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Category: Middle East

  • Shell-Iraq gas company is a monopoly, secret agreement shows

    Shell-Iraq gas company is a monopoly, secret agreement shows

    By BEN LANDO, UPI Energy Editor

    A secret document obtained by United Press International reveals a planned joint venture company between Royal Dutch Shell and the Iraqi Oil Ministry would give the company a 25-year monopoly on the gas industry of southern Iraq.

    Shell and the ministry are currently negotiating the terms of the joint venture company. On Sept. 22 the two signed what’s known as a “Heads of Agreement,” basically a rough draft of the contract, a legal framework establishing the management team and the scope, purpose and other details of the company.

    Though it’s non-binding, the confidential document is telling.

    If the joint venture company is finalized as outlined in the HOA, it would give Shell the largest role in Iraq’s oil and gas sector since the 1960s, when the world’s Big Oil firms were kicked out after 40 years of virtual control of exploration, production, exports, and payments to the government.

    The joint venture will be the “sole gas company engaged in business,” as outlined in the HOA, “and providing gas for domestic and export markets and generating revenues from gas marketing activities.”

    At the time of the HOA signing, Shell and ministry officials pitched the future joint venture company’s role as utilizing for domestic needs the natural gas currently being wasted in Basra province. Iraq would own 51 percent and Shell 49 percent.

    Developing Iraq’s gas resources is important for delivering basic services like electricity and fuel to citizens and business. Iraq’s once top-shelf state-run oil and gas industry was devastated by Saddam Hussein’s misuse, sanctions and nearly three decades of war. Infrastructure and equipment were harmed, and new technology and training were shut out.

    More than 60 percent of Iraq’s natural gas production is burned or released into the air or reinjected into the ground because of insufficient infrastructure to transport and utilize the gas. The gas would be helpful for Iraq’s power and other industries currently, and more so as the economy grows. Electricity last week supplied only 58 percent of demand, according to the U.S. State Department’s Iraq Weekly Status Report.

    The oil and gas sector is in need of new and modern investment, though there’s a dispute over how to proceed: rebuild the once prominent domestic oil and gas industry or allow foreign companies to re-enter the sector.

    A new oil and gas law is supposed to set post-Saddam guidelines and regulations for developing the oil and gas industry, but a draft of the law has been stalled for nearly two years. A top roadblock: to what extent foreign companies should be allowed to invest. The oil unions say it should be limited to contracts to help rebuild the Iraqi sector. Others, a decidedly smaller group, favor an all-out reversal of the nationalism that saw Shell and others booted out of the country 40 years ago.

    The Shell joint venture is an attempt by the Oil Ministry to walk the fine line, relying on remaining Saddam-era laws, though some have complained the Parliament should have more of a say and the contract should not have been a private negotiation with one company.

    According to the previously unseen HOA, “the joint venture will off-take and purchase all Raw Gas produced in the South of Iraq by either the South Oil Co. or any other producer.” The HOA defines “South of Iraq” as the southernmost province — and oil and gas capital — of Basra, though a map appendix to the HOA shows the contract territory extending for an unknown distance into the Persian Gulf “and any other areas as may be agreed by (Shell and the Oil Ministry).”

    The joint venture would not focus solely on gas currently being produced in the agreed upon area. As oil production increases, as expected by the ministry, so will the gas; most of Iraq’s gas production is what’s called “associated gas,” found during oil production.

    Iraq has the world’s 10th-largest proven gas reserves, according to the U.S. Energy Information Administration, most of it located in southern Iraq. Two to three times more reserves could be found when it is fully explored, and much more expected to be “non-associated” gas, reservoirs independent of the oil.

    “The Parties acknowledge that access to non-associated gas is essential to ensure that the aims of the Joint Venture are met,” the HOA states, adding one of the objectives of the company is to “pursue development of non-associated gas fields in southern Iraq according to respective rules and regulations for field development in Iraq.”

    According to the HOA, the joint venture will purchase the raw gas from producers — mostly state-owned companies — and process it into products used in domestic and foreign markets.

    The agreement does not stipulate whether Iraq’s residents and industries would have first dibs on the gas.

    Shell, which has proposed to the Iraqi government a nationwide gas master plan, will create a “high-level evaluation of dry gas export schemes.”

    Shell would have the rights to all liquefied natural gas. Although Iraq currently does not have LNG facilities, the HOA tasks Shell with assessing the “feasibility of an early LNG export project.”

    All other products, such as fuel for cooking and heating, would be sold to the Oil Ministry, directly to domestic consumers and bypassing the ministry, or exported.

