Jul 21, 2021
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Iraq on the Eve of a New Crisis – Major Oil Companies Prepare to Leave

“The war against the American occupation returns to the open phase”

The activity of the federal authorities in Baghdad in the last month testifies to the growing concern for their own fate. It would be an exaggeration to draw direct parallels with the well-known events in Afghanistan, but the fact that they influenced what is happening in Iraq is undeniable.

On June 30, Iraqi Prime Minister of Iraq M. al-Kazimi visited the NATO headquarters in Brussels, where he called on to continue supporting the Iraqi forces in the fight against the ISIS banned in Russia *. He described Iraq as the first line of resistance in the war against IS, which needs broad international support, and praised the role of the Iraqi armed forces in the fight against terrorism.

NATO officials limited themselves to “Highly appreciated the Iraqi forces in their fight against IS and expressed their readiness to support the efforts of the Iraqi government to hold early parliamentary elections on October 10 this year”… And it is not surprising: in Brussels they were busy with the hasty evacuation of military contingents from Afghanistan, where the countries participating in the “mission” competed with the US Armed Forces in the speed of leaving their positions. Along the way, Greek Prime Minister K. Mitsotakis postponed an official visit to Iraq scheduled for July 5 “for security reasons.” Away from sin.

Prime Minister Mustafa al-Kazimi is due to arrive in Washington on July 26; the corresponding official invitation (read: call to the carpet) was received in early July. According to the Iraqi Foreign Ministry, the head of government will meet with President Joe Biden and other high-ranking officials of the American administration at the White House. White House spokeswoman Jane Psaki said: “The visit aims to highlight the strategic partnership between the US and Iraq … President Biden looks forward to strengthening bilateral cooperation with Iraq on political, economic and security issues, including joint efforts to ensure the final defeat of IS.”

The press services also said that the parties will discuss other topics of mutual interest, including education, health, culture, energy and climate. At the same time, it is absolutely clear: the main issue is the presence of American troops in Iraq and the protection of American investments in this country. The opinions of the State Department and the Pentagon differ. If the military is ready to talk only about the gradual withdrawal of combat units with an indefinite schedule and insist that advisers and specialists remain in Iraq, then so will. O. Assistant Secretary of State Joy Hood, in an interview with the Arab channel al-Arabiya, plaintively asked that the Americans be left alone and given the opportunity to fight the common enemy, which is IS.

Meanwhile, pressure on US forces in Iraq has been mounting in recent months, primarily from Iran-backed Shiite militias. The number of armed attacks and explosions, rocket and mortar attacks in June exceeded 100, which is comparable to the figure for the period 2008-2010. Attackers are increasingly using quadcopters, and their combat load and accuracy are increasing.

Several radical armed groups belonging to the “people’s militia” announced the creation of a Resistance Front. Thus, the general secretary of Hezbollah al-Nudjab, Akram al-Kyaabi, said that his units would fight the Americans until they leave the country. Saad al-Saadi, one of the leaders of another group (“Asaib Ahl al-Haq”) also announced plans to intensify attacks on US troops in Iraq. On July 12, he announced that “The resistance front has developed a new plan to confront the US forces and the war against the American occupation is returning to an open phase.”

In addition to the belligerent statements of pro-Iranian militants, the “sleeping cells” of IS are becoming more active; energy supply facilities became one of the main targets of the terrorists. It is literally hot time in Iraq now – the temperature in Baghdad, central and southern provinces reaches 54 degrees. Since late June, more than 50 power transmission towers have been blown up in Diyala, Kirkuk and Baghdad provinces, and a thermal power plant in Samarra (Salah al-Din province) has been damaged by rocket attacks. Many parts of the country (except for the Kurdish autonomy) were left without electricity and water, and people took to the streets of Basra, Baghdad and other large cities. The most common demand of the participants of the action is “Give us the opportunity to simply survive!” accompanied by the statement: “It only gets worse.”

The collapse of the power supply system resulted in the resignation of Energy Minister Majid Mahdi Hantush. At the same time, Prime Minister M. al-Kazimi ordered the dismissal of the director of the General Electricity Transmission Company “for neglect of official duties.” In addition, the head of government said that the Cabinet has already taken “many important decisions”, in particular on the creation of “Task force to address electricity shortages in Baghdad and the provinces”… The formation of special formations for the protection of power plants and power transmission poles was announced with the participation of army and police units, as well as detachments of the “people’s militia”. The decision is strange, since the Ministry of Internal Affairs has the Main Directorate of the Energy Police – a total of more than 60 battalions, which are supposed to ensure the safety of power generation and transmission facilities, as well as the oil and gas sector.

However, they clearly do not cope with the task – suffice it to mention the repeated shelling of residential townships of oil workers near Basra. (Energy City), blockades by local residents of oil fields, individual facilities, and even attempts to storm contractors’ townships (some were completely defeated). All raids of special forces with the participation of the army to seize illegal automatic and other weapons ended in the same way – the locals handed over their old, and the sheikhs of the tribes openly declared: we are in power here!

