DEPUTY OIL MINISTER ON HYDROCARBON LAW

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003863 SIPDIS SIPDIS STATE FOR E, NEA-I AND EEB USDOE FOR HEGBERG E.O. 12958: DECL: 11/27/2017 TAGS: EPET ECON IZ SUBJECT: DEPUTY OIL MINISTER ON HYDROCARBON LAW REF: BAGHDAD 3852 Classified By: CETI Ambassador Charles Ries, reasons 1.4 b,d ¶1. (C) SUMMARY: Deputy Oil Minister Motasim on November 27 revealed that Oil Minister Shahristani had not been entirely convinced about the idea of proceeding with a technical committee to clear up the few remaining brackets in the July draft of the hydrocarbon framework legislation, as discussed with us the previous day. He said that the personal animosity between the Oil Minister and the KRG negotiator, Dr. Ashti Hawrami, was one of the principal reasons for the impasse with the oil law. Motasim contacted the KRG to propose a technical committee meeting, and expects a positive reply. END SUMMARY. Deputy Oil Minister: Shahristani not convinced -------------- - ¶2. (C) Following up on our conversation with Oil Minister Hussayn al-Shahristani on November 26 (reported reftel),we spoke with Deputy Oil Minister Motasim Akram Hassan (Kurd) on November 27 to get his impressions of the meeting, which he also had attended. He reported that he had spoken with the Oil Minister after we left, and the Minister had told him that he was not certain whether it was a good idea to allow others to conduct a technical review of the draft framework law and revenue sharing law. However, Motasim thought if additional pressure were applied, for example if the Ambassador directly requested it of Shahristani, then Shahristani would accede. ¶3. (C) Motasim thinks the idea of a technical committee to hammer out the remaining details of the hydrocarbon legislation is an excellent idea. He said that the personal animosity between the Oil Minister and the KRG negotiator, Dr. Ashti Hawrami, was one of the principal reasons for the ongoing impasse with the oil law. He floated the idea of having Thamir Ghadban (the current GOI negotiator),Ibrahim Bahr al-Uloum (a former Minister of Oil),and Natik al-Bayati (the Director General of the newly-created Petroleum Contracts and Licensing Directorate at the Ministry of Oil) as members of the technical committee on behalf of the GOI, with other members to be determined by the KRG and the USG as deemed appropriate. This formulation, he reasoned, removes both Doctors Shahristani and Ashti from each other's throats. ¶4. (C) Motasim telephoned Sarbaz Hawrami, advisor to the KRG Prime Minister, to pitch the idea of a technical committee to hash out the remaining points on the hydrocarbon legislation. He reported that Hawrami had asked if it was Shahristani's idea, but he had replied that it was his own. He expects a positive reaction from KRG PM Barzani. ¶5. (C) Motasim added that Shahristani had wanted to impress upon us his suspicion that Dr. Ashti has been receiving significant signature bonuses or other financial inducements for the contracts. If true, that would be a strong incentive for Dr. Ashti to stall on the national hydrocarbon legislation so that he could continue to reap any personal rewards. Motasim views that as an internal issue, and assuming there has been no side-dealing, then the KRG should be able to easily resolve that issue by publishing the contracts or their terms. Not legal is not the same as cancelled -------------- ¶6. (C) Motasim clarified that Shahristani has not said he is canceling the new KRG production sharing contracts with international oil companies, as reported recently in the press. Shahristani continues to believe, and to say, that the KRG has no legal basis for entering into such contracts, but he recognizes the GOI is not a signatory to the contracts and so he has no ability to cancel them. However, Motasim said the Minister has at least four letters sitting on his desk addressed to various international oil companies, explaining to them the Ministry's view that the contracts are not legal and the consequences (no further information) should the companies decide to continue oil operations on Iraqi soil without the Minister's approval. Shahristani also is preparing a letter to the Prime Minister to explain his position on the new contracts. COMMENT -------------- ¶7. (C) The Minister's reservations are hardly surprising, since he has grown accustomed to controlling petroleum policy, and illustrate the delicacy with which this issue BAGHDAD 00003863 002 OF 002 will need to be handled. Motasim's suggestions on the composition of the technical committee reveal that the question of who should decide the composition, as well as the composition itself, needs to be thought out. The choice of Thamir Gahdban, for example, may not be feasible since he has been the lead negotiator for the GOI with Dr. Ashti acting as his counterpart; his inclusion (as sensible as it might seem) would make the exclusion of Dr. Ashti difficult. CROCKER