The Report
of the Iraq Inquiry
453.
The British
Embassy Baghdad reported on 16 May that the new Minister of
Oil,
Mr Ibrahim
Bahr Al-Ulum, had now taken up his post.262
Mr Al-Ulum
had stated that
his
priorities were to increase production and tackle corruption.
Production averaged
2.1m bpd,
consistently below the Ministry’s 2.5m bpd target. Fuel stocks were
healthy.
454.
The Embassy
also reported that insurgent attacks on oil infrastructure had
“tailed
off” since
the elections, although the effect of attacks could still be
dramatic.
455.
The IPU
provided an update on oil and commercial issues for Mr John
Sawers,
FCO
Political Director, on 25 May, at his request.263
The IPU
advised that:
•
The
Petroleum Law would be a key piece of legislation, establishing
the
regulatory
framework for Iraq’s energy sector, including the approach to
foreign
investment.
Major international oil companies would want to see
transparent
rules
established.
•
The
Ministry of Oil would start drafting the Petroleum Law alongside
the drafting
of the
Constitution. The UK had not been asked for help in drafting the
Law,
although
the UK did plan to take forward the FCO project to help the
Ministry
develop
transparent petroleum contracts.
•
The UK
Government’s view was that a high level of oil company
involvement
in drafting
the Petroleum Law could be counter productive: “This should
be
an
Iraqi-drafted law and it will be for them to decide their approach
to foreign
investment.”
The UK would, however, want to encourage the Iraqi
Government
to consult
widely in the process, including with oil companies. The UK
could
facilitate
that exchange.
•
There had
been no discussions with the Iraqi Government on a
UK/Iraq
commercial
agreement (which could provide a framework for trade
and
investment),
but such an agreement might be beneficial.
456.
Representatives
from Shell advised officials from the British Embassy
Washington
on 31 May
that Shell wanted to see “a Constitution in place” before making a
“serious
investment”
in Iraq.264
Most major
oil companies were similarly “keeping a low profile”.
457.
In June 2005,
FCO, DTI and DFID officials developed an Iraq Oil and
Gas
458.
The Iraq Oil
and Gas Strategy, the UK’s second post-Occupation oil
strategy,
shared much
of the analysis presented in the September 2004 UK Energy
Strategy
for Iraq.
It added a third UK objective – promoting Iraq’s role within the
international
oil market
and the Organization of the Petroleum Exporting Countries
(OPEC).
262
Telegram
4635/05 Baghdad to FCO London, 16 May 2005, ‘Iraq: Oil and
Electricity: New Government,
Old
Problems’.
263
Minute IPU
[junior official] to Sawers, 25 May 2005, ‘BP: Iraq’.
264
Minute FCO
[junior official] to Braithwaite, 3 June 2005, ‘Note of a Meeting
with Shell, 31st
May
2005’.
265
Paper,
[undated], ‘Iraq: Oil and Gas Strategy’.
442