IRAQ TURKEY PIPELINE AGREEMENT NEGOTIATIONS

C O N F I D E N T I A L BAGHDAD 002423 SIPDIS SIPDIS E.O. 12958: DECL: 07/20/2017 TAGS: ECON ENRG PREL IZ SUBJECT: IRAQ TURKEY PIPELINE AGREEMENT NEGOTIATIONS Classified By: daniel weygandt, econ minister counselor for reasons 1.4 (b) and (d). ¶1. (C) Econ Emboff was informed that the Iraq Ministry of Oil (MoO) is sending a group of senior officials to Turkey at the end of July to renegotiate the transportation agreement for crude oil through the Iraq Turkey (IT) pipeline. The current agreement expired at the end of December, 2006. Under the terms of the agreement, the shipment of oil could continue even after the primary term of the agreement expired until one of the parties notifies the other of its intent to cancel. MoO officials expressed concern that not having a signed agreement holds them hostage to the Turkish Government's ability to cease accepting crude oil without significant advanced notification. ¶2. (C) The GOI negotiation committee will be headed by Sahib Al Qutub, Advisor to the Minister of Oil. He will be joined by Dr. Mussab H. Al Dujayli (past Director General (DG) State Oil Marketing Organization (SOMO)) and members from the Inspector General Office, Northern Oil Company, Economics & Finance Directorate, and the Admin & Legal Directorate. (Note: It is very unusual for any MoO negotiating team to be headed by an individual of another department that will not be overseeing the resulting agreement or contract. End Note) ¶3. (C) The agreement has been extended on a year-by-year basis for the last several years. Prior to 2004 the agreement was based on a five year period. In late 2006, Dr. Falah Alamri, present DG SOMO took steps to renegotiate the contract. SOMO insiders and those familiar with the negotiations attribute the failure of those negotiations on Alamri's involvement, since he excluded those intimately familiar with the agreement including veterans of the MoO, in favor of newly hired and inexperienced individuals. ¶4. (C) Alamri, an Iraqi expatiate, has strong connections to Ahmed Chalabi, Dr. Ibarhim Bahr Al Uloum (past Minister of Oil) and the Fadilah party. He had no petroleum industry experience prior to arriving in 2003, but was made DG of the Iraq Tanker Company, within the MoO. Alamri was placed into his present position by the Fadilah party in the spring of ¶2006. ¶5. (C) Mr. Qutub has requested a meeting with senior embassy officals and others in the forth coming week. It is anticipated that the IT pipeline will be one of the topics of discussion. CROCKER