Iraqi Oil Minister Interviewed on TV on Fuel Prices, Oil and Gas Law, Contracts
["People's Talk" programme, featuring an interview with Iraqi Oil Minister Dr Husayn al-Shahrastani, by Zaynah al-Alusi, in the studio - Live or recorded]
Baghdad Al-Iraqiyah Television in Arabic at 1903 on 30 June carries a live or recorded interview with Iraqi Oil Minister Dr Husayn al-Shahrastani within its “People’s Talk” programme. The interview is conducted by Zaynah al-Alusi in the studio.
Asked that the people talk about a “reduction in the prices of oil byproducts, particularly gasoline, and some people say that the price will be 250 dinars for one litre,” Al-Shahrastani says: “I had wished that one of the powers of the oil minister would be making the price of gasoline 250 dinars, or, in fact, giving it for free to the people. This is a wish, but this is not one of the powers of the oil minister. The decisions on prices are made by the government. There was an agreement between Iraq and the IMF, before the formation of this government and since 2005, which stipulates that in return for writing off 80 per cent of Iraq’s debts, which total $140 billion, economic reforms should take place. They were defined by the IMF. Among the most important paragraphs of this agreement is amending the prices of oil byproducts, presenting a list of the amended prices, and fixing a ceiling of prices, or in fact a bottom for prices, something which means that prices could be higher but not lower than this bottom. When we assumed the responsibility of the ministry, we had the choice of either implementing this signed agreement or accepting the continuation of debts. When we talk about these debts, this means that they represent approximately $5,000 for each Iraqi citizen. It was not a small amount that Iraq could endure.” He says that the government had decided to go ahead with the agreement and to “comply with the list of the amended prices of oil byproducts.” He also speaks about other “measures” Iraq had to take, such as the issues of “interest, electricity prices, and other issues.”
He adds: “We had a meeting with the IMF two weeks ago. The IMF was determined regarding the issue of reexamining prices due to the increasing prices of crude oil in the international market as well as the increased prices of byproducts two times as much compared with the last year. As a ministry in charge of this sector, we have categorically rejected any reexamination of prices during this year and we have announced this. We said that the international prices are paid by citizens in Europe and Japan who have living standards and salaries that are different from that of Iraqi citizens.” He says: “Frankly speaking, the IMF threatened to revoke the agreement and they have strongly objected to the new pay scale. They said that this conflicts with the agreement and we cannot accept a pay increase of 75 per cent at one time, and therefore, the Iraqi Government should reconsider this. So, we had a complicated and difficult issues, and we had actually fought like heroes in order to maintain the prices as they are without change and increase during this year. This is what has happened.”
Asked that the “talk today is about the renewal of queues at gas stations and whether this is a sign of a new crisis,” Al- Shahrastani says: “You mean what happened in Baghdad over the past few days. The crude oil pipeline which feeds the Al-Dawrah Refinery, which is the main and only refinery in Baghdad for the production of oil byproducts, was the target of a major act of sabotage. Five meters of the pipeline were violently hit in the Al-Iskandariyah area, near the power station. The pumping of crude oil to the Al- Dawrah Refinery has stopped and the refinery was brought to a halt. As a result, we had no production over the past few days, something which caused a serious drop in supplies for the stations. Thus, signs of a crisis have emerged. But to reassure the citizens, I say that we have formed a crisis cell and sent a team to repair the damage. It is now working day and night, 24 hours a day.” He says that the pipeline will be ready in a “few hours,” and the refinery will “resume operations within a few days.”
Immediately after this, and at 1915 gmt, the station carries a video report on the “fuel crisis” in Iraq. Citizens are interviewed to express their opinion about the crisis. All in all, these citizens say that the “situation is better than the past year and the year before.” Al-Iraqiyah’s Correspondent Qays al-Murshid says: “At any rate, the fuel crisis in Iraq has dropped gradually compared with the past. However, eliminating this crisis entirely will continue to hinge on the Oil Ministry’s modern plans and programmes that are aimed at maintaining this level of success or reaching better levels.”
Al-Alusi says: “You have heard the citizens’ opinions. Some of them spoke about an improvement in the distribution of some oil byproducts. However, has the Oil Ministry managed to really alleviate the suffering of citizens?”
