The interview with Mr Jabbar Al-Luaibi provides serious and damaging revelations, and could implicate top management of the Ministry of Oil-MoO on grounds of negligence, incompetence, loss of potential oil revenues and production capacity etc. The seriousness of the provided counts of events and matters calls for an independent investigation, and could very well be incorporated in the possible forthcoming questioning of the minister of oil before the Parliament. Since the interview is public and widely circulated through the internet at a remarkable pace, it is expected the Ministry of Oil provide its full response to what Mr. Al-Luaibi has said.
My comment, though, is confined to the impact and implications of this development on the accelerated/crush program designed to have additional production capacity on time.
Mr. Al-Luaibi in this very important interview provides further details in connection with the “report” on the state of the oil extractive industry in Iraq. He together with eight members, including two former oil ministers, had drafted the report after they made site visits, that took place between 21 and 31 December 2008, to all important locations and held intensive discussions with the top management and senior staff. The report, which was done pursuant to an instruction from the Prime Minister-PM and his Deputy and Head of the Economic Committee, Dr. Barham Salih, was presented to the PM on 12 January 2009. Copy of the report was distributed during the Symposium for Reviewing Iraq Oil Policy held in Baghdad February 27-March 1, 2009.
The first recommendation of the said “report” adopts an accelerated/crush program to increase oil production by some 350000-500000 b/d as suggested by Mr. Al-Luaibi, and the Symposium endorsed such program. (However, the range mentioned in the interview is 300000 -350000 b/d to be executed within two years 2009 and 2010). He estimated it would not cost more than $500 million to bring this extra capacity on, and this amount could be part of the company’s budget, not an additional budget. Essential component of the plan is to drill and complete some (56+) oil wells and connect them to the available excess capacities in existing surface installations in the oilfields of Majnoon, Nahr Bin Umar, Tuba, Luhais, Rattawi and Nassiriya.
Two days after the Symposium the Council of Ministers-CoM, in its meeting Nr. 8 dated 3rd March 2009, authorized a committee comprising the PM, his Deputy, the ministers of Oil, Finance and Planning, and the Legal Advisor of the PM to review the state of the oil industry and decide on the requested mandates and authorities for the ministry of oil and oil producing companies.
Apparently the crush plan drawn by Mr. Al-Luaibi has been adopted but he is, surprisingly, out of it. In his absence his “colleagues in the committee [which drafted the report] met with the prime minister and they arranged for someone else [Idriss Al-Yassiri, DG of the Iraqi Drilling Co-IDC, and member of the said committee] to be responsible for the execution of that plan and he was appointed in charge of it.” Hence, Mr. Al-Luaibi is “out of it all now on the minister’s instructions.”
What purpose it serves to alienate Mr. Al-Luaibi from a plan he had formulated and endorsed by everybody? Will this derail the implementation of the accelerated plan or expedite it? And finally why he is out of it all? His “colleagues in the committee” and the Minister of Oil could, should have the answers.
But what about the drilling program necessary for the accelerated plan as outlined above? There are no solid indications that the drilling program in the mentioned above oilfields has begun in earnest.
CoM in its meeting Nr. 16 dated 12 May 2009 approved a contract with an American Company (no name was given) to drill and complete 20 wells in Buzurgan oilfield within 24 months period. This could be important for the Buzurgan oilfield, but this field is not among the ones included in the accelerated/crush program! Isn’t it more appropriate to give priority to drilling operation related to the fields that are part of the accelerated program?
During the Symposium both the Minister of Oil and the DG of IDC announced the formation of a new joint venture Iraq Oil Services Company (IOSCO), between IDC and a British, Mesopotamia Petroleum Company (MPC). According to MoO website the Joint Venture with initial capital of $90 million is owned 51% by the Iraqi side and 49% by MPC, would be able to drill 60 wells per annum.
An old colleague of mine from INOC time of the 70s, who like myself attending the symposium, informed me that this company is not known with credible drilling record. Recently, another former colleague from MoO of that period, Dr. Thamir Uqaili “was not able to make contact over a two-week period with the management of MPC, apparently based in London, through a service contact was advertised on their website”.
Recalling Mr. Al-Luaibi story regarding the tender in 2008 to drill 45 wells, and how the ministry kept changing its mind back and forth nominating “unknown company”, the bewildering question remains where is the priority for drilling the needed wells for the crush plan?
Finally, entrusting the DG of IDC Mr. Al-Yassiri with the accelerated plan could shoulder him with a heavy load probably more than he can tolerate. To begin with he is heading a state company that has its own problems. IDC, according to Dr. Uqaili, “had some 25 rigs in 1993, and is now struggling to maintain what is left in their possession. It is planning to acquire drilling crews and skilled personnel to operate some rigs that are expected to arrive in less than a year from now.” Second, the new joint venture, IOSCO, and its operational requirements will undoubtedly add further burden on IDC, which chairs the joint management of IOSCO. Furthermore, this might generate “conflict of interest”, which could negatively affect IOSCO, IDC or the accelerated plan. Thirdly, the accelerated plan is already 5 months behind. And when 5 out of 24 month duration of the plan have already gone without putting the plan on the implementation path this by itself a daunting task requires a fulltime leadership, tireless efforts and consistent attention.
It remains to be seen though whether Mr. Al-Yassiri has the time, the managerial skills and professional competence to deal with IDC, IOSCO and the accelerated plan, and deliver.
As for our colleague Jabbar Al-Luaibi it is with regret and astonishment that at this critical phase of the oil industry we see yet another capable oil veteran with such a track record is left on the sidelines of a plan that was his product, and with this the brain drain in the Iraqi oil industry is getting deeper and alarmingly crippling. Why and for whose interests? Who is next?