29 April 2005
Three months after Iraqis voted in national elections, the first Shiite-led government in Iraq’s modern history has won the support of the elected National Assembly. However, protracted negotiations among political factions and differences within the biggest Shiite bloc mean that the positions of two deputy premiers and five ministers, including the oil portfolio, have yet to be filled.
In a sign of the difficult horse-trading since the Jan. 30 elections, the head of the Iraqi National Congress, Ahmad Chalabi, has been appointed acting oil minister, in addition to his post as one of four deputy premiers. Chalabi, a controversial figure in both Iraq and the US, joined a coalition led by the head of the Supreme Council for the Islamic Revolution in Iraq (Sciri), Abdul Aziz al-Hakim, which, with almost a dozen other factions, ran in the elections as the Iraqi United Alliance and won 140 seats in the assembly.
Chalabi was at one point suggested as a possible oil minister during the last three months of political deadlock over the allocation of ministries. Viewed as largely unpopular among Iraqis and now among many of his coalition partners, he was however dropped from this contest.
Other contenders for the oil ministry include former minister Ibrahim Bahr al-Uloum, who held the position for 10 months in the first interim government appointed by the US Coalition Provisional Authority in 2003; Abdul Sahib Qutub, an adviser at the oil ministry appointed by Bahr al-Uloum during his tenure at the ministry; and Karim Hattab of the Fadhilah Party, which is close to the fiery Shiite clerical leader, Moqtada al-Sadr.
Although there is a consensus among Shiites that the next oil minister will come from the ranks of the Iraqi United Alliance, deep differences remained over the personalities. The issues are purely political and are not related to oil policy, observers say.
Addressing lawmakers after winning the backing of 180 members from the 185 present in the 275-strong parliament, al-Jaafari said he would work on completing the appointments over the next few days. These include the naming of two deputy premiers — one Sunni and one Turkomen — as well as the ministers of oil, defense, electricity, industry and human rights.
However, sources in Baghdad told International Oil Daily Thursday that an agreement on a choice for oil minister is not certain, and that Chalabi — considered notorious in some circles, but one of the architects of the fall of Saddam Hussein in others — could have a longer tenure than expected. One of Chalabi’s aides, Nabil al-Mussawi, suggested that he might remain at the head of the oil ministry “for weeks or months” if the deadlock continues among the Shiite partners.
Most of the Iraqi oil executives contacted Thursday remained subdued, while waiting to see if Chalabi — who has made a political comeback after a period in the cold since the deterioration of his relations with the Pentagon — will let go of the oil ministry now that he has been appointed to head it, albeit temporarily.
In the months following the fall of the Baath regime in 2003, Chalabi was alleged to have exercised pressure on State Oil Marketing Organization (Somo) to award crude contracts to companies with which he had business ties. The controversy resulted in the replacement of the head of Somo at the time, Mohammad al-Jibouri, who was later appointed as trade minister in the outgoing government.
Fresh elections should take place in December 2005 following the adoption of a constitution by a referendum, but are expected to be delayed by at least six months.
Whoever heads the oil ministry over the coming months will face the same daunting challenges that impaired his predecessor, Thamer al-Ghadban.
These include a rundown upstream sector with declining oil production, which has slumped to 1.8 million barrels per day from prewar levels of 2.8 million b/d; refining capacity shortages and domestic distribution crises that force products to be imported from neighboring countries; and a continuing insurgency that has targeted oil pipelines and infrastructure, hitting export revenue.
“The top priority is to ensure sufficient protection to the pipelines to enable us to use the northern export line again, and a quick rehabilitation to raise production as quickly as possible,” a Somo official told International Oil Daily Thursday.
Iraq’s northern Kirkuk-Ceyhan pipeline has been idle for most of the last six months, while term sales from the southern Basrah Oil Terminal were cut by 10% in January to reduce demurrage costs to Somo, as a backlog of 20 million bbl was carried over from month to month.
“We have managed to reduce the backlog to less than 10 million bbl so far and we hope to renew term contracts in June with the original volume awarded in the current contracts,” the official said.
Iraq is currently exporting an average of 1.55 million-1.6 million b/d.
By Ruba Husari, London
(Published in International Oil Daily April 29, 2005)