ERBIL, Kurdistan Region – There is an urgent need to create a national oil company in the Kurdistan Region to prevent losses from past mistakes, create transparency and boost efficiency, panelists at an economic forum in Erbil argued on Wednesday.
At a panel discussion of the first Economic Forum of Erbil’s Middle East Research Institute (MERI), academics, lawmakers, and government officials from the Kurdistan Regional Government (KRG), discussed whether oil is a blessing or a curse for its people.
“It is an opportunity if oil can be used by countries as a chance to build infrastructure,” he argued, giving the example of Norway’s Statoil, which he said was a model of transparency.
He said that foreign oil companies working in Kurdistan should not have partnerships with the KRG, but with a state oil company, which would then provide energy-related reports to the government.
“It is late already – it will be too, too late once all the fields have been discovered and all contracts signed,” he said, warning that past contracts had been detrimental to the KRG’s interests, and this trend would continue in the absence of a state oil company, lamenting that nine years have passed without the formation of such a company.
“Every two years the Norwegian government puts pressure on companies to publicly put online every report, all data – all of it online. The KRG can also do this, so that information about explorations, etc, can be accessed by universities and others looking for it.”
Speaking about Kurdistan’s oil reserves, he said that according to information given out it was estimated at 45 billion barrels. “But there must be data and resources to show this – reserves are different from resources,” he noted.
Sherko Jawdat, chairman of the Kurdish parliament’s Oil and Gas Committee, also argued for transparency, stressing that corruption in the sector must be tackled now, especially at this time when Kurdistan is going through a severe economic crisis. He said reform of the oil and gas sector was a must.
“Cutting corruption is a significant step toward sustained development,” Jawdat argued. “If you cut costs and implement reforms but do not tackle corruption, then all other efforts are useless,” he said, noting that combatting corruption in a systemized manner is “highly important” for the oil and gas industry.
Kurdistan is facing what some officials have gone so far as to warn as “bankruptcy.” Although Kurdistan has plenty of oil and gas, exports are burdened by a host of issues, including lack of transparency, corruption and restrictions on exports by the central government in Baghdad.
At a time when the Kurds are fighting on one of the most important fronts of the global war with the Islamic State, the focus on revenues from energy resources – and how much gets lost in corruption – has become a top priority.
Jawdat highlighted the importance of monitoring the sector in order to know production and export levels. He likened not knowing this basic information to driving a car without knowing how much fuel is left or if there are any problems with the car, saying that if you do not know the problem, how can you fix it.
“In the same way, how can we go toward reforms if we don’t have any monitoring.”
Jawdat said that reports issued by the MNR should be independently audited and monitored. “The numbers given by the MNR are not supported by auditing companies. There are national companies that can do the auditing, but the oil and gas sector will not allow that.”
He said that the Kurdistan energy sector is suffering from many problems, but that they could not be diagnosed because of lack of transparent and true data. “If you cannot diagnose, no solution can be found,” he warned. “There is no environment to implement reforms.”
Taha Zangana, deputy minister for natural resources and one of the panelists, made a weak defense of his ministry.
“It is not under the authority of the MNR to implement reforms. That is the authority of the energy board,” he said.
Asked the price at which Kurdistan was selling each barrel of oil, Zangana inadvertently illustrated what the other panelists were complaining about. His reply demonstrated the scale of opacity in the Kurdish energy sector.
He said he could not reveal the price of a barrel of oil.
“It is not my job to tell you this. The ministry is in charge of extraction, exploration and export. So I cannot answer.”
At a panel discussion of the first Economic Forum of Erbil’s Middle East Research Institute (MERI), academics, lawmakers, and government officials from the Kurdistan Regional Government (KRG), discussed whether oil is a blessing or a curse for its people.
“Oil is neither a curse or a blessing, it’s an opportunity,” argued the articulate Hawre Mansurbeg of the Soran University.
“It is an opportunity if oil can be used by countries as a chance to build infrastructure,” he argued, giving the example of Norway’s Statoil, which he said was a model of transparency.
Mansurbeg criticized the KRG for not having created a national oil company, and instead having all energy decisions made by its Ministry of Natural Resources (MNR), which he said had led to a great lack of transparency.
He said that foreign oil companies working in Kurdistan should not have partnerships with the KRG, but with a state oil company, which would then provide energy-related reports to the government.
“Not forming a state oil company was a huge mistake. Advisors and experts should have thought of this,” said Mansurbeg, one of five panelists at the two-day forum that closes Thursday.
“It is late already – it will be too, too late once all the fields have been discovered and all contracts signed,” he said, warning that past contracts had been detrimental to the KRG’s interests, and this trend would continue in the absence of a state oil company, lamenting that nine years have passed without the formation of such a company.
Mansurbeg upheld Norway as a model of transparency, saying that all companies in the oil sector are obliged to upload their information on exploration, findings and reserves on a publicly-accessible website.
“Every two years the Norwegian government puts pressure on companies to publicly put online every report, all data – all of it online. The KRG can also do this, so that information about explorations, etc, can be accessed by universities and others looking for it.”
Mansurbeg stressed the need for transparency and data, which, he said, experts and researchers such as him are unable to access under the current system. “The MNR should provide the data to the public. It should say to experts, ‘here is our data, how can you help us?’”
Speaking about Kurdistan’s oil reserves, he said that according to information given out it was estimated at 45 billion barrels. “But there must be data and resources to show this – reserves are different from resources,” he noted.
Sherko Jawdat, chairman of the Kurdish parliament’s Oil and Gas Committee, also argued for transparency, stressing that corruption in the sector must be tackled now, especially at this time when Kurdistan is going through a severe economic crisis. He said reform of the oil and gas sector was a must.
“Cutting corruption is a significant step toward sustained development,” Jawdat argued. “If you cut costs and implement reforms but do not tackle corruption, then all other efforts are useless,” he said, noting that combatting corruption in a systemized manner is “highly important” for the oil and gas industry.
Kurdistan is facing what some officials have gone so far as to warn as “bankruptcy.” Although Kurdistan has plenty of oil and gas, exports are burdened by a host of issues, including lack of transparency, corruption and restrictions on exports by the central government in Baghdad.
At a time when the Kurds are fighting on one of the most important fronts of the global war with the Islamic State, the focus on revenues from energy resources – and how much gets lost in corruption – has become a top priority.
Jawdat highlighted the importance of monitoring the sector in order to know production and export levels. He likened not knowing this basic information to driving a car without knowing how much fuel is left or if there are any problems with the car, saying that if you do not know the problem, how can you fix it.
“In the same way, how can we go toward reforms if we don’t have any monitoring.”
Jawdat said that reports issued by the MNR should be independently audited and monitored. “The numbers given by the MNR are not supported by auditing companies. There are national companies that can do the auditing, but the oil and gas sector will not allow that.”
He said that the Kurdistan energy sector is suffering from many problems, but that they could not be diagnosed because of lack of transparent and true data. “If you cannot diagnose, no solution can be found,” he warned. “There is no environment to implement reforms.”
Taha Zangana, deputy minister for natural resources and one of the panelists, made a weak defense of his ministry.
“It is not under the authority of the MNR to implement reforms. That is the authority of the energy board,” he said.
Asked the price at which Kurdistan was selling each barrel of oil, Zangana inadvertently illustrated what the other panelists were complaining about. His reply demonstrated the scale of opacity in the Kurdish energy sector.
He said he could not reveal the price of a barrel of oil.
“It is not my job to tell you this. The ministry is in charge of extraction, exploration and export. So I cannot answer.”
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