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Iraq's Energy Development Dependent on Politics


Iraq is regarded as second only to Saudi Arabia in terms of its oil and natural gas reserves, but 80 percent of its fields lay undeveloped and those that are developed suffer from weakened infrastructure. At a recent conference in Houston, energy industry representatives and participants from Iraq focused on what needs to be done to develop the country's badly needed resources.

Iraq Oil and Gas Summit held in Texas

For the past six years Iraq has been the scene of violence and turmoil, but its economic situation, as well as its security, has improved.

The key to Iraq's development is its vast oil and gas reserves.

At the Iraq Oil and Gas Summit held recently in Houston , international oil services companies met with participants from Iraq to make contacts that could become lucrative down the road.

Don Anderson represents the Ameron Company, which produces pipes and other products used in oil and gas fields. "We just had a contact that could be in excess of $5 or $10 million in business for our company," Anderson said. "So this was well worth it."

Norm Sydlowski, a former advisor to the Iraqi Minister of Oil, says Iraq's future will brighten considerably once its political leaders pass hydrocarbon legislation to regulate oil and gas contracts. "I think if the country can get a hydrocarbon law passed through parliament, that would be the optimum, because it sets the course, it sets the rules for very large investments for the future," Sydlowski said.

Sydlowski says Iraq's oil riches could make the country prosperous for decades to come. "The country probably has much more than the official 115 billion barrels of reserves on the books. Once they are able to really look and really develop and really go forward on the exploration side, I think they are going to find that those reserves in Iraq are much greater than the stated number today," he said.

Potential developments stalled

But the hydrocarbon bill has been stalled for three years now, and most of the participants in Houston see no chance of it being passed until after the election in February.

One of the most promising developments is the recent agreement to allow oil produced by two newly developed fields in Kurdistan to be exported through the Iraqi national pipeline.

Qubad Talabani is the Kurdistan Regional Government's representative to the United States. "Two of those oil fields that have been developed are producing now. The pipeline is connected to the national pipeline and, on June first, we will begin exporting 60,000 barrels and, later, up to 100,000 barrels a day into the national export pipeline."

Agreement complications

Friction between Arab Iraqis and the Kurds often complicates business in Iraq. The country's oil minister says an agreement, between the Kurdistan regional government and two foreign oil companies, to develop the new fields is illegal.

Former Iraqi Oil Minister Ibrahim Al-Oloum told reporters in Houston that this is a political dispute that should not deprive the Iraqi people of needed development.

"I think dialogue is the way to resolve this problem," Al-Oloum said.

Asked his opinion of the man currently holding the job he once held, Al-Oloum hesitated. "Well, the camera is here." he laughs.

The political problems holding back Iraq's energy development are not likely to be resolved until sometime after elections scheduled for early next year.

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