Risky Business in Iraq
|June 14, 2014||Filled under Iraq Business News|
Iraq Business News –
As ISIS prepares to advance on Baghdad and Iraq slips towards civil war, the world’s oil corporations are updating plans to evacuate worried staff, from Dohuk in the north to the southern powerhouse of Basrah.
With one eye on Iraq’s turbulent history executives in Houston, London, Moscow and Beijing always knew they might have to pull their people out – although perhaps not now and not under these extraordinary circumstances.
Ever since a Turkish company discovered oil in Kirkuk in 1927, Iraq – with its 150 billion barrels of proven reserves – would be a commercially tantalising yet risky business for the global giants.
Oil exploration and production is long haul anyway and, as one boss told me: “Iraq is adventure capital, not venture capital.”
But hundreds of billions of dollars of foreign investment did pour in since the fall of Saddam in 2003 and until now the biggest industrial revolution in Iraqi history was revitalising a moribund economy and underwriting mega-construction projects like millions of new homes, highways, Sports City and the Baghdad to Basrah high speed rail link.
ExxonMobil, Shell, BP, Lukoil, Kuwait Energy and China Petroleum are among major players in the south and east of Iraq. BP’s Rumaila is spread over an astonishing 2000 kilometres and accounts for 12% of Iraq’s entire reserves.
Shell’s Al Majnoon is another monster, although the field’s production potential was slowed by the discovery of thousands of tonnes of explosives and other military hardware left over the Iraq’s war with Iran.
In Kurdistan companies from around 20 nations hold licenses including America’s ExxonMobil, the UAE’s Dana Gas and Turkish registered Genel Energy run by former BP man Tony Hayward.
Fortunes spent on exploration and production are half the story. Some giants like Shell have paid out countless millions building roads, housing and schools and all have extensive training programmes for Iraqis.
And it was not only the hydrocarbons industry making a difference in Iraq.
Thanks to Herculean efforts by Western diplomats, governments departments like UK Trade and Investment (UKTI) and trade groups such as the Iraq Britain Business Council (IBBC) and Middle East Association (MEA) other major corporations took the brave step to dip their toes in Iraqi waters bringing with them sound and transparent trade practices.
PwC, Deloitte, Ernst and Young and Eversheds are among Western law firms and finance houses with offices in Iraq. Standard Chartered was the first British bank into Iraq and security firms such as Control Risks, Olive Group, Restrata and G4S are also well established.
If these companies pull out Iraq will still survive, of course. And it has to be acknowledged remarkable Iraqi engineers kept the oil fields running for most of the Saddam years.
But Iraq’s rebirth as of one of the richest and hopefully commercially transparent countries on the planet will have be set back for at least a generation.
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