10.3  |  Reconstruction: oil, commercial interests, debt relief, asylum and stabilisation policy

422.  Mr Chaplin made an introductory call on Mr Ghadban on 30 August.244 He reported

that Mr Ghadban’s main priority was maintaining and repairing Iraq’s oil infrastructure.

Attacks were taking place almost daily. Production was around 2.5m bpd; the IIG aimed

to produce 3.25m bpd by the end of 2005.

423.  Mr Chaplin reported that Mr Ghadban advocated a gradual and careful reduction

in fuel subsidies (although the IIG as a whole remained reluctant), and the privatisation

of the distribution system. Mr Chaplin had “encouraged” those views.

424.  Mr Ghadban stated that encouraging investment was key, for example through

internationally accepted models for production-sharing agreements (PSAs) or joint

ventures. He did not favour privatising upstream245 activities.

425.  The IPU circulated a first draft of a UK Energy Strategy for Iraq on 18 August.246

426.  A junior official at the British Embassy Baghdad commented on the draft on

25 August, highlighting the need to be realistic about what the IIG could deliver in the

period before the January 2005 elections:

“While Ghadban and others may have every intention of looking longer term and

plotting a strategy for the industry, the day-to-day running of the network/fire-fighting

is taking up the bulk of everyone’s energies just now – and is likely to continue doing

so. The IIG is desperate to show improvements in the supply of electricity and fuel

as soon as possible. That means focusing efforts on ensuring that oil continues to

flow to the power stations and refineries, and stocks are built up.”247

427.  The IPU circulated a final version of the UK Energy Strategy for Iraq on

6 September.248 The Strategy identified two UK objectives:

“• the development of an efficient, outward looking and transparent oil and energy

industry, capable of delivering both sustainable export revenues to meet Iraq’s

development needs and meeting domestic needs for energy in an efficient,

equitable and secure manner; and

• Iraq’s energy sector development to be complemented by the increasing

involvement of UK firms, leading to sustained investment over the next five to

10 years and substantial business for the UK.”

428.  The Strategy stated that the IIG had established a Supreme Council for Oil and

Gas, which the UK believed would approve strategy and major investments. The IIG was

244 Telegram 167 Baghdad to FCO London, 31 August 2004, ‘Iraq: Introductory Call on Thamir Ghadban,

Minister of Oil’.

245 Upstream activities are generally understood to be exploration and extraction.

246 Email IPU [junior official] to FCO [junior official], 18 August 2004, ‘UK Energy Strategy for Iraq’ attaching

Paper IPU, [undated], ‘Iraq-UK Energy Strategy for Iraq’.

247 Email FCO [junior official] to IPU [junior official], 25 August 2004, ‘UK Energy Strategy for Iraq –

Comment’.

248 Email IPU [junior official] to FCO [junior official], 6 September 2004, ‘Energy Strategy for Iraq’.

437