The Iraqi army, despite the pathos of official statements about the victory over IS in 2017, is not always able to defend even itself. On July 17, terrorists attacked a checkpoint in Kirkuk province, killing four soldiers. The Peshmerga ministry of Kurdish autonomy has announced its readiness to form two joint brigades with the Iraqi Ministry of Defense to intensify ongoing operations against IS. Deputy Minister of the Peshmerga Sarbest Lazgin said that this will happen as soon as issues related to armament, financing and the structure of these formations are agreed within the framework of military cooperation between Erbil and Baghdad. Comments are superfluous.

Terrorists were also noted in the Iraqi capital: on the evening of July 19, on the eve of the significant Muslim holiday of the Sacrifice (Eid al-Adha, which we call Eid al-Adha, which we call Eid al-Adha), an explosion in a busy market in Sadr City in eastern Baghdad killed more than 30 people. dozens were injured.

Zahra al-Bajari, a member of the Iraqi Parliament’s Committee on Energy, notes that the existing state system is extremely weak and incapable of qualitatively performing its assigned functions. The energy problem, like many others, requires a well-thought-out strategy, as well as significant and effective cash investments. In Iraq, this can theoretically be realized only with profound internal political changes that transform the very structure of state power.

A clear example of how adequately the current officials in Baghdad assess the situation is the statement by the head of the Iraqi Office for the Regulation of Radioactive Sources. On June 15, Kamal Latyf announced a program for the construction of an 11 GW nuclear power plant. It is envisaged to commission eight power units by 2030, and a contract worth $ 40 billion is scheduled to be signed by the end of this year.

The preferred partner in Baghdad is Rosatom, and the proposed financing scheme involves an interstate loan with repayment within 20 years after the launch of the nuclear power plant. That is, in all seriousness, the option is being considered for the Russian Federation to build 8 reactors for its own money, and then wait for almost three decades for the loan to be repaid. This is in Iraq, where no one is sure what will happen in two months!

The authorities are rapidly losing credibility, and the upcoming elections do not bode well for them. It is significant that on July 15, the influential Shiite religious leader Muqtada al-Sadr announced the withdrawal of his faction from the election race: “I inform you that I will not participate in the elections … I declare that I will cease support for all those who work with this government, current and future.”… He also hinted at the growing hegemony of Iranian-backed militias as well as those more Western-oriented, saying that the people of Iraq should regret those associated with foreign players or those working to normalize relations with Israel.

Against this background, a number of the largest oil companies, one after another, announce their intention to withdraw from Iraqi projects. On July 3, Oil Minister Ihsan Abdel Jabbar officially acknowledged that “The investment environment in Iraq is not acceptable for the retention of large investors. They are now either looking for other markets or other partners “… According to the official, LUKOIL wants to sell its stake in the West Qurna-2 project to Chinese companies. Currently, the Russian company owns a 75% stake, the remaining 25% is owned by an Iraqi state-owned company. Northern oil… It is noteworthy that the Norwegian Statoil back in 2012, withdrew from the consortium for the development of the West Qurna-2 field, selling its 18.75% stake to LUKOIL.

Residential town of oil workers in Iraq

Residential town of oil workers in Iraq

In the same 2012, American Exxon Mobil for the first time announced plans to withdraw from the West Qurna-1 project and focus on geological exploration and oil production in Iraqi Kurdistan. In November 2011, the company entered into six contracts directly with Erbil, defiantly ignoring the federal center. The Iraqi government was able to convince the company to stay, but failed to provide a normal working environment.

In 2019 Royal Dutch Shell ceased operations at the Majnoun field, selling its stake to the Iraqi Basra Oil Company, and also left the project “West Qurna – 1” – its share was acquired by the Japanese Itochu Corporation… The Americans then limited themselves to evacuating all their personnel from Basra province “for security reasons”, but announced their readiness to invest $ 53 billion to increase oil production in Iraq. In April 2021, their patience came to an end – Exxon Mobil officially notified the Iraqi side of the sale of its stake in West Qurna-1, and almost for nothing: the giant corporation is ready to give up 32.7% in one of the richest deposits in the world for only $ 350 million.

The head of the Iraqi Oil Ministry soon rushed to deny himself, stating that LUKOIL and British petroleum remain one of the most important investors in the country and will continue to work. Although earlier he said that British BP, which has been operating in Iraq since the 1920s, plans to leave the Rumaila field – the third in the world in terms of recoverable oil reserves (19 billion barrels).

Oil fields in Iraq

A local resident’s house at the Rumaila field

In May 2021, Iraq received $ 5.6 billion from oil sales.

Initially, the oil minister said that he had received an official letter from LUKOIL about plans to sell its stake in the West Qurna-2 project to a Chinese investor. Despite the subsequent rebuttal, this is hardly a slip of the tongue. It is known that Chinese experts have already audited this field, but in their usual manner – without attracting attention or advertising.

In any case, it is clear that the major players are reconsidering their strategies, while Chinese companies quietly and without scandals occupy the most important place in the Iraqi oil sector. For example, the shares of the operators of the Rumeila field are distributed as follows: 38% for BP, 37% for the Chinese CNPC and 25% from the Iraqi side. In the West Qurna – 1 project, the picture is even more revealing: Exxon Mobil and Chinese PetroChina have equal shares (32.7% each), the other participants are the Japanese Itochu Corp. (19.6%), Indonesian Pertamine (10%) and Iraqi Oil Exploration Co. – as much as five percent.

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