10.3 |
Reconstruction: oil, commercial interests, debt relief, asylum and
stabilisation policy
486.
The paper
identified five risks to UK objectives, including: “The US
dominates the
field in
advising Iraq on energy sector development.”
487.
Dr Kim
Howells, FCO Minister of State, introduced the paper at the 2 March
DOP(I)
meeting.280
He
highlighted the centrality of oil to Iraq’s economy, and reported
that he
planned to
visit southern Iraq shortly to look at issues relating to the
southern oil fields.
Mr Malcolm
Wicks, DTI Minister of State, described projections that Iraq could
produce
7.9m bpd by
2030 as very significant in the global and UK context. The UK was
already
working
closely with IOCs and Iraq on energy issues.
488.
In discussion,
Ministers commented that oil and gas would continue to be
the
bedrock of
Iraq’s economy, but diversification was essential in the medium
term.
489.
DOP(I) agreed
that Ministers should discuss the oil sector again after
Dr Howells’
visit to
Iraq.
490.
Dr Howells
visited Iraq later that month. He reported to Mr Straw on 23
March that
the delay
in forming a Government and doubts over Iraq’s commercial legal
framework
were
constraining investment in the oil sector, but that the biggest
barrier to investment
remained
the security situation.281
He
recommended that the UK should consider what
its
military forces could do to provide security for international
investors:
“Such
a joint operation [coalition military forces and Iraqi Security
Forces] would
mean a
different focus for our forces in the South. It would entail a
shift from the
urban
concerns of Basra to … desert-located oil installations … I suggest
the FCO
discuss it
at the earliest opportunity with the MOD.”
491.
There are no
indications that Dr Howells’ proposal was discussed by
Ministers or
senior
officials.
492.
Following the
2 March DOP(I) meeting and Dr Howells’ visit, the IPU assessed
that
Ministers
would be keen to discuss the future of the oil sector again, and by
the end of
March had
begun work to develop a “comprehensive programme of engagement” for
the
oil sector,
covering:
•
engagement
with UK oil companies in support of their activities;
and
•
engagement
with the Iraqi Government on strategic policy
issues.282
493.
Mr Asquith
chaired a meeting of senior officials on 19 May to agree how the
UK
would like
to see the Iraqi oil sector structured.283
He advised
Mr Straw that the group’s
conclusions
would be tested with “industry experts”, before being used as a
basis for
280
Minutes, 2
March 2006, DOP(I) meeting.
281
Letter
Howells to Straw, 23 March 2006, ‘My Thoughts on Iraq’s Oil
Industry’.
282
Paper IPU,
29 March 2006, ‘Iraq’s Oil and Gas Sector – HMG Policy and
Action’.
283
Minute
Asquith to Private Secretary [FCO], 24 May 2006, ‘Iraq: DOP-I: 24
May’.
447