Washington Post: Big Oil Companies Train Iraqi Workers Free: “In an internal Shell newsletter circulated earlier this year, Wolfgang Strobl, the company's projects director for exploration and production activities relating to Iraq, said Shell wanted to develop untapped oil and natural gas reserves in the country and work with the government to redevelop existing fields. Shell said Strobl was unavailable for comment.” (ShellNews.net) 6 Nov 04
Justin Blum
Nov 06, 2004
International oil companies have launched voluntary efforts to train Iraq's oil workers and provide technical assistance, hoping to generate goodwill and eventually get access to the country's huge oil reserves.
Companies from the United States, Britain and Russia -- including ChevronTexaco Corp., BP, Royal Dutch/Shell Group and Lukoil -- are paying to send Iraqi oil workers out of the country to teach them the latest techniques in developing and managing oil fields.
In addition, Shell agreed to look into the most effective use of the country's natural gas reserves. Chevron is advising Iraqis on two of the country's biggest oil fields now in production, Kirkuk in the north and Rumaila in the south.
"The industry is about relationships -- face-to-face relationships count for something," said Lawrence J. Goldstein, president of the PIRA Energy Group in New York, an international consulting firm. "If you're the company and individuals involved in the face-to-face training, it's clearly beneficial. . . . It's offensive, it's defensive, it's altruistic in many ways, and it's self-serving."
The companies said they are responding to a need for assistance and are not jockeying to grab the country's oil. They said that they have offered similar voluntary assistance in other oil-rich countries with limited resources.
"We are interested in building long-term relationships with Iraqis and establishing a material and enduring presence in Iraq," Shell spokesman Simon Buerk said.
A spokesman for Iraq's oil ministry said he was not authorized to comment about oil companies' activities, and could not immediately arrange an interview with an official who could.
International oil companies are eager to gain a foothold in Iraq because the country is believed to have the world's second-largest conventional oil reserve, though some analysts said the statistics are questionable.
Iraq nationalized its oil fields in the 1970s, and no foreign companies have been allowed to own fields in the country since. Under Saddam Hussein, some concessions were granted but they were later canceled or never came to pass because of United Nations sanctions.
Iraq is attractive because its oil is considered high quality and relatively cheap to produce, analysts said. Daily oil production in the country has been hampered in recent months because of insurgents' frequent attacks on pipelines. Analysts said Iraq's oil industry is in need of modernization and investment after years of neglect.
The Iraqi government has not established provisions to allow foreign investment in the oil industry, and companies are hoping such measures eventually will be enacted. Oil companies said they expect such decisions will be made after an elected government takes office. Elections are scheduled for January.
Iraq this summer solicited bids to perform a comprehensive evaluation of the Rumaila and Kirkuk fields, and companies from around the world are awaiting its response to the proposals. The analysis would help determine how much oil is in the ground and how to best pump it, and is key to maximizing production, analysts said.
In one of the goodwill projects, Chevron, based in San Ramon, Calif., is training Iraqi oil company employees as part of a broader "technical service agreement" with the country's oil ministry, said Andrew Norman, a company spokesman.
"The overall aim of the program is to really bring the Iraqis up to date with their petroleum engineering techniques, modern-day operating standards," Norman said. "It was conceived jointly by the ministry and by us. We made it very clear that it was a goodwill gesture on our part. They made it very clear that there will be no payment in kind. There is no quid pro quo."
But he added: "You might reasonably say, 'What's in it for us?' To be honest, this is part of a broader relationship-building effort we have underway. It's important to build relationships with those folks. At the same time, we understand the interim government doesn't have the mandate to award any oil contracts."
He said the company's work with the oil fields could be described as "reservoir studies." With the Kirkuk field, for instance, he said the company is helping with seismic information, which is used to determine optimal sites to drill.
Royal Dutch/Shell, based in The Hague and London, was asked by the Iraqi oil ministry to help create a "master plan" for natural gas, which would help develop its fields, Buerk said.
In addition, Shell is providing scholarships to allow Iraqi oil workers to study outside the country.
In an internal Shell newsletter circulated earlier this year, Wolfgang Strobl, the company's projects director for exploration and production activities relating to Iraq, said Shell wanted to develop untapped oil and natural gas reserves in the country and work with the government to redevelop existing fields. Shell said Strobl was unavailable for comment.
Through an affiliate, Exxon Mobil Corp. has signed an agreement with Iraq's oil ministry to "broadly define the conditions for potential cooperation . . . in the areas of technical assistance, joint studies and human resource development," company spokeswoman Susan Reeves said.
She said Exxon Mobil, based in Irving, Tex., is interested in projects in the country. "If the Iraqi people decide they want the help of international oil companies to develop their resources, Exxon Mobil would have an interest in participating," Reeves said.
Oil specialists who have worked in Iraq or studied its development said that the country has not invested enough to maintain its fields and that foreign assistance would be needed to ramp up production.
Iraqi oil workers are in need of training in modern oil field techniques because such information was often not provided to them during years of sanctions, they said. The country also could use assistance in seismic exploration.
Amy Myers Jaffe, associate director of the energy program at the James A. Baker III Institute for Public Policy at Rice University in Houston, said the companies could contribute significant assistance that the country needs.
However, she said their efforts to develop relationships with Iraqi officials may not prove useful for the companies if there is significant turnover in the government after elections.
"In terms of making relationships and building your relationships on the ground," Jaffe said, "that's only helpful if the people who are currently in government stay in government."
Special correspondent Omar Fekeiki in Baghdad contributed to this report.
Washington Post Staff Writer