September 3, 2008

Iraqi Oil Minister Gives News Conference on Oil Projects, Deal With China

Baghdad Al-Iraqiyah Television in Arabic - government-sponsored television station, run by the Iraqi Media Network - carries a 25- minute live news conference by Iraqi Oil Minister Husayn al- Shahrastani at the Council of Ministers' Press Centre in Baghdad.

Al-Shahrastani begins by saying that "the Council of Ministers has agreed to sign a contract with a Chinese company to develop the Al-Ahdab oil field in Wasit Governorate." The Iraqi Oil Ministry "insists that companies signing oil contacts with Iraq should offer service instead of being partners in the Iraqi oil wealth, which is for the Iraqi people under the constitution." Therefore, the Council of Ministers today "agreed to press ahead with the contract, which we initialed in China a few days ago," he says, adding that "the $3 billion-investment project will start within two months." He says that "the security situation cannot justify any delay of the project" and that "the oil field is expected to produce around 25,000 barrels a day within the next three years after which the output will increase up to 115,000 million barrels a day." The oil field, "which will supply the Al-Zubaydiyah power station with fuel," he says, is expected "to produce 630 million barrels during the next 20 years at a total price of $63 billion." He also says that "about $3 billion will be used to cover the cost of the project's equipment and maintenance and another $2.5 billion will cover the operational cost within the next 20 years." These amounts of money "will be paid to Iraqis, who are going to work in the project," he says, adding that "the Chinese company's share will total 2.6 billion, equivalent to 4 per cent of the production." This significant achievement by the Oil Ministry "will preserve Iraq's interests," he says, stressing that "the project will serve construction and development in Iraq by employing Iraqi engineering and technical cadres," and that "unskilled Iraqi laborers will also be trained by the Chinese."

In order not to harm the environment in Iraq, we insisted that "the water which will be used in this project should be taken from the mouth of the Tigris and Euphrates rivers." The project, he says, "includes a gas treatment and desalination unit to serve the Al- Zubaydiyah power station, as well as an oil pipeline which will be linked to the strategic oil pipeline to export oil from the oil field to the Al-Nasiriyah, from the Basra Port, and from the Mediterranean Sea ports." He says that "the project will also supply the liquid gas plant in Wasit with condensers, gas stations with fuel, and the entire region with liquid gas." We also set a condition under which "we will reduce the number of wells dug vertically," he says, adding that "we will invite the Chinese side to sign the contract in Baghdad."

Asked about power cuts in Iraq, Al-Shahrastani says that "Iraqi officials are aware of the suffering of the Iraqis from power cuts" and that "we held a meeting with the prime minister and the concerned ministers yesterday to discuss ways to provide as much power as possible for the Iraqis." He says that "this project will take three years," that "there are many other projects, which will provide an additional 10,000 Megawatt of electricity within the next three or four years," and that "the power stations to be established for that purpose will cost more than $7 billion." The Al-Zubaydiyah power station, he says, "will be linked to the national grid and provide Baghdad and the central governorates with electric energy," adding that "many other power stations will be built by a number of international companies."

Asked if there are other oil projects in Iraq, Al-Shahrastani says that "at a news conference on 30 June, we announced our plans to develop six large oil fields and two gas fields" and that "we will hold a conference in London on 13 October to ask companies to make their offers within six months." He also expects the contract on the said six oil fields "to be signed in mid 2009" and says that "we are also planning to develop other new oil wells."

Following a five-minute break during which the news conference apparently went on, Al-Shahrastani says that "due to a technical failure at one of its main units, the Al-Dura refinery stopped fuel production temporarily," that "the oil tanker, which would have brought us fuel, broke down on its way to Iraq," and that "the problem has been solved."

Asked if the security situation discourages some companies from working in the Iraqi soil fields and why gas stations do not abide by the official fuel prices, Al-Shahrastani says that "numerous companies are willing to work in Iraq" and that "we take severe measures against those tampering will fuel prices." He says that "the Oil Ministry alone cannot fight corruption," urging citizens, officials, security men, and judges "to cooperate to eradicate this phenomenon."

A correspondent says that after the visit to Iraq by Jordanian and Lebanese leaders, the Iraqi Government agreed to sell oil to the two countries at preferable prices, asking if Iraq will do so each time an Arab leader visits Iraq.

Al-Shahrastani says that "Iraq and Jordan signed an agreement three years ago," that "the Jordanians pay the cost of oil transportation from Bayji to Jordan," and that "the contract with Jordan was renewed during the prime minister's visit to Jordan several months ago." Regarding oil sales to Lebanon, he says, "no agreement has yet been signed" and that "I am waiting for the prime minister's instructions to start negotiations with Lebanon."

Asked if he expects oil prices in Iraq to rise or drop, Al- Shahrastani says that "oil is sold at the international prices on the day of loading" and that "we will continue to pursue this policy."

Responding to a largely indistinct question, Al-Shahrastani says that "the Oil Ministry is the only party authorized to conclude oil contracts under the valid laws" and that "any oil contact with any other party than the Iraqi Oil Ministry is considered null and void." He also says that "no company has any right to operate in Iraqi territories without the approval of the Iraqi Government" and that "I will give another news conference during the Month of Ramadan to make more important announces."

Originally published by Al-Iraqiyah TV, Baghdad, in Arabic 1230 2 Sep 08.

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