Sunday, October 10, 2010

Row Over Al-Ahdab Oil Field Continues In Wasit

Al-Ahdab Oil Facility In Wasit
Source: Washington Post
Ever since the Chinese National Petroleum Company (CNPC) re-worked an old Saddam Hussein era oil contract to develop the Al-Ahdab field in Wasit, it has run into one problem after another. In the latest incident, the Oil Ministry sent federal police to arrest two members of the Wasit provincial council, including the deputy head, on October 7, 2010 for forcing their way into the facility last month. On September 27, council members and local police went to Al-Ahdab demanding to see all of the financial records of the joint Iraq-Chinese company that runs the field, claiming mismanagement. The Oil Ministry condemned the council’s actions, saying that local officials had no authority over the facility. Baghdad has now taken it a step further by arresting some of the politicians involved.

Just the day before the Wasit council demanded that employees at the field be transferred elsewhere because of corruption and embezzlement charges. The council also accused the Iraq-Chinese company of failing to provide money or jobs for the province, which is one of the poorest in Iraq. The local politicians threatened to turn Wasit into an autonomous region, unless something was done about the Al-Ahdab employees.

Back in 2009, Wasit farmers destroyed some of the oil company’s equipment, saying that it was ruining their fields. That forced Al-Ahdab to shut down for a short period until Baghdad sent extra security. Then as now, locals complained that they were not receiving jobs or money from the field.

CNPC renewed a 1990s deal into a new service contract with the Oil Ministry in August 2008. Under the agreement, CNPC is to raise production at Al-Ahdab to 100,000 barrels a day within five years. They will initially receive $6 per barrel for every one they produce over 100,000. That will eventually go down to $3 per extra barrel.

It’s unclear now whether Al-Ahdab is the exception or will set a trend for how locals view the international oil companies that are beginning to work in Iraq. In 2009 and 2010, the Oil Ministry signed twelve new contracts with foreign corporations to develop its energy industry. They are currently working on fields throughout southern Iraq. Whether their operations will eventually garner the kind of animosity that CNPC has is yet to be seen, but if any of them do, it could be a setback for Baghdad’s plans. Not only has the Oil Ministry promised a huge increase in oil production and exports, but also jobs, something Iraq desperately needs. There are many who questions whether this will ever happen, as petroleum is not a labor-intensive business. Iraq will definitely reap huge profits, and how those are spent will likely determine whether these new deals really help Iraqis or just make it another oil dependent country where the public rarely sees any benefits.


Lando, Ben, “Wasit official arrested for Ahdab raid,” Iraq Oil Report, 10/8/10

Al-Rubaiaa, Salah, “Iraqi province and oil ministry in row over oil field which China is developing,” Azzaman, 10/7/10


Maury said...

Just their bad luck to have a Chinese company get the work. These Chinese companies only use Chinese labor. They bring all the food and supplies in from China too. To add insult to injury, the workers stay on the compounds, and spend nothing in town. This way, a town can have a 10,000 man construction crew on its outskirts, and not a single job to show for it.

Joel Wing said...

Yes, at least according to Wasit residents, which of course has to be taken with a grain of salt, the only jobs that have resulted from the Al-Ahdab deal have been security guards and they complained that many of those weren't even given to locals. Otherwise they complained that the Chinese workers were pretty much keeping to themselves.