaged 2 million barrels per day since, though recent repairs and security pushed it to around 2.4 million bpd, but that's much less than the world's third-largest oil reserves could handle.

The Oil Ministry left more than 97 percent of its $3.5 billion reconstruction budget unspent last year, the U.S. Government Accountability Office reported to Congress in September. The Ministry received a $2.4 billion capital budget this year and is reported to have spent 21 percent of it through July 15, but the Special Inspector General for Iraq Reconstruction is disputing the numbers from the U.S. Embassy in Baghdad.

Awad said the money used to fix, rehabilitate and modernize the producing oil wells could nearly double production.

The central government, encouraged by Washington, has focused efforts on approving a controversial proposed oil law and reaching out to international oil companies. Iraq's oil sector needs tens of billions of dollars in investment over the medium term to fix what Saddam broke and boost capacity. The political prerogative has been the law as a way to set investment guidelines -- with foreign oil companies seen as a given -- and perhaps be tool for political reconciliation.

But Iraq's oil sector was nationalized in 1972 -- a source of pride and empowerment -- and any real or perceived attempts to reverse that will not be smooth, at best.

"Iraq, ever since the occupation started, and now, is producing oil without an oil law," Awad said. "Therefore we think the insistence of passing a law under the current circumstances is a trick to bring in international oil companies."

And he fears the lack of investment from Baghdad is a "deliberate" move to make the Iraqi oil workers look incapable.

Awad and the tens of thousands of workers he represents have already been a thorn in the side of Baghdad. The oil law is now stuck in disputes, partly because of the oil unions' actions and campaigns, including a strike over the summer that the government responded to by surrounding the workers with security forces.

"Because of an opposition to the oil law we find all kinds of condemnation from the government and our workers understand fully that the campaign waged against us is because of our opposition to the oil law," Awad said. "The Iraqi people need such a law, but we need to gain our full sovereignty before such a law is enacted."

He said service contracts, where an oil company is tasked with doing a specific job, would be OK. But the draft law allows for concession or risk contracts, such as production-sharing agreements, which has been labeled a red line not to cross.

And if a law is to be passed, Awad says it should be approved by Iraqi voters in a referendum.

"If it's only discussed and debated in government and Parliament," he said, "in our opinion that's not enough because there might be a political concession between parties involved in the debate."

Arrest warrants for him and a half-dozen other labor leaders issued during work stoppages in the summer are still outstanding, though "dormant," he said. Along with a halt to the oil law and a seat at the negotiating table, the workers demanded better working conditions and workers' rights outlawed under Saddam Hussein and upheld by governments since.

"We achieved some concessions from the government," he said, including promised distribution of land and "a minimum improvement" in wages.

Prime Minister Nouri al-Maliki had promised to set up a working group of union and political officials to discuss working conditions and the oil law, but "this committee never got established," he said. "They did not implement what they promised they would do."

The unions, with the help of the international labor community, are urging the government to adopt a labor law that, unlike the oil law, has received nearly no overt backing from Washington.

"Such a law has not seen the light of day yet," he said.

All of which brings him to London for the World Against War Conference on Saturday.

"War always has a very negative impact on all sectors of society and Iraq is no exception. Workers are part and parcel of society. War destroys things and infrastructure, and if the infrastructure of a country is destroyed therefore it will affect other sectors," Awad said. "Through these conferences we explain the struggle of the Iraqi workers and our opposition to the regulations, the laws that control our activities.

"The law enacted under the Saddam regime is still acted upon and implemented by the government in Iraq," he said. "Up until now the Iraqi government has not repealed these acts and are in the same position, basically."

Source: United Press International

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Moscow Finds Relief As Gas Prices Rise Only 30 Percent
Moscow (UPI) Nov 30, 2007
When Turkmenistan announced last week it would raise the gas price for Gazprom by 30 percent, the Russian energy giant actually sighed with relief. It had long expected Ashgabat to raise the prices, and $130 per 1,000 cubic meters is a moderate price for today, considerably lower than the rumored $150. In the end, the news is one more proof that Russia's increase of gas prices for Ukraine is justified.

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