Al-Shahristani: Architect of Iraq's oil future

Author: 
REUTERS
Publication Date: 
Sun, 2010-12-19 00:35

A nuclear scientist by training and a survivor of torture under the regime of Saddam Hussein, Al-Shahristani's strength of mind helped him to forge deals with foreign oil firms that could quadruple Iraq's oil output.
Iraq has ambitious plans to boost production capacity from 2.5 million barrels a day to 12 million bpd over the next six or seven years, but skeptical analysts say 6-7 million bpd is a more realistic target.
Even that goal, however, would give it much more weight in OPEC, currently dominated by the world's top oil exporter Saudi Arabia, and prompt some hard negotiations in the oil producers' organization about the level of Iraq's output quota.
Within Iraq, obstacles to Al-Shahristani's plans include a lack of security, decades-old laws, crumbling infrastructure and sectarian divides.
"He was the right person to be in charge during the bid rounds because he was not going to be bought by anybody," said Bill Farren-Price of Petroleum Policy Intelligence.
"But is he the right person to be in charge for the implementation phase, where you need someone who understands the industry and gets things done?"
For international oil companies, his presence in the Oil Ministry amounts to a pledge that contracts he agreed will be honored in the absence of any formal guarantee as Iraq still lacks a new oil and gas law.
"Al-Shahristani looks like a guarantor of continuity from the point of view of the companies investing in the south of Iraq," said Samuel Ciszuk, senior energy analyst at IHS.
"(He) has built himself a reputation as a capable technocrat and ally to (Prime Minister Nuri) Al-Maliki, but has also become the nemesis of Iraq's Kurdish factions for pushing hard to extend national control over the oil and gas resources in the Kurdistan region."
Born in 1942, Al-Shahristani studied in Britain, Russia and Canada and became senior scientific adviser at Iraq's Atomic Energy Commission, where he was arrested in 1979 by Saddam Hussein's agents for his activities against the regime.
Those who worked with Al-Shahristani have divergent opinions of a man who, although lacking experience in the industry, took a tough line with firms queuing up to develop some of the world's most promising oil fields.
Politicians and oil officials said he also took a firm stance in fighting corruption when he took over the Oil Ministry, and has been praised for leading a largely transparent auction process.
Al-Shahristani has said he expects an OPEC output limit of no less than that of the group's most influential member, Saudi Arabia. Emerging from the shadow of war and sanctions, Iraq is exempt from the targets the Organization of the Petroleum Exporting Countries uses to set supply levels.
But as Baghdad embarks on unprecedented development, OPEC will at some point need to bring Iraq back into the fold to stop millions of barrels of new supply from destabilizing markets.
Al-Shahristani has said there was no need for OPEC quota talks before output reaches 4 or 5 million bpd, which could be in two or three years' time.
"The issue of an Iraqi OPEC quota will clearly be of strategic importance to Iraq," said Ciszuk. "I think we should expect negotiations to become quite complex when we get there, but then that depends on what Iraq's potential will look like at that point."

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