Oil In a Week (The Battle of Basra and its Oil Dimension)
Walid Khadduri Al-Hayat - 31/03/08//
No Arab oil industry has witnessed the difficulties and challenges facing the oil sector in Iraq over the past 25 years, especially during the past five years of occupation. Currently, a battle is raging for political control over Basra, Iraq's only marine gateway, its second largest city, and the source of almost 90% of its oil reserves which currently account for two million barrels a day. This is not to mention three huge oil fields with production capacity of over two million barrels a day that have been explored but not developed yet. These are the Majnoun field, the Gharb al-Qurna field, and Nahr bin Omar field. This battle will represent decisive turning point in the modern history of Basra and in the history and future of Iraq's oil industry.
Basra suffered its share of destruction in comparison to other Iraqi cities during the war with Iran throughout the 1980s. It also suffered the weakness that hit the southern provinces and other Iraqi areas in the 1990s as a result of the international blockade on Iraq. Given Basra's proximity to heated battlefields, the development of its oil industry came to a halt during that decade, not to mention the devastation that took a toll on numerous oil plants. The destruction inflicted upon al-Khor al-'Ameeq Port is only an illustration of the massive devastation suffered by oil constructions in that strategic area.
Since the occupation in 2003, Iraq's oil constructions in Basra have been plagued by plundering, robbery, smuggling and sabotage along with the rest of the country's industrial sector. Entire plants were robbed, scrapped down piece by piece, especially the Karma purification plant whose production capacity had reached almost 130,000 barrels a day. As a result, water injection in many of the southern oil fields was halted for a long period, leading to a decline in oil production as a result of weak pressure. As the militias wreaked havoc in the streets and neighborhoods of Basra over the past five years and with the growing power of Iranian intelligence, many Iraqi engineers and oil experts left overseas to preserve their lives and families, especially after the assassination of almost 100 Iraqi engineers and oil experts since the occupation, not to mention the abduction of dozens others, some whose fate still remains unknown.
The battle in Basra today is of another type, political on the surface, but related to oil in nature. The political forces that can control Basra and its surrou8nding areas can control Iraq's resources and economy. It is evident from last week's developments that halting production and exports from Basra has international repercussions. The rise in oil price from $90 to almost $109 per barrel in one day was not caused by blowing up one oil pipe with a capacity of 800,000 barrels a day, but rather because the international markets are anxious that the fighting might continue for days and expand geographically. There is also the fear of other explosions that may completely stop oil exports (1.50 million barrels a south from the south). The battle in Basra becomes especially serious given the prominent role assumed by Prime Minister Nouri al-Maleki in this battle which he personally leads from Basra along with a number of his ministers against al-Mahdi Army and the other military gangs that have undermined the security of Basra's people and threatened their dignified livelihood. Failure to quickly end this battle with a decisive victory for the state will undermine al-Maleki's ability to stay in the leadership position, not to mention the dangers that Iraq will face as a result of the ensuing chaos.
Interestingly, the battle in Basra takes place at a time when oil resumed its prominent position on the Iraqi agenda. In Amman, Jordan, for example, negotiations are underway between Iraq's ministry of oil and major international oil companies to improve productivity at huge fields, especially in Basra and its surrounding areas. Naturally, the government's position in the negotiations with the companies is compromised even if it emerges militarily victorious out of this battle. The companies will use the lack of security in the south as a pressuring card to demand a price by improving their negotiation position despite the fact that these agreements will last for several years. The government has sent a draft of the oil bill to parliament in its current session for discussion and voting despite the serious doubts that it will get the necessary votes given the many disagreements that surround it. Also in question are the explicit and implicit American pressures that aim at passing an oil law, painting a grim image of the nationalization of Iraq's oil industry under the previous regime, and the desire to have the contracts for developing major oil fields granted to American firms.
Another problem that a few have been trying to raise despite repeated denial from Oil Minister Hussein Shahrastani involves the common fields that geologically extend across borders, especially with Iran, and the accusations that Iran is illegally pumping oil from these fields and hence infringing on Iraq's resources. Finally, Iraq's oil industry remains captive to the ambiguous constitutional provisions pertaining to hydrocarbon resources (Articles 111-115) that were imposed on the constitutional parliamentary committee which was prohibited from amending a single letter of the articles to prevent the collapse of the government coalition at the time. There is also the open and growing dispute between the government, Kurdistan and the Iraqi ministry of oil over the authorities of the three sides with respect to negotiation and forming agreements with international companies.
Ultimately, the Basra battle has multiple political dimensions in addition to the oil dimension. These include the conflict between the Shiite parties in the south (Supreme Council, Sader's Movement, al-Fadeela Party, and al-Da'wa Party and its different branches), the powerful militias engaged in stealing and smuggling oil, and the disagreement over whether or not the Basra province will support the proposal made by Abdul-Aziz al-Hakim's Supreme Council to form a southern district that includes the province of Basra (a proposal vehemently rejected by other Shiite parties) and other southern and central provinces. Moreover, the battle represents a significant confrontation between the US and Iran which has been expanding its influence in Basra through its multiple intelligence agencies. This battle is therefore part of the struggle between Washington and Tehran in the Middle East as the case is in Lebanon and Gaza.
The Sadr Movement claims that the timing of the battle of Basra was determined by its decision to participate in the upcoming provincial elections and the attempt to prevent its candidates from winning them. It is worth mentioning that the Sad Movement had previously boycotted these elections allowed the candidates of the Supreme Council and Al-Fadeela Party to win those elections.
*Energy Expert
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