Oil deals signed by Nawshirwan Mustafa were waste of Kurdistan's Natural Resources: Ashti Hawrami
Kurdistan Regional Government Minister for Natural Resources Ashti Hawrami. Photo: Reuters • See Related Links It has become clear to everyone that the claim that says I have a share in the Norwegian company is not true. Unfortunately, Gorran only intends to attack the KRG and the Ministry of Natural Resources. Mr. Mustafa was the one wasting the region’s natural resources.
August 29, 2012
ERBIL-Hewlêr, Kurdistan region 'Iraq', — Kurdistan’s Minister of Natural Resources Ashti Hawrami sat down with Rudaw to discuss a recent statement he made about amendments to a contract signed by Nawshirwan Mustafa, now leader of the Change Movement (Gorran), back in 2006. He addresses criticisms made by Gorran about Kurdistan Regional Government’s (KRG) oil policy and how his ministry is proceeding on a number of issues related to the high-profile oil and gas portfolio.
Q: You issued a statement on August 14 where you mentioned making changes to a contract signed between Nawshirwan Mustafa, the current leader of Gorran, and an oil company before 2006, when Mustafa was a senior leader of the Patriotic Union of Kurdistan (PUK). Have you improved the contract?
Ashti Hawrami: We made many changes to the contract and to the amount of the land designated for the company to search for oil. The contract, signed at Mustafa’s request, was done very unprofessionally. A large area of land from Sulaimani (Sulaimaniyah) to Garmian to Bawanur was given to just one company to search for oil.
When I became the minister of natural resources in 2006, I revoked this contract. The way the contract was signed was very suspicious. It was not the oil
company’s fault, but the shortcomings were in the way the contract was signed and the ignorance of the other party who had signed the contract.
A vast area of land in Kurdistan was given to one company. Is that loyalty to Sulaimani and its natural resources, as some Gorran leaders and Mr. Mustafa always claim? At the time, Mustafa was considered the number one decision-maker in the area. It is questionable that he allowed such a contract to be signed under his authority. Fortunately, we could fix the errors of the contract and save Kurdistan millions of dollars. Instead of thanking us for this, they started a campaign to ruin the reputation of our oil policy.
Q: Why is it bad to designate a large area of land to one company to search for oil?
Ashti Hawrami: Of course it is bad. First, let me explain the errors of the old contract and the changes we made to it. We divided the land into four areas and gave it to five companies, instead of one. Mustafa signed the contract with only a $5 million signature bonus for the KRG,www.ekurd.net while the new contract with the five oil companies will make a hundred times more income for the Kurdistan Region, estimated at around $500 million.
The new contract gives less than a 10 percent share to the oil companies whereas the old one gave more than 30 percent. If the KRG were to follow Mustafa’s expertise in signing oil contracts, the entire region would have garnered only eight contracts, while we have currently signed 50 contracts with various foreign companies.
Q: What is wrong with having only eight contracts?
Ashti Hawrami: It is wrong because the companies will receive more shares and the government less. It will also decrease competition between oil companies in the region. In addition, it will reduce the bonus from the companies to Kurdistan’s infrastructure.
If such contracts like the one Mr. Mustafa signed were to continue in the Kurdistan Region, a large part of the region’s natural resources would be wasted. Gorran accuses us of wasting Kurdistan’s resources without looking at the contents of contracts we have signed according to KRG’s oil legislation. Mr. Mustafa was the one wasting the region’s natural resources.
The old contract gave the oil company a share three times more than in other contracts the KRG signed. We were able to return 5 percent that was designated to two people, an Iraqi and a Kurd, to the KRG. We returned the income to the government instead of it secretly going to those two people. The question is why was that much given to two people?
What is more surprising was that the 5 percent share was not mentioned in the contract; we discovered it. Why wasn’t it mentioned in the contract? Was there more money that disappeared during contract negotiations? That’s another question. If we were to follow this pattern, instead of getting $5 billion for Kurdistan infrastructure projects from oil revenue, we would only receive $40 million and a lot of money would have been stolen.
