Thu, Aug 09, 2007 - Page 9 News List

The struggle for Iraq's oil

Baghdad wants to ressert central control over oil reserves run by Kurdish authorities who have opened the door to foreign investors

By Michael Howard  /  THE GUARDIAN , TAQ TAQ, IRAQ

At the end of a rough dirt track, on a sun-baked hillock once the domain of scorpions and snakes, squats an odd settlement of caravans, generators and drilling rigs that is at the heart of the battle for Iraq's oil.

"Welcome to Texas, Kurdistan," said Karim Ali, as his taxi bounced to the gates of the Taq Taq oilfields on the undulating plains of Koi Sanjaq, some 130km southeast of Irbil.

"Soon we'll all have big hats and cigars like them," he said, nodding at a group of oil workers passing by on a pickup truck.

Like many Iraqis, Karim appeared convinced that the country's vast reserves of crude, the bedrock of its economy, were about to be siphoned off by major US oil corporations. The presence of "foreigners" here at Taq Taq merely cemented his certainty.

With the administration of US President George W. Bush pressing the Iraqi government to pass a new hydrocarbons law, there are widely voiced assumptions that it will bulldoze the oil industry into privatization and that foreign firms -- meaning US ones -- will unfairly reap the rewards. A survey published on Sunday by a group of British and US nongovernmental organizations suggested most Iraqis oppose plans to open the oilfields to foreign investment.

Unlike his compatriots, however, Karim, a Kurd from Sulaimaniya, was not perturbed at the thought.

"They [the Americans] are our friends and they deserve it for getting rid of Saddam [Hussein]," he said. "Besides, when oil was in the hands of Baghdad, it never meant anything other than bombs and bullets for us."

There are no Americans at Taq Taq. The operation is being managed by the Taq Taq Operating Co (TTopco), a joint venture between Genel Energie, a Turkish company, and Addax Petroleum, an independent exploration and development company quoted on the London and Toronto stock exchanges.

The closest thing to a Texan oilman among the 200 or so international team members is Bill, the beefy rig manager, who in his hard hat could pass for John Wayne's Red Adair character in Hellfighters. When not burrowing for oil in Kurdistan, Bill farms sheep in his native Australia.

The Taq Taq field promises to be the most lucrative new oil development in Iraq since the fall of late Iraqi president Saddam Hussein. The three wells sunk since drilling began in May last year have penetrated valuable deposits of high-quality crude oil. Within five years it could be producing as much as 200,000 barrels a day, TTopco general manager Les Blair said.

But the trouble for some in Baghdad is that the contract for the Taq Taq operation is one of several exploration and development projects in the self-rule region that have been negotiated and signed by the Kurdish authorities, independently of central government.

Another more advanced development at Tawke, near the northern Kurdish city of Dohuk, is being run by a Norwegian independent, DNO. The firm recently announced that it was ready to begin exporting the oil it had discovered. It would be the first new field in Iraq to do so since the US invasion in 2003.

The much-delayed hydrocarbons legislation, which was supposed to have gone before the Iraqi parliament before its summer recess, was one of the main US benchmarks for Iraq's ethnic and sectarian communities to heal their divisions.

Likewise, many Iraqis are banking on oil as the nation's best chance to guarantee economic and social stability.

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