Answering this question, Al-Shahrastani says: “I would like to say that I am proud of the awareness of the Iraqi citizen. This is because the opinions I have heard are correct and fair. There is clear improvement in securing liquid gas and kerosene but there are signs of queues at the gas stations. I have explained the reason; namely, that the Al-Dawrah Refinery is inoperative because the pipeline was attacked and we are working day and night to repair it. We will make up for this shortage during these days by pumping additional amounts in the pipeline and by bringing one million litres from Bayji to Baghdad.”
Asked about this “sudden improvement in the distribution of oil byproducts and why crises emerge from time to time,” Al-Shahrastani says that regarding the improvement, “great efforts were made to control the situation,” adding: “The causes of the previous crises were corruption, smuggling, and theft.” He says: “Crises might occur in some areas either due to military operations, the destruction of roads or bridges, or due to a damaged pipeline, as happened to the Al-Dawrah Refinery. These are temporary issues that are tackled immediately and we try to overcome them.”
Commenting on footage of fire at an oil refinery, the minister says: “This is a missile attack on Al-Dawrah Refinery. We should not belittle the effect of the acts of sabotage and terrorism from which the ministry suffered. A year ago, the rate of terrorist operations was 30 operations a month.”
Asked about the “effects of these terrorist operations on the distribution of oil byproducts to the citizens,” Al-Shahrastani says that “it is a big effect,” adding: “The efforts made by the oil cadre are great. Therefore, I hope that through their patience and awareness, the Iraqi citizens will cooperate with us to overcome crises. We should not worsen the situation every time there is a scarce production and pile up the products at home. We should know how to cooperate in order to overcome these crises.”
Asked “when we will reach self-sufficiency in oil byproducts,” Al- Shahrastani says: “After we build the new refineries. We have signed contracts on the Al-Nasiriyah Refinery, which is a big refinery that processes 300,000 barrels per day.” He adds: “This refinery only will double Iraq’s production capacity and achieve self- sufficiency. We have another big refinery in Karbala, a big refinery in Kirkuk, and another big refinery in Maysan. These are all projects under implementation. However, what is more important than this for the citizen is that we have found refineries that can be installed and operated within 18 months, which is considered a record time, taking into consideration that the big refineries I spoke about need from four to five years. However, we will install these refineries within 18 months. We will begin with the first one in Karbala and the second will be in Kirkuk.”
Al-Alusi says: “Although some sides describe your ministry as the rich ministry, or one of the richest ministries in Iraq, there is talk about the low salaries at this ministry, particularly in the new pay scale, something which caused a serious annoyance by the employees. What are your measures in this regard?”
Answering this question, Al-Shahrastani says: “Indeed, 90 per cent of Iraq’s revenues are secured by the Oil Ministry through oil production and exports, but the level of salaries at the ministry is low and even lower than that of the other ministries. This is an unacceptable phenomenon. What happened is that in the new pay scale and the instructions it included the employee’s salary should be based on his job title. At the Oil Ministry in the past, the salary used to be increased but without any change in the job title, taking into consideration that the salary was not affected by the job title. This is negligence that accumulated over the past five years. It has nothing to do with the ministry’s current measures.” He adds: “Through this TV channel, I would like to reassure the ministry’s personnel that I will not allow any drop in any employee’s salary. I will tackle this issue through awards or something else until we rearrange grades in harmony with the instructions.”
On the “suffering” of the citizens who use power generators, the minister says: “Regarding generators in particular, taking into consideration that I am aware of summer heat and the importance of this issue to the people, I will issue instructions to the distribution company to increase the amounts allocated for generators, provided that it should be made clear that such generators do exist. Frankly speaking, and regrettably, I do not want to surprise the citizens by the number of people who we found that they receive amounts for generators that do not exist.”
Asked: “Although the ministry supplies the bricks factories with diesel oil, we hear that they complain about this. What is the truth in this issue?”