    “The products will be sold at prices linked to international market prices,” the HOA states, and the joint venture would pay for the raw Iraqi gas with “a fixed percentage of the revenues received by the Joint Venture for selling products.”

    While the HOA does not bind the ministry and Shell to create the joint venture, it is a legal contract for 12 months — with a six-month automatic extension — during which it restricts the Iraqi Oil Ministry from negotiating with any other company or carrying out any work that could be interpreted as competing with the Shell joint venture.

    “The ministry shall not pursue any discussions with the intention of entering into a project with a similar scope to that set out in this HOA with any third parties,” the HOA states.

    The joint venture would be “of a long term (25 years extendable),” according to the HOA. Iraq and Shell would split the revenue dividends and required investment 51/49 percent, respectively. The joint venture would owe the state a 15 percent tax as well.

    Both sides, however, have equal representation on the six-member Joint Management Committee, which was to begin work Oct. 22. All of the JMC decisions must be unanimous, though only one person each from the ministry and Shell is required for quorum.

    The JMC will determine “activities” of the joint venture, and Shell and the Oil Ministry will work together “in good faith with each other and shall not participate in any similar activities with any third parties.”

    Shell has the option of offering a part of its stake to a third party, and UPI understands Shell is in talks with Chevron. All equipment and “technical and operational support” will be purchased by Shell, which “has developed a strategic alliance with General Electric (NYSE:GE) for the benefit of the Joint Venture.” Mitsubishi Corp. (OTCPK:MSBHF) and other companies are negotiating “strategic alliances” as well.

    —

    (e-mail: blando@upi.com)

  • Talabani dismisses US base offer

    Talabani dismisses US base offer

       

    Barzani, left, said Kurdistan’s people and government would welcome US military bases [AFP]

    “It is not possible for US troops to stay in Kurdistan without the approval of the central government,” Talabani said in an interview with state television Al-Iraqiya late on Sunday.

    “Kurdistan is part of Iraq, and all of the country’s constitutional laws apply to it.”

    ‘Warm welcome’

    Barzani, who heads the Kurdish administration in the country’s north, had offered his region as an alternative for US military bases if the status of forces agreement being negotiated between Washington and Baghdad fell through.

    Iraqi newspaper Khabat quoted Barzani, who has strongly backed the controversial proposal, as saying during a recent visit to Washington that his regional government would “welcome” the setting up of US military bases.

    “All the attempts are going right now to sign the pact, but if the pact is not signed and if US asked to keep their troops in Kurdistan, I think the parliament, the people and government of Kurdistan will welcome this warmly,” he said at the Centre for Strategic and International Studies.

    Supporters of Muqtada al-Sadr, a Shia leader, criticised Barzani for his comments.

    “We reject the statement by Massud Barzani,” Sheikh Saleh al-Obeidi, a spokesman for the group, told the AFP news agency.

    “This position reminds us that Kurds want to separate … There is a constitution in this country and they have to respect it.”

    Proposed changes

    The US government – after initially balking at making any changes demanded by the Iraqi government in the draft pact – is now expected to respond in the next few days.

    The agreement is supposed to outline the framework under which US forces will stay in Iraq beyond 2008.

    The signing of the pact was delayed after the Iraqi cabinet sought key changes, including greater legal jurisdiction over US troops and guarantees that US soldiers would not launch attacks on other countries from Iraq.

    The pact is unpopular among Arab Iraqis who have seen the bulk of violence and destruction since the US-led invasion in 2003, and who see the pact as nothing more than another form of occupation.

    Al Jazeera’s Hoda Abdel Hamid reporting from the Kurdish city of Irbil, said that Kurds felt safer having US troops around given the distrust between the Kurds and the Arabs.

    Kurds have also been spared the worst of the violence since 2003 and many actually feel that their lives have improved over the last five years, with foreign investments and a flourishing local economy, our correspondent said.

    The final draft of the proposed pact must be endorsed by the Iraqi parliament after the amendments are finalised by both Washington and Baghdad.

    Iraq’s president has dismissed Kurdish leader Massud Barzani’s invitation to the US to set up military bases in the Kurdish region if a proposed security pact with Baghdad fails.

    Jalal Talabani, himself a Kurd, said Washington could set up bases in the country – even in the Kurdish region – only with Baghdad’s approval.

