Iraq: local governments oppose Baghdad gas deals

The Iraqi oil ministry’s auction of three natural gas fields last week has been angrily opposed by all the governorates in which they are located, with provincial officials threatening legal action against Baghdad and warning that they will refuse to cooperate with the developers. Bids were granted to companies from Turkey, Kuwait, Kazakstan and South Korea to develop gas fields holding approximately 10% of the country’s reserves. The fields in Anbar, Diyala and Basra are primarily being developed for domestic consumption to improve Iraq’s feeble power supply, oil ministry officials said.

But provincial council members maintain the oil ministry overstepped its bounds—and may have violated the constitution—by holding the auction without consulting local officials. The provinces say they want more control over their natural resources and assurances that the developments will benefit their economies.

Iraq has the fourth-largest proven oil reserves in the world, and is believed to have the tenth-largest gas reserves. Most of the country’s natural resources are undeveloped.

In western Anbar governorate, the council is threatening to sue the oil ministry for not consulting local authorities on the auction bid. It says it will not assist the foreign firms that won the right to develop Akkas, a large gas reserve near the Syrian border. Local officials point to Article 109 of the constitution, which mandates that the federal government should manage oil and gas “with the producing governorates and regional governments.”

“The council will not provide any kind of cooperation or support or facilities to those companies that won the bid,” said Jasim al-Halbusi, the head of the provincial council. Asked if there could be attacks on the foreign companies developing the field, Halbusi responded, “The central government will bear the responsibility for ignoring the decision of Anbar’s local government and the demands of Anbar’s people.”

Oil Minister Hussein al-Shahristani called on local authorities to cooperate with the firms that won the gas field auction, warning that “the government will be very strong and severely punish everyone who hinders development of these contracts.” (IWPR via ENS, Oct. 28)

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