Q: Besides the contract you mentioned, are there other contracts that have been signed by Mustafa? If yes, what were the contents of those contracts?
Ashti Hawrami: Yes, other contracts have been signed between Mustafa and small companies in Sulaimani province. Some of those contracts laundered a 20 percent share to unknown people. We discovered these shares and returned them to the KRG as well. I don’t know why Mustafa was silent about the money laundering and why he didn’t thank us when we discovered it.
Q: Gorran says that KRG’s oil contracts are production sharing contracts rather than service contracts as we see with the central government. What do you say to this?
Ashti Hawrami: We sign oil contracts according to KRG’s oil legislation. Article 37 indicates that contracts must be sharing contracts between the KRG and oil companies. The law was passed after eighth parliamentary sessions and 111 lawmakers voted in favor, including some lawmakers from Mustafa’s faction.
In addition, in order to sign service contracts you have to have oil revenue already and we didn’t have that. We also didn’t have the funds to sign service contracts. KRG’s situation is very different from that of the central government. It is like if you have two people and one of them owns a gold store and the other is looking for gold mines. We ask people to come and look for the gold mine and tell them that when they find it they will have their share. Iraq is past that stage. Iraq’s oil fields have already been found and can be drilled.
Q: Gorran also says that the KRG has given oil refineries to the private sector, but still pays the salaries of the employees and guards. Is this true?
Ashti Hawrami: This is a baseless claim. If there is such a thing we will investigate and deal with it according to the law. If anyone has any evidence about this, he should tell us.
There are a number of small oil refineries in the Kurdistan Region. Some of them are old and were built before the oil legislation was passed. Most of them were built to refine crude oil coming from the south. It is said that one of the refineries is owned by a Gorran MP. We decided to shut down the refineries or at least improve the old ones. We also decided to reduce the oil tankers on the roads.
During my visit with Mr. Mustafa, we discussed this issue. I told him many people who work in the refineries have families and that if we shut them down they would lose their source of income. I also asked him if he was suspicious about the transparency of oil revenues in Kurdistan and his answer was that I
appeared honest and clean in performing my duty. I asked him why he didn’t say the same thing on TV so people know the truth, but he said “why would I praise a government that I wish to overthrow?”
I told him that implementing such a policy makes him unpopular and independent people like me would not vote for him. Some of the things Gorran officials say about oil revenue they know very well are not true. But they want to continue to confuse people and make our enemies happy.
The leaders of Gorran would not dare to criticize the Iraqi government that has withheld Kurdistan’s billions of dollars’ worth of oil in recent years. Iraq refines 700,000 barrels of oil for local needs every day and Kurdistan’s share is 135,000 barrels, but Iraq only sends 15,000 barrels.
Unfortunately, Gorran only intends to attack the KRG and the Ministry of Natural Resources. Gladly, not all opposition factions share Gorran’s attitude.
Q: In your statement, you also mentioned that Gorran requested that the Iraqi government provide satellite pictures of locations where the KRG is exporting oil so that they can televise them. Do you have any evidence of this?
Ashti Hawrami: Yes. It is said that a letter from one of Gorran’s officials was sent to Shahristani, Iraq’s deputy prime minister for energy, in which they requested such information. The letter is more like spying on Kurdistan. Such actions shouldn’t be conducted by any loyal Kurd or any political parties in Kurdistan.
Gorran’s hostility toward KRG’s oil policy started long ago. We want the Kurdish people to realize the difference, that we will still provide them with services in spite of the central government’s hostility toward KRG’s oil policy.
In the letter, Gorran requested a meeting with Shahristani. The letters were exchanged via email and through Haidar. In the letter, Gorran asked for Shahristani’s assistance in attacking KRG’s oil policy and finding a way to rescue them from the lawsuit that was filed against them.
In the letter, both sides proudly address the reduction of Kurdistan’s share from Iraq’s oil. They consider my criticism of Baghdad for the reduction unfair. Gorran doesn’t care whether Baghdad deprives Kurdistan of its rights. So far, Gorran’s media has not said anything about the issue.