  • Israel to begin new UAV deliveries to Turkey

    Israel to begin new UAV deliveries to Turkey

    TURKISH DEFENSE MINISTER VECDI GONUL VISITS ISRAEL

    Saban Kardas

    Turkey’s Defense Minister Vecdi Gonul visited Israel on October 29 and 30 to expedite the Turkish Armed Forces’ (TAF) purchase of 10 Heron Unmanned Aerial Vehicles (UAV) from Israel Aircraft Industries (IAI). He was accompanied by a large delegation that included Undersecretary for Defense Industries Murad Bayar and several military officers and civilians. The meeting also provided opportunities to discuss regional diplomacy and bilateral relations between Turkey and Israel.

    In 2005 Turkey awarded a $180 million contract for the off-the-shelf purchase of 10 UAVs to IAI and Elbit Systems, which outbid offers for the U.S. Predator UAV (Zaman, October 25). In response to the acceleration of the PKK’s terror campaign, the TAF’s new counter-terrorism strategy has been centered on the effective use of intelligence (Terrorism Focus, August 12). In addition to real-time images provided by U.S. satellites, the reconnaissance missions conducted by UAVs have come to play a crucial role in the air strikes against PKK strongholds in Northern Iraq and PKK militants inside Turkey.

    Despite the urgency of the TAF’s order, however, the Israeli contractor has postponed the delivery of 10 Herons to Turkey several times over the past year, citing technical failures in the camera system that will be produced by a Turkish subcontractor. In addition to accelerating domestic programs to develop national UAVs and the purchase of three Israeli Aerostar Tactical UAVs, Turkey leased Herons from Israel in 2007 (Yeni Safak, December 28, 2007). When one Heron at the TAF’s disposal crashed in July due to engine problems, Israel could not replace it because it did not have one available in its inventory (Referans, October 21). Turkey instead bought a smaller UAV called the Searcher.

    The shorter range of the Aerostars has hindered the flow of intelligence for the TAF. Surveillance shortages are speculated to have played a part in the TAF’s failure to prevent the PKK attack on Aktutun outpost, which claimed the lives of 17 soldiers on October 3 (Milliyet, October 18). Domestic debate on this attack has refocused attention on the difficulties Turkey has experienced with surveillance aircraft. On the eve of the trip, Gonul was urged to put pressure on Israel to speed up the delivery of the UAVs (ANKA, October 21).

    Gonul visited Israel at the invitation of Israeli Defense Minister Ehud Barak to observe the test flights of the Heron UAVs. Following the demonstrations, Gonul found the drones’ performance excellent and remarked that they would fill the requirements successfully and strengthen Turkey’s military capabilities. Reiterating the urgency of the UAVs for Turkey, Gonul noted that two of the Herons would be delivered to the TAF by the end of November and the remaining eight in early 2009 (Yeni Safak, October 31). At a meeting with Barak and Israeli Chief of Staff Gabi Ashkenazi, Gonul stated that cooperation with Israel in defense projects would not be limited to UAVs, although he declined to name any other specific projects (Milliyet, October 31).

    For its part, the Israeli side also is keen on deepening its partnership in defense projects with Turkey. When Barak visited Ankara in February as Gonul’s guest, he called for greater cooperation between the two countries and emphasized that Israel did not harbor any concerns about transferring sensitive technology to Turkey (Voice of America, February 12). Barak was particularly eager to convince Turkey to purchase Israel’s Ofeq spy satellites (Jerusalem Post, February 11). Israel’s flexible attitude has definitely been welcome to Ankara, because most of Turkey’s ambitious defense procurement and modernization programs contain stringent rules requiring greater domestic contribution in production or technology transfers to Turkish companies. Given the problems that U.S. weapons producers face in obtaining Turkish defense contracts due to the Turkish procurement policy, Israel provides an alternative for the Turkish military to obtain high-tech weapons systems for its fight against the PKK and to upgrade its aging weapons systems with larger domestic input. It has been reported, however, that the TAF is close to acquiring U.S.-made Predators to meet its urgent needs but is constrained by the Turkish procurement rules (Today’s Zaman, October 29).

    Vecdi Gonul also met Israeli Prime Minister Ehud Olmert and Foreign Minister Tzipora “Tzipi” Livni, both of whom emphasized Turkey’s strategic importance in the Middle East and the value they attached to maintaining bilateral relations. They commended Turkey’s constructive efforts to contribute to stability and peace in the Middle East, in particular its role in the recent Syrian-Israeli negotiations. Livni, however, used this opportunity to express Israel’s displeasure with Iranian President Mahmoud Ahmadinejad’s visit to Turkey in August, and she called on Turkey to support international efforts to increase pressure on Iran. Israel and the United States have been critical of Turkey’s warm relations with Iran at a time when they are seeking to isolate Tehran on the nuclear issue (see EDM August 14). Gonul avoided confronting his Israeli hosts but clarified Turkey’s position by maintaining that Turkey would continue to develop relations with all countries in this volatile region on the principles of nonintervention in domestic affairs and good-neighborliness (CNNTurk, October 30; Milliyet, October 31). At a meeting with Israeli President Shimon Peres, Gonul discussed possibilities for building industrial zones on the West Bank (Zaman, October 31).

