Friday, October 1, 2010

Maliki Government Back In?

Sounds like there's hope of an end to the long Iraqi government stalemate:
BAGHDAD — Prime Minister Nuri Kamal al-Maliki of Iraq appeared almost assured of a second term in office on Friday after winning the support of an anti-American Shiite Islamic movement whose return to political power could reshape relations with the United States.

Mr. Maliki’s renomination to the post he has held since 2006, announced in a garden beneath a mosque’s minaret, was a breakthrough after nearly seven months of bare-knuckle, back-room bargaining that have followed the country’s election in March.
Mr. Maliki owes his nomination to the extraordinary political resurrection of the followers of Moktada al-Sadr, the self-exiled cleric whose fighters once battled in the streets of Baghdad and other cities with Iraqi and American troops. The Sadrists, as they are known, proved effective and disciplined campaigners, winning 40 seats in the March elections.
If so, I think this would cause one to be more optimistic about the al-Shahristani plan.  Maliki has been reasonably effective at stabilizing the country, and the oil development plan came about under his watch.  So the odds of a later, higher, oil peak just went up a notch.

Not to say there aren't still plenty of risks to the plan.  But the "no legitimate government" risk sounds like it's significantly reduced.


Anonymous said...

Anybody not signed up to the EIA's mailing list should know that they just sent out this very bullish update a few minutes ago.

James said...

At the risk of sounding like a broken record ... the only reason that al-Maliki is now "almost assured of a second term in office" is because Muqtada al-Sadr has thrown his weight behind him. I believe that the foreign oil firms will be wary of investing heavily in the country as long as the famously nationalistic and anti-American al-Sadr is acting as king maker.

jay said...

This article is an excellent example of stuart's balanced view on the "peak oil" topic...
Of course it is true that Muqtada's support for the stability is not very good sign. But there is every chance that he may be contended with his share of the oil pot which could result in a more stable Iraq and contribute to atleast postponing the oil peaking and give a hope for doing something about the alternatives meanwhile.

James said...

I agree that Stuart is insightful and balanced about pretty much everything - my disagreement with his analysis of the recent Maliki events is relatively minor and one of emphasis.

I read Patrick Cockburn's biography of al-Sadr a couple of years ago and I came away with the distinct impression that (unlike the vast majority of Iraqi politicians) he is not for sale. At least not to the US - who he believes tried to kill him when he met to negotiate with one of their representatives.

I think that we in the west cannot easily understand the resentment and distrust the Iraqis feel toward foreign oil companies. Events which most westerners know little or nothing about carry much emotional weight with the Iraqis. The overthrow of democracy in Iran in 1953 so that anglo-american oil companies could secure that country's oil reserves. The so called "nationalization" of the Iraqi oil industry in 1972 - which wasn't really a nationalization at all but was a boycott imposed on Iraq by the anglo-american oil companies to punish Iraq for daring to sign contracts with the soviet union to exploit unclaimed oil fields. These events are a big deal to Iraqis, especially the poorer and less educated Iraqis who form al-Sadr's base.

Stuart Staniford said...


I don't really know enough to dispute your point firmly. The only thing I wonder is whether al-Sadr, being a pretty savvy guy, may not be able to appreciate how hard a bargain al-Shahristani drove with the majors.

jay said...

James, Stuart:
The good news here is that al-Sadr (Thankfuly not as powerful as Taliban) is now willing to get onto the government. Al-Sadr is leading a much more powerful Tea party movement and savy may not be the right attribute to expect here. Though it may be a stretch, let me say the character of Sadr is important for the future of Oil availability. Successful leaders of these movements are usually greedy as well as hypocrites so that they could spin things differently to gather raw energy in their support. Ironically that is our only hope.
Who knows that may be a good hope to have in a shiite majority Iraq since both Bin Laden (a nightmare
rebel) and Sadam Hussein (a nightmare dictator) are both of the other sect (Sunnies)


jay said...

Just for completion to continue on the above thought, The leaders of Iran(a Shiite country) though making of lot of noise (of course getting repercussions)the country does not have a history of serious aggression(In the context of neighboring Arab States)
and even have a semblance of democracy (elections are held)

KLR said...

t r u t h o u t | Is the US Pulling the Plug on Iraqi Workers?

