IRAQ'S OIL MINISTER TO SEEK INDIAN INVESTMENT

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 002480

SIPDIS

SIPDIS

DEPT OF ENERGY FOR A/S KAREN HARBERT, TOM CUTLER, CGILLESPIE

E.O. 12958: DECL: 05/24/2017
TAGS: PREL PGOV ETRD EPET ENRG IQ IN
SUBJECT: IRAQ'S OIL MINISTER TO SEEK INDIAN INVESTMENT
DURING DELHI VISIT

Classified By: Charge d'Affaires Geoffrey Pyatt for Reasons 1.4 (B, D)


1. (C) Summary. Iraqi Oil Minister Hussein al-Shahristani
will visit India May 25-28, leading a delegation from a broad
spectrum of the Iraqi government, in addition to several
businesspeople. The main goal for Iraq is to get an Indian
agreement for investment in either building a new oil
refinery or partnering in operating an existing one,
according to the Iraqi Embassy in New Delhi. Iraq will also
seek broader direct investment. Since the war began, India's
assistance to Iraq has been minimal, and any new major
investment would be a welcome change in policy. End Summary.

Iraqi Oil Minister Arrives In India May 25
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2. (C) Iraq Embassy (in New Delhi) Political Attache Anas
al-Neiami briefed Poloff on May 24 on the upcoming visit to
India of an Iraqi delegation led by Oil Minister Hussein
al-Shahristani. Al-Neiami reported the four-day visit begins
May 25, is formally a reconstitution of the India-Iraq Joint
Committee, and includes representatives from numerous Iraqi
ministries, including Education, Planning, Agriculture,
Trade, and Industry/Minerals, along with several
businesspeople.

Goal: Indian Investment In Oil Sector
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3. (C) While al-Shahristani will meet with his counterpart,
Minister of Petroleum and Natural Gas Murli Deora, and
discuss a range of bilateral issues, the purpose of the visit
is to seek Indian direct investment in Iraq's reconstruction,
according to al-Neiami. Minister al-Shahristani will
specifically ask for India to invest in an oil refinery,
either to build one or to partner in an existing one,
al-Neiami said. India had been granted a couple contracts,
on Block 8 and as part of a consortium for the Tuba oilfield,
during the Saddam Hussein regime. Al-Neiami described Iraq's
latest offer as a way for India to recover money lost from
pre-war endeavors, by being granted investments into the
Iraqi economy at this time. Al-Shahristani will be
accompanied by experts from Iraq's Oil Ministry, and the
group will visit an India's Mathura refinery near Agra. They
will also meet with India's Oil and National Gas Corporation
(ONGC) to discuss the modalities of any potential investment.
"India could own a refinery or be a partner - the Iraq side
is open," al-Neiami asserted, adding India has made no formal
commitments at this time. "What we want is India's
technology and efficiency. We hope they would get involved
in producing petroleum and diesel, in addition to crude oil."

India Concerned With Guarantees, Legalities, Security
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4. (C) The Indian government has been focusing its questions
to date on two main issues: 1) what kinds of guarantees are
being offered with such investments; and 2) what are the
specifics in Iraq's new laws on foreign ownership of oil
assets, particularly banking procedures. India is also
considering investing only in areas it deems secure,
according to al-Neiami, in the far north or south of Iraq.
In working level discussions preparing for this visit,
al-Neiami stated that Indian officials have been stressing
the historical ties between India and Iraq, and the
similarities in terms of climate and civilization. India
will include Iraq experts in meetings, including businessmen
whose ties to Iraq go back 20 years prior to the war, as well
as Iraq watchers from prominent trade organizations such as

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the Confederation of Indian Industries (CII),the Federation
of Indian Chambers of Commerce and Industry (FICCI) and
Assocham.

Also Seeking Broader Investment
--------------


5. (C) In addition to seeking investments in the oil
industry, the delegation will seek broader investment in
education, trade and agriculture. It will offer India the
opportunity to also run cement factories, in which al-Neiami
said India has relevant experience successfully running.


6. (C) Al-Neiami offered to provide Poloff a full readout on
the visit after al-Shahristani returns to Baghdad.

Comment: A Welcome Change In Indian Policy
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7. (C) Comment. Until now, India's official policy has been
that it "remains ready to assist in the reconstruction" of
Iraq, but true assistance has been sorely lacking. India
committed USD 20 million in assistance at the Madrid Donors'
Conference and another USD 10 million to the two Iraqi trust
funds administered by the UN and World Bank. It has also
given minimal assistance through the provision of certain
commodities and through human resource development, such as
the 125 annual slots under the Indian Technical and Economic
Cooperation (ITEC) program and 50 scholarships for higher
education. To be sure, India will avoid anything to do with
involvement in Iraq's security situation, and would make
these investments strictly for its own interests, which
include re-engaging in a meaningful way with a centuries-old
friend. But clearly the attraction for India is access to
Iraq's enormous oilfields. With 10-13% of Indian oil imports
coming from the increasingly volatile Iran, Iraq offers an
attractive diversification opportunity for India's enormous
and rapidly growing energy needs. Regardless of the reason,
if this visit succeeds - and all indications are that it will
- India's return to direct investment would be a welcome
change from its heretofore hands off approach on Iraq. End
comment.
PYATT