Q: The letter also points out that you have a share in a Norwegian company. It also mentions that you spent $6 million buying a house in England after you became the minister of natural resources. What do you have to say about this?
Ashti Hawrami: It has become clear to everyone that the claim that says I have a share in the Norwegian company is not true. Even in the letter, Gorran asks Shahristani for proof of whether I have a share in the Norwegian company, but he didn’t have any proof. The other claim is also a lie, because I bought the house 10 years before I became the minister in 2006. I had a successful business in England.
I challenge anyone to provide reliable evidence that I have a share in anything. In the past, I filed a law suit against Hawlati newspaper that echoed the same lie about my house in England. I have not withdrawn my complaint and I will not.
When former Prime Minister Barham Salih and current Prime Minister Nechirvan Barzani contacted me about coming back to Kurdistan to become the minister of natural resources,www.ekurd.net I was already running a successful business. I told them I didn’t have the opportunity to become a Peshmerga or serve Kurdistan in the past, so this was an opportunity for me to come back and serve in this way. I really came back to Kurdistan with this enthusiasm.
Q: In your statement, you mentioned that until 2009, the KRG had only received $743 million in cash out of the $5 billion from oil revenue. The companies themselves will spend the rest of the money on service projects. But Gorran insists that the government has received the whole $5 billion. What can you tell us about this?
Ashti Hawrami: In 2009, we published all the information in a book in both Kurdish and Arabic. We also explained details to parliament that the money was divided into two parts. First, part of the money ($743 million) was to be given to the government in cash. The rest of the money ($4,220,000,000) would be used by the companies for projects according to the contracts, the most important of which was exporting oil.
During my visit, I explained this in detail to Mr. Mustafa. Those in Gorran who understand contracts and the economy know that what they say is not true. But they want to deceive people. It is insulting to the Kurdish people that Gorran’s media sees them as that low and simple and lies about KRG’s oil policy.
For example, $350 million out of the $743 million was spent on water projects in Garmian and Duhok. We gave the data on the spending to parliament. Former Prime Minister Barham Salih mentioned in parliament that the government wished to have all the money so it could spend it on the projects.
Q: What was the rest of the $743 million used for?
Ashti Hawrami: Some of the projects were carried out before I became minister. At the time, there were two administrations, Sulaimani and Erbil, and the income was split between them.
As I heard at the time, Mr. Mustafa’s decisions superseded the government. It is said some of the project money disappeared in Sulaimani. It is fair to ask Mr. Mustafa if some of that money was used to build his movement’s infrastructure. In general, we will collect data on how the money was spent for the projects and take it to parliament.
Q: KNN television says that the KRG has signed 40 contracts and that in all of them only 20 percent revenue will go to the government. Forty percent will
go to the foreign companies and the other 20 percent will go to local companies, most of them owned by KDP and PUK officials. If this is not true, what are the figures?
Ashti Hawrami: By taking a quick look at the contracts, any educated person will realize that these are all lies. All their data is wrong. The companies’ shares from oil revenue are not more than 10 percent. No political parties have a share in the oil contracts.
When the contracts were signed under their authority, a huge share was given to the companies with some secret shares for some people. They think it is still the same. These statistics do not exist in the contracts that the minister of natural resources has signed.
Q: When you visited Mustafa, did you explain everything to him? Gorran says they don’t know anything since everything is a secret?
Ashti Hawrami: Mr. Mustafa is aware of the situation as he was a part of the oil contracts from the beginning. I explained everything to him during my visit. I am sure he knows now that what is being mentioned in his party’s media is not true.
The subject of oil is one of the biggest strategic subjects in Kurdistan. It should not become a political issue. I know Gorran knows that KRG’s oil policy is successful, but it is concerned that the KDP and PUK’s power will increase so its view on oil is a political one.
The oil issue is related to all of Kurdistan. Gorran is part of this community; I would like for them to participate in this. It is not acceptable to continue to behave like the enemies of the Kurds. I urge Gorran officials to use their conscience and stop confusing people and being hostile toward KRG’s oil policy.
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