    Political differences aside, the two countries share a common ground: Turkey needs cooperation with Israel to fill its deficiencies in combating the PKK, while Israel views Turkey as a lucrative market for its sophisticated weapons systems. The recent visit reaffirmed both parties’ determination and ability to put an occasional divergence on regional diplomatic issues aside and maintain cooperation in mutually beneficial projects.

  • Tehran — with Moscow’s Backing — Seeks to Expand its Role in the Caucasus

    Tehran — with Moscow’s Backing — Seeks to Expand its Role in the Caucasus

    Paul Goble

    Vienna, November 3 – The big winner at the summit among the presidents of Russia, Armenia and Azerbaijan yesterday may be a country was not there: Iran, whose return to an active role in the Caucasus, something the US opposes and the Minsk Group was organized to prevent, now appears to enjoy the active support of both Moscow and Yerevan.
    Yesterday, following their meeting in Moscow, Presidents Dmitry Medvedev, Serzh Sarksyan, and Ilham Aliyev signed a joint declaration on their commitment to continuing to pursue “a peaceful regulation” of the Karabakh conflict by means of talks, including within the framework of the Minsk Group (www.kavkaz-uzel.ru/newstext/news/id/1232473.html).
    While Russian commentators celebrated this document not only as a major contribution to the peace in the Caucasus and a confirmation of Russia’s newly expanded role there, in fact, neither that declaration nor the meetings of the foreign ministers on Friday or their joint session with the Minsk Group on Saturday broke much if any new ground.
    But a statement by Russian Foreign Minister Sergey Lavrov on Friday suggests that the diplomatic landscape in the Caucasus may be changing quickly, albeit in ways that may not lead to any resolution of the conflicts between Armenia and Azerbaijan or between Georgia and the Russian Federation.
    Lavrov said that Iran had expressed an interest in creating a security zone in the Caucasus, a step that would appear to challenge both the Minsk Group which was created to exclude Iran from having a role in the region and Turkey which has proposed creating a Platform of Security and Stability in the Caucasus (www.kavkaz-uzel.ru/newstext/news/id/1232455.html).
    The Russian foreign minister said that he had spoken with Iranian officials about their desire to be included “in discussions” about the Caucasus, a move that appears to be the product of both Moscow’s own desire to promote a north-south axis through the Caucasus and two developments earlier this fall.
    On the one hand, Yerevan indicated that it was not prepared to talk about Turkey’s proposal for security unless Iran was involved (kavkaz-uzel.ru/newstext/news/id/1229327.html). And on the other, Tehran offered itself as an intermediary for possible talks between Moscow and Tbilisi (kavkaz-uzel.ru/newstext/news/id/1089720.html).
    The Russian foreign minister said that Moscow has still not received any concrete proposals from Tehran in this regard, but earlier last week, the Iranian news agency IRNA quoted an Iranian deputy foreign minister to the effect that Tehran is currently “completing” work on them.
    It is, of course, entirely possible that Iran’s proposals, even if they do find support in Moscow and Yerevan, will go no further than Turkey’s have in resolving some of the neuralgic disputes of the South Caucasus. But just like the Moscow meeting itself, Iran’s new involvement represents a kind of tectonic shift there.
    Since the end of the Soviet Union, the United States has taken the lead in trying to keep Iran from having any role in the region. That is of course why Washington promoted the creation of the Minsk Group, a product of the only international organization in which all the regional players were members except Iran.
    But that group has not succeeded in squaring the circle on Karabakh, a dispute in which the positions of the two sides are not really any closer than they were a decade or more ago. And consequently, those immediately involved have become increasingly frustrated and are willing to explore different venues and negotiating partners.
    Such frustrations have given an opening to Iran. And as Lavrov’s remarks in Moscow on Friday indicate, Tehran is ready and willing to get involved, a development that the Russian government gives every indication of welcoming whatever its Minsk Group and American “partners” may think.

  • Syria After the U.S. Helicopter Raid

    Syria After the U.S. Helicopter Raid

    By YONAH ALEXANDER

    There is an old Arabic proverb stating that “he who gets fat, will get thin, and he who goes up in the air will come down.” The simple meaning is that nothing is static in the affairs of life and each epoch has its beginning and end.

