Monday, May 17, 2010

More On Prospects For Jobs From New Oil Deals In Iraq

In 2009 Iraq signed ten new oil deals with international companies to develop its greatest resource. Six different businesses have said that they plan to start work on four fields this year. Those corporations have begun giving out multi-million dollar contracts to oil service companies to drill wells, prepare fields, etc. Schlumberger, Halliburton, Baker Hughes, and Weatherford are four of the largest petroleum service businesses in the world, and all have received work in Iraq recently. British Petroleum for example, gave out a $500 million service contract in March 2010 to Weatherford and Schlumberger to work with the state-run Iraqi Drilling Company on the Rumaila field in Basra. As a result, Schlumberger is setting up its first camp in Iraq that will have 300 people this year, and up to 600 by early 2011. Weatherford has been hired to set up 9 rigs in Iraq with 1,000 employees by July. 

The question is how much of this work will be done by Iraqis and how much by foreigners? Oil Minister Hussain al-Shahristani has said that the new oil deals will provide up to 100,000 jobs for Iraqis. The problem is that petroleum is not a labor-intensive industry, so this early effort to build up Iraq’s infrastructure might be the best chance for people to find work. Iraq lacks skilled workers however. As part of each one of the oil deals that the government signed are clauses saying that the foreign companies must train Iraqis. The corporations are said to be setting up training programs right now. Even then, early reports show how little work is actually going to be available. In total, the oil service companies have only talked about 1,600 workers by early 2011. This is just the beginning of what could be a huge amount of construction work, but even if that initial number were to double, triple, quadruple, etc. that would still only a handful of positions with no word on how many of those would go to Iraqis. Even the 100,000 jobs promised by the Oil Ministry, would not be adequate to meet Iraq’s needs, because it suffers from such high unemployment/underemployment, poverty, and 250,000 new people entering the work force each year. It seems that the promise of a booming oil industry may not translate into a booming job market for the country. The best hope is that the profits from the oil deals will be invested into the economy and services, and that might be the way for people to benefit.

SOURCES

Canty, Daniel, “Iraq’s skill shortage: Challenge vs. Opportunity,” Arabian Oil and Gas, 5/5/10

Gunter, Frank, “Liberate Iraq’s Economy,” New York Times, 11/16/09

Hatcher, Monica, “Weatherford to Be Ready for Iraq Fields by July,” Houston Chronicle, 4/20/10

Klump, Edward and Wethe, David, “Iraq Oil Bases Sprout as Halliburton Chases Growth,” Bloomberg, 4/21/10

Reed, Stanley and Razzouk, Nayla, “Iraq’s Economy Wakes Up,” Business Week, 4/22/10

Reuters, “Schlumberger: Iraq work hinges on security,” 4/25/10

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