Answering this question, Al-Shahrastani says: “We sell the tonne of diesel oil for bricks factories at a price of 100,000 dinars. We export this same diesel oil at approximately 500,000 dinars for the tonne based on international prices. This means that we sell it to them for one fifth of its real price. There are real bricks factories and there are owners of real generators. However, we find large amounts of the diesel oil that is sold to the bricks factories on the Jordanian and Syrian borders to be smuggled to outside Iraq. So, they buy it for this low price and sell it based on international prices. Thus, they make the country lose these revenues and do not produce bricks to sell them to the people. In light of this, we have coordinated with the Industry Ministry and the inspection committees in the governorates and said that we are ready to give any real factory that produces bricks whatever amounts of diesel oil it needs at 20 per cent of its real price.”
Al-Alusi says: “Today, you have announced the first round of licensing and called them services or support contracts. What are these contracts?”
Answering this question, Al-Shahrastani says: “The services contracts mean that we attract international oil company that has the required technologies, financial capabilities, and expertise in this field to render a service to us based on a certain price. There is a difference between these contracts and those of the sharing in production. The sharing production contracts stipulate that the foreign company shares Iraq in its oil. It is true that oil is for the Iraqis when it is underground, but when it is produced, based on this sharing contract, the company shares Iraq its oil. The Oil Ministry has rejected such contracts and we said that Iraq’s oil will continue to be for the Iraqis and under full national control. It is true that Iraq needs foreign technology, investment, and the foreign know-how, but for a price.”
He adds: “Frankly speaking, the Oil Ministry adopted a stand towards the contracts that were concluded in the Kurdistan Region, taking into consideration that they are all sharing contracts that granted a large part of Iraq’s oil to the foreign companies.”
Asked that “one of the members of the Council of Representatives has criticized this issue and said that the services contracts do not serve oil industry,” Al-Shahrastani says: “I do not know who this person is or what his motives are. I hope he will not be one of those who serve the interests of foreign companies that want sharing contracts. Perhaps, he wants to convince the Iraqis that the services contracts do not serve you and that you should give your oil to others in the hope he will benefit from this. Such kind of people who pant after foreign companies is known to us. There are other sides that do not want oil industry to develop. There are foreign interests in this which do not want Iraq to take its place among the big oil-exporting states in order to improve the living standards of citizens. This is a political position. They seek to disrupt the political process and to obstruct the reconstruction of Iraq, the increase of production, and the improvement of living standards, taking into consideration that they view this as an achievement by an elected government that represents this existing situation, and thus, they want to foil it even if this was at the expense of the Iraqi people. Believe me, many of the crises at the gas stations are fabricated. They do not care about the citizens’ suffering, but what counts to them is to say that there is a crisis in the country.”
Asked “when we can conclude long-term contracts and what are the specifications of these contracts,” Al-Shahrastani says: “The services contracts are long-term contracts. The companies will continue to work in Iraq and to produce, and we will pay a price for them. In fact, we ask them to invest, especially since we are talking about many billions. We have a surplus in the budget now, but our brothers tell us that we need this surplus to reconstruct the other sectors which cannot secure foreign financing.”
Asked that “some sides say that there are monopoly companies in these concluded contracts, which will control the Iraqi market,” Al- Shahrastani says: “This is a cheap political disruption. Anyone who knows the ABCs of oil industry knows that this is false. We have sanctioned 35 companies from various nationalities out of 120 companies also from various nationalities. The world has even congratulated us on this professionalism. We have refused to look at the nationality of the companies. It was said that all contracts will go to the US companies because America has an occupation force and the like. Practically speaking, the largest oil companies in the world are US companies, taking into consideration that oil industry had basically begun in the United States and the US market is the largest oil consumer. Despite this, there are only seven US companies out of 35 companies that are qualified. Among the qualified companies are also four Chinese companies, four Japanese companies, Russian companies, German, Italian, French, and British companies.”
Answering a question on the Oil and Gas Law, Al-Shahrastani says: “The Oil and Gas Law still suffers from political differences among the political blocs in Iraq and at the parliament. There is also the signing of oil contracts based on sharing in production. These contracts are shrouded in full secrecy and without the approval of the Iraqi Government.”
The programme and the interview conclude at 1959 gmt.
Originally published by Al-Iraqiyah TV, Baghdad, in Arabic 1903 30 Jun 08.
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