1 June 2004
Iraq’s newly appointed interim oil minister, Thamer al-Ghadban, aims to restructure his ministry and the companies under its umbrella, and to launch a number of long delayed oil development projects, he told Energy Intelligence Briefing on Tuesday, in his first interview after being sworn in. Al-Ghadban was named as part of the new interim government that will take over most of the power from the coalition occupation authorities from Jul. 1. He and other ministers were sworn in on Tuesday in Baghdad, following days of haggling between the US-led coalition, the United Nations and the US-appointed Iraqi Governing Council.
Six ministers kept their portfolios from the previous cabinet, but al-Ghadban, a veteran of Iraq’s oil ministry, replaced Ibrahim Bahr al-Uloum as oil minister.
The announcement of the new cabinet, which will assume sovereignty with some constraints — coalition troops will remain — and prepare for national elections in early 2005, was only possible after a deal was reached on the new president, Ghazi al-Yawar, who was supported by the Governing Council against US favorite Adnan Pachachi. The new prime minister, Iyad Allawi was also picked and announced by the council, catching UN special envoy Lakhdar Brahimi off guard.
The choice of the 59-year old al-Ghadban was largely expected, following Washington’s apparent disappointment with the tenure of Bahr al-Uloum, and the fact that few other technocrats had shown the capability to step in and lead Iraq’s vast oil sector. In the early days of post-Saddam Iraq, al-Ghadban impressed the US when he took the initiative and set up an ad hoc steering committee with ministry colleagues, to restart oil operations in a lawless country that had been overwhelmed by lootings. He was later named chief executive of the oil ministry, only to be replaced several months later by Bahr al-Uloum, the son of an influential Shiite political leader.
“My first priority is to make gasoline available to all Iraqis and put an end to the long queues at filling stations in Baghdad,” al-Ghadban, a geologist and reservoir engineer who graduated from London University, told Energy Intelligence Briefing by telephone from Baghdad, a few hours after his nomination.
Iraq’s current crisis in petroleum product supplies mirrors a similar problem al-Ghadban and his committee faced in the weeks after the war. Despite several product import deals with neighboring countries, he said shortages should be dealt with first through internal measures. “There are organizational problems, continued attacks against pipelines and the long overdue maintenance at Iraq’s largest refinery in the north. We will overcome all those through better organization and determination,” he said.
The second priority is also internal, al-Ghadban said. “We have to make available all fuels, including gas, fuel oil or crude, for industry and power plants to deal with the electricity shortage once and for all,” he said.
Once Iraqi needs are attended to, the newly appointed oil minister said he would focus on increasing crude production and exports, and on pushing ahead with reconstruction projects that have been plagued by delays.
While steering clear of direct criticism of his predecessor or the US officials in charge of restoring Iraq’s prewar oil capacity, al-Ghadban said that “bureaucracy and weakness in the follow-up” have been the main problems. “We have to increase efficiency and have better control over the implementation of reconstruction projects,” he said.
The oil ministry has finally obtained a development budget for the oil sector, following several rejections by US administrator Paul Bremer. According to al-Ghadban the ministry has now been given a $500 million budget for new oil projects to increase production and develop new fields. A further $250 million has been allocated for the rehabilitation of the natural gas sector and construction of a gas transmission system from the south to north to serve power generation, liquefied petroleum gas production and emerging industries.
“The second half of the year will see several projects implemented including the development of the Khurmala Dome in Kirkuk, the Himrin and the Subba-Luhais oil fields, the upgrading of the refineries and new reservoir management projects,” al-Ghadban said.
The oil field projects were tendered last year, but deadlines were extended several times this year after the ministry failed to convince Bremer to approve a budget.
While most international oil companies are steering clear of Iraq until the security situation improves, al-Ghadban attempted to calm their fears. “In parallel to the projects, we will work hard on the security of our oil installations and will reinforce the protection force we have already trained, as well as build relations with the tribes through whose territories our oil facilities pass,” he said.
Although long term investment projects will have to wait until a new parliament is elected and new laws are in place to regulate foreign investments, al-Ghadban said a restructuring of the oil ministry and the 15 companies under its umbrella could be implemented as soon as logistically possible.
“The idea is to separate the head from the body. The centralized power at the ministry will have to focus on policies and strategies, international relations and attracting investments, while the executive bodies will concentrate on carrying out these policies. We will wipe out the state of slackness that has been the main feature for years,” he said.
Al-Ghadban’s current thinking aims at creating one mother company for a certain number of state companies that have been acting independently. This would see a single company take charge of the three main refineries, another to oversee the northern and southern natural gas companies, and an upstream company — possibly under the revived name of the Iraq National Oil Co. — to embrace the four existing upstream companies, North Oil Co., South Oil Co., Iraq Drilling Co. and Oil Exploration Co.
Al-Ghadban started his career in the southern oil region of Basrah in the early 1970s, before leading the reservoir engineering department of South Oil Co. In 1989 he was appointed to head the reservoir and field development department at the oil ministry in Baghdad. At the time of last year’s war, he was serving as director general of the oil ministry’s planning department.
In Washington circles, the choice of al-Ghadban as Iraq’s new oil minister was greeted as a smart move.
Robert Ebel, energy program director at the Center for Strategic and International Studies, a Washington think tank, said al-Ghadban is well respected. He is known to be levelheaded and not overly optimistic about Iraqi oil production and development, Ebel added. But Ebel said he does not expect foreign oil companies to rush to do business in Iraq, and he expressed doubts that they “will sit at the table to bargain with an interim government.”
Despite the Iraqi Governing Council getting its way on the choice of Iraq’s interim president and prime minister, Bush administration officials put a positive face on the outcome. The US government and UN envoy Lakhdar Brahimi had hoped to have an interim government made up of technocrats rather than politicians associated with key parties. US President George W. Bush said the new Iraqi ministers seemed like a “good group,” adding: “It’s a government with which I believe we can work.”
One foreign policy consultant said the Iraqi Governing Council essentially hijacked Brahimi’s task. “Now you have an interim Iraqi government from the Iraqi Governing Council, which not so long ago the US government said was inept,” the consultant said. He said the US government “after wanting to micromanage the process, now wants to roll over, all because of a self-imposed deadline.”
Marina Ottaway, senior associate at the Carnegie Endowment for International Peace, said that on the surface, it seemed that Iraqis picked the new ministers rather than the US government or Brahimi, but noted that the 25 ministers in the Iraqi Governing Council had not built legitimacy among the Iraqi population, she said. “In that sense, it’s pretty hollow,” said Ottaway.
By Ruba Husari, London
(Published in Energy Intelligence Briefing June 01, 2004)