     

    Can this perception be applied to politics and the current challenge of state sponsored terrorism to the international community? The short answer is definitely yes. Consider the case of Syria.

     

    It seems an unthinkable contradiction to even raise the issue that Syrian President Bashar Assad might cooperate with the United States in combating terrorism following the massive demonstrations in Damascus protesting against a U.S. helicopter raid in Sukariyah village that killed top al-Qaida leader Abu Ghadiyah and members of his cell, and after Syria’s closing of the U.S. cultural center and American school in the capital in protest, and Damascus’s demand of a formal U.S. apology for “terrorist aggression.”

     

    Moreover, Washington’s “account” with Syria relates not only to securing the border with Iraq from infiltration of foreign terrorists but also to Damascus’ support of Hezbollah and Fatah al-Islam in Lebanon and Hamas in Gaza and in the West Bank.

     

    Thus, it is extremely unlikely the next U.S. administration will reverse its disposition vis-à-vis Syria and consider removing it from the list of state sponsors of terrorism.

     

    The new president, however, must bear in mind the validity of former British Prime Minister Lord Palmerston’s dictum that “there are no permanent friends or enemies but only permanent interests.”

     

    That is, there are several identifying factors which indicate that Syria is possibly reconsidering using terrorism as a tool. The first is the existence of legal measures to combat terrorism.

     

    Syria, for instance, is party to the Arab League and the Islamic Conference Organization conventions on the suppression of terrorism and on combating international terrorism.

     

    Furthermore, Syria is a signatory to global treaties dealing with aviation security matters and “prevention and punishment of crimes against internationally protected persons.”

     

    Also, Syria’s penal code complies with various international anti-terrorism efforts such as combating money laundering, confiscating and freezing of funds related to terrorism, and suppressing the recruitment of members of terrorist groups.

     

    Clearly, these steps and other judicial measures indicate a positive trend to be considered in any assessment of Syria’s policies concerning terrorism.

     

    What is of particular significance is the progress made by the recent rounds of indirect talks between Damascus and Jerusalem through Turkey’s “good offices,” and supported by other states such as France.

     

    Obviously, Assad’s apparent strategic intention to undertake a comprehensive peace settlement with Israel will, in accordance with long-standing Syrian policy, focus first and foremost on the return of the occupied Golan Heights captured in the 1967 War.

     

    Other crucial issues must also be resolved, including early warning attack systems, mutual zones of disengagements, water conflicts, and the scope of normalizing relations between the antagonists.

     

    It is clear that further progress on this diplomatic track will depend on political developments in Israel related to the forthcoming elections planned for February 2009 and the formation of a new government in Jerusalem.

     

    In sum, despite the unfolding crisis in U.S.-Syrian relations concerning the “rat lines” in Iraq and other terrorism-related issues, it behooves all concerned parties to recognize that substantial, peacemaking efforts must be developed for long-term stability and prosperity in the Middle East and beyond.

    —

    Yonah Alexander is the Director of the International Center for Terrorism Studies at the Potomac Institute for Policy Studies in Arlington, Va., USA. Research for this article was provided by Michelle Zewin, Julie Tegho, Daniel Curzon, and Kendall McKay.

  • Kirkuk needs a surge, report says

    Kirkuk needs a surge, report says

    WASHINGTON, Oct. 30 (UPI) — An organic effort along the lines of the Anbar counterinsurgency strategy is needed to calm the security situation in Iraq’s province of Kirkuk, a study says.

    A study published Thursday by the Washington Institute for Near East Policy says Kirkuk has not felt the benefits of the counterinsurgency strategy employed in Anbar and central Iraq in early 2007.

    The level of violence in Kirkuk remains static, with only a 29 percent drop in deadly attacks since 2007, compared to a 91 percent decline in Baghdad. Taken on a per capita basis, however, the number of attacks in the city of Kirkuk is double that in Baghdad, the report says.

    The durability of the Sunni-led insurgency in the north suggests a failure to employ the strategy of forming multi-ethnic security forces in the region. Unlike the south, northern security forces are predominately Kurdish-led, leaving many of the forces from Baghdad viewed with disdain.

    Furthermore, with U.S. forces dropping below the U.N.- and NATO-recommended ratio of one soldier to 50 civilians ahead of an anticipated 2009 redeployment, a final but temporary U.S. troop surge may be needed in Kirkuk.

    The region is one of Iraq’s most economically viable, leaving Kirkuk as one of the last places left for U.S.-led forces to have a positive influence on security matters.