The former head of
Iraq
's
largest state-owned oil company and advisor to the country's oil ministry has
criticized deals
Baghdad
signed with international oil majors to develop some of its biggest
fields.
"There is no clear national plan on how to develop these huge oil
fields," Jabbar Al Luaiby told Dow Jones Newswires in an interview.
BP PLC (BP.LN), Royal Dutch Shell PLC (RDSA) and Cnooc Ltd. (CEO), Exxon Mobil
Corp. (XOM) and
Italy
's
Eni Spa. (ENI.MI) have bagged deals with Iraq to develop fields in the war-torn
country, which holds the world's third-largest proven oil reserves after Saudi
Arabia and Iran, according to BP.
Al Luaiby's remarks could increase pressure on Baghdad to revise contracts
awarded to foreign companies. Ayad Allawi's Iraqiya bloc, which won the most
seats in the recent parliamentary election, said it would like to review oil
contracts signed with the majors.
"They're huge deals that need the infrastructure, the potential and
management which Iraq is currently lacking because of years of war, economic
sanctions and destruction," said Al Luaiby, who recently left his position
as an advisor to Iraq's oil minister.
Al Luaiby added that international oil companies can still play a part in
tapping
Iraq
's
vast resources once better infrastructure and oversight is in place. Foreign
investment could help reverse the impact of two decades of war, sanctions and
neglect on
Iraq
's
oil industry.
A spokesman for
Iraq
's
oil minister Hussain Al Shahristani declined to comment on Al Luaiby's remarks
when called.
Two auctions held last year led to the award of 11 major oil deals to
international oil companies that
Baghdad
hopes will boost daily capacity close to Saudi levels of 12 million barrels
from the current 2.5 million barrel a day in place. The 20-year deals give
companies costs for development and remuneration for each barrel pumped.
Al Luaiby argues that
Baghdad
should have offered short-term technical deals originally negotiated with oil
companies but canceled in 2008.
NO DRILLING
The
veteran Iraqi oil technocrat, who was head of South Oil Co., or SOC, between
2003 and 2008, also said that the current decline in
Iraq
's
crude oil production from southern
Iraq
was
"expected" because of failure to drill new wells and repair hundreds
of existing spigots.
Iraq
's
exports in April of Basra Light crude dropped to 1.42 million barrels a day, a
fall of 100,000 barrels from the previous month, according to officials. Output
is expected to remain lower throughout the summer as the hot climate makes
production harder.
"I told them several times that production would decline if we don't move
quickly to check it," said Al Luaiby.
A popular tribal figure in
Basra
, Al
Luaiby, played a lead role in rebuilding the country's southern oil fields from
scratch after the 2003 invasion. Headquartered in
Basra
, SOC
is
Iraq
's
largest state-run oil company accounting for 70% of total output.