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IRAQ - How The Deals Are Done.

All E&P deals, mainly involving service contracts (SCs), for the upstream must be approved by the top political leadership, i.e., by Saddam Hussein in his capacity as prime minister. The same will go for downstream deals to be signed with foreign companies in future, and for pipeline deals with neighbouring countries.

The technocrats under Al Rashid in the Oil Ministry will work out the technical details and present them in the form of recommendations, together with alternative details which they will have to recommend as well. Then the political leadership will instruct the technocrats, through Al Rashid, which of the details they will have to negotiate with the foreign companies or neighbouring governments. If the other party comes up with different details or terms for negotiation, the technocrats will first refer them to the political leadership, through Al Rashid. The political leadership will then give the technocrats, through Al Rashid, instructions on how to proceed in negotiating with the other party.

Even in OPEC matters Al Rashid's role is limited to his being the top liaison man between the political leadership, i.e., Saddam and the Vienna-based organisation or its other member-states. Thus, in early 1999 Al Rashid sent a letter to OPEC's current president, Algeria's Energy Minister Youcef Yousfi, and all the other member-states saying Saudi Arabia must cut its production by 2m b/d to boost crude oil prices. Al Rashid told a press briefing at the end of OPEC's ministerial meeting on March 23, 1999: "Saudi Arabia, at the time out production went from the market (in Aug. 1990 because of the UN embargo), increased its production by 2m b/d. So when Iraq is back in the market, Saudi Arabia should bear the whole reduction in production. If we take the July 1990 (OPEC) resolution, Saudi Arabia would have a production of about 6.3m b/d". He noted: "Iraq is a founding member and OPEC was initiated in Baghdad in 1960... Iraq has a very important role to play in the overall decision (of OPEC), although not on quotas (because Iraq was excluded from the March 23 deal on output cuts), because we have a different view". He then repeated what all Iraqi officials say: the UN sanctions must be lifted.

The March 1999 agreement, which has proved to be the most credible accord in OPEC's history, did not take Iraq's view into account. Since then OPEC has been defending oil prices effectively and Saudi Arabia, the leader, does not allow Iraq to influence any of the group's decisions. But Saddam keeps instructing Al Rashid to confront Saudi Arabia and allied states at all OPEC ministerial meetings in one way or another.
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Publication:APS Review Oil Market Trends
Date:May 14, 2001
Previous Article:IRAQ - Profile - Amer Mohammed Al Rashid.
Next Article:IRAQ - Preparing For 'Smart Sanctions'.

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