THAMIR GHADBAN DISCUSSES HYDROCARBONS LAW AND USG

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 001610 SIPDIS E.O. 12958: DECL: 06/19/2019 TAGS: EPET ENRG EINV EAID PREL IZ SUBJECT: THAMIR GHADBAN DISCUSSES HYDROCARBONS LAW AND USG ASSISTANCE REF: BAGHDAD 1250 Classified By: Classified by Acting EMIN Marc Wall, reasons 1.4 (b,d) ¶1. (C) Summary: At a June 15 meeting, Chairman of the Prime Minister's Advisory Commission, Thamir Ghadban, told EMIN that he felt the mood surrounding the hydrocarbons legislation (HCL) had changed for the better after attending the June 14 UNAMI conference on Hydrocarbon Resource Distribution. He stated that the HCL must be passed to develop the oil sector fully and characterized the recent oil export deal between the Kurdistan Regional Government (KRG) and the Ministry of Oil (MoO) as a positive step (reftel). Ghadban also spoke about targeting USG assistance for Iraq's oil sector under the Strategic Framework Agreement (SFA). He suggested areas where Iraq needs assistance, noting he is already in direct contact with U.S. petroleum sector trade groups. This cable contains market sensitive information. Please protect accordingly. End summary. Mood Shifting on the HCL -------------- ¶2. (C) In a meeting with EMIN on June 15, Thamir Ghadban said that during his interactions with KRG representatives at the UNAMI meeting, the KRG representatives' language about the HCL had shifted to a more positive tone from previous discussions. Ghadban added that hard-line rhetoric was reduced, perhaps signaling a change of heart. However, he did not foresee a breakthrough before the KRG elections, in which Deputy Prime Minister (DPM) Barham Salih could become the new KRG PM. Ghadban described DPM Salih as less a Kurdish nationalist and more an Iraqi nationalist. He stated bluntly that the HCL must be passed for the Iraqi oil sector to truly progress. Ghadban dismissed the idea of a third party arbitrator on the HCL and added that when there is the political will to pass the law, an agreement will be reached. He believed that the disagreement on the four annexes added to the February 2007 law was an excuse to avoid addressing the law rather than a substantive disagreement. KRG Oil Export Deal Shows Weakness of Kurdish Position -------------- ¶3. (C) Ghadban believes the agreement to export oil from the KRG illustrated the weakness of the Kurdish position. He said that the KRG's Minister of Natural Resources claims about pushing the deal through were false. He explained three terms as undebatable facts: 1) the KRG oil will enhance the overall oil sector development in Iraq; 2) SOMO will remain in charge of oil exports; and 3) the GOI cannot become the "KRG's accountant" blindly paying the bills on the KRG contracts without oversight. He said under a normal situation, the national government would pay the international oil companies which produce oil in Iraq. However, without first reviewing the KRG contracts, the national government could not take responsibility for those contracts. When the HCL is passed, the Federal Oil and Gas Council will review the KRG contracts and determine their legality at that time. USG Assisted Conferences and Workshops -------------- ¶4. (C) Ghadban outlined his objectives for deliverables from the SFA Oil and Gas working group. He requested USG assistance with small scale workshops and conferences that could be organized in the short term, such as visiting experts and professors with technical specialties. (Note: We have already arranged for an international oil expert to visit Iraq this month and are continuing training through the Commercial Law Development Program. End note). He also requested a larger conference on technical specialties such Qrequested a larger conference on technical specialties such as oil exploration, extraction, and economics of oil such as macro-production and export management. He believed this would require six months or more preparation time. He suggested establishing a five to six person committee to plan the conference with representatives from his office, the MoO and the USG. Trade Associations and USG Assistance Purchasing Goods -------------- ¶5. (C) Ghadban requested USG assistance in bringing oil trade associations to Iraq. He noted the Society of Petroleum Engineers had previously been active in Iraq and that he had met with them in the U.S. He also noted interest in the American Association of Petroleum Geologists. Mr. Ghadban commended the work recently initiated by the United States BAGHDAD 00001610 002 OF 002 Geological Survey (USGS) with support from the Task Force for Business Stability Operations and asked that USGS become more involved in Iraq. He welcomed its geologic survey now underway of minerals, underground water, and hydrocarbons in the western desert. Comment ¶6. (C) Ghadban was upbeat about the improved tone of the debate about hydrocarbons legislation, but was clear in his view that no action could be expected soon. We will work with him and other involved in the SFA oil and gas working group to refine his requests for technical assistance and follow through. FORD