Shahristani's order prohibits all trade union activity in the plants operated by the ministry, closes union offices, and seizes control of union assets from bank accounts to furniture. The order says the ministry will determine what rights have been given to union officers, and take them all away. Anyone who protests, it says, will be arrested under Iraq's Anti-Terrorism Act of 2005.

So ended seven years in which workers in the region's power plants have fought for the right to organize a legal union, to bargain with the electrical ministry, and to stop the contracting-out and privatization schemes that have threatened their jobs.

Iraq Plans to Raise Official Estimate of Crude Reserves, Oil Ministry Says - Bloomberg

Iraq’s government will announce tomorrow that the country’s crude oil reserves are larger than the current estimate of 115 billion barrels, an oil ministry spokesman said.

Oil Minister Hussain Al-Shahristani will disclose the revised figure at a news conference in Baghdad, Asim Jihad said in a telephone interview in the capital.

“The new figure will be important and will reflect Iraq’s true crude oil potential,” Jihad said.

Uh-huh. From that EIA page:

Furthermore, Iraq’s oil and gas industry is the largest industrial customer of electricity, with over 10 percent of total demand. Large-scale increases in oil production would also require large increases in power generation. However, Iraq has struggled to keep up with the demand for power, with shortages common across Iraq. Significant upgrades to the electricity sector would be needed to supply additional power.

Power Hungry: Iraqis Ask 'Where Is The Electricity?' - Radio Free Europe / Radio Liberty © 2010

"It comes for one hour although it is not for a whole hour. It goes on and off all the time. Technically we have the electricity for about 20 minutes only," says one Baghdad resident who wished to remain anonymous.

"We get our electricity from the generators in the house and the generators on the street and that is all. There is no electricity, it is hardly ever there."

Data from the World Bank's World Development Indicators paper for 2009 showed Iraq in 2006 98.5% dependent on oil for electrical generation. The Power Hungry story says that most of the new capacity installed by occupation forces was optimized for NG - but there isn't any NG available, so they run at lower efficiency on fuel oil etc.

EIA says 200 and 400 kb/d additional capacity by the ends of 2010 and 2011, respectively. JODI says Iraq is down 111 kb/d YOY for August. Next.

James said...


I am sure that al-Sadr is a pretty savvy guy, but I think he may hold some different assumptions than one might expect.

1. If al-Sadr believes peak oil is imminent, it behooves him to hold off on increasing Iraqi production in the short term. Far better both financially and in terms of increasing Iraq's geo-political leverage to allow peak oil to become apparent before ramping up production.

2. The oil majors are not the only game in town. I understand Russia has been quite successful at exploiting its oil reserves in partnership with Slumberger. By my admittedly uneducated estimate, partnering with Slumberger would give Iraq just as large a share of the profits as the al-Shahristani plan but with much more of the independence that I believe al-Sadr desires. Of course this plan would require Iraq to come up with a whole lot of capital.

3. When Iran nationalized their oil industry in 1953, Britain pulled all of her oil engineers out of the country in an effort to shut down production - another reason for al-Sadr to prefer to partner with Shlumberger or to go it alone.

4. Everyone agrees that al-Sadr's greatest wish is to see all foreign troops leave Iraq. As long and the oil majors remain in the country, the foreign troops have reason to stay (or to possibly come back if they do withdraw and the oil majors run into conflict with a future Iraqi govt).

5. I think the al-Shahristani bargain may not be as sweet for the Iraqis as some people are assuming. The deal is sweet on paper, but as far as I have been able to tell it is backed by nothing but promises. It seems to me that the oil majors had every incentive to promise the moon, and then decide later whether they wished to invest enough capital to be able to deliver on their promises. If all of the oil majors fail equally to deliver on their promises (and they do have a history of collusion), what can the Iraqi government do about it? Fine them? Expropriate their property and thus shut down what increased production they have delivered? I just don't think the Iraqi government has enough leverage to be able to enforce the contracts it has signed with the oil majors.

James said...

Fascinating article on al-Sadr's deal with Nouri al-Maliki: