Speech by KRG Prime Minister Barham Salih
at the first Oil and Gas Conference in Erbil
Martyr Saad Abdullah Convention Centre
Erbil
13 November 2011
Ladies and Gentlemen
I am truly honoured to welcome you all to the first Oil and Gas conference in Erbil. Not long ago, holding such a conference in Kurdistan was beyond anybody’s dream, it was unimaginable to say, the least. I thank CWC for working to organize this conference and I again welcome you and hope that you will enjoy your time in Erbil and learn about the history of Erbil, its citadel and to learn about the culture of Kurdistan.
Gathering such a distinguished and diverse crowd of businesspersons, investment bankers and industrialists under one roof highlights the new status of Kurdistan as a major economic player internationally and indeed domestically in Iraq as it helps the country as a whole to move forward and progress.
And progress we have achieved. We have seen this wonderful documentary by my good friend Gwynne Roberts, who is also a Welshman. He was with us during those difficult days when my country was being targeted by chemical weapons and the regime in Baghdad under Saddam Hussein was pursuing a vile policy of genocide and ethnic cleansing, much of which was paid for by the oil money. Indeed the challenge for us is to turn oil from the curse it has been to the blessing that we should have.
The progress that you see in Kurdistan today, may be impressive, but it can only be understood in the proper context of the arduous journey that we have embarked on. In the 70s and 80s this was a devastated homeland, this was a devastated wasteland, more than 4,500 villages were totally destroyed by Saddam Hussein’s regime, and Kurdistan was under a trio of economic embargoes, very little of infrastructure, only one university, very few schools, very few hospitals and very few services.
Our economy today is moving on, and is moving forward. And many statistics point to an amazing transformation of Kurdish life, whether it is in the number and quality of universities that we have, the number of schools, the number of hospitals, and GDP per capita income, that I can relay to you, in 2002, according to the World Bank, was about $375 dollars, whereas today our estimates suggest that it is at least $5,500 dollars GDP per capita income. Growth rate in Kurdistan is expected, according to revised estimates next year to be about 12%.
This economy continues to rapidly progress and investment in non-oil sectors alone exceed $16 billion, including Housing, Banking, Tourism, Industry, Agriculture, education, health and others sectors. In 2002, the annual budget of Kurdistan was $100Million. In 2011, we had $10Billion of government expenditure. In 2012, we expect that to rise to $13Billion.
This is significant by any standards, but I think what we aspire to is much more. And I think this country Kurdistan, Iraq are capable to delivering far more opportunities for its own people and indeed for international investors.
In the oil and gas sector we have signed over 45 Production Sharing Contracts for oil exploration, with consortia belonging to 17 different countries – some have already started producing oil. In 2011, we will meet our commitments as stated in the Iraqi national budget to export an average of 100,000 bpd. We have already agreed with Baghdad to increase this to 175,000 bpd for next year.
• In operational terms, we have seen a steady rise in activities in 2011, with seismic and drilling activity increasing as the international oil companies implement their work plans. There have also been a number of new entrants to the market in 2011 and we are pleased that our policies are proving to be the right ones to attract world class companies to invest in Kurdistan. We are pleased with the vote of confidence in our investment-friendly climate and in our security and stability that these contracts represent.
The days when Kurdistan was an isolated economic backwater are over. If our production continues to increase, as we expect it to, Kurdistan could within a few years become a net contributor to the Iraqi budget. The increase in revenues will underpin the acceleration in the country’s economic reconstruction.
In this context, I want to recognise the efforts of our Ministry of Natural Resources, and my good friend; Ashti Hawrami and his team for what they have done to developing our oil resources and putting in place the right policies in the context of our oil and gas law to this effect.
Ladies and Gentlemen:
After the end of tyranny of Saddam Hussein and the liberation of Iraq in 2003, the people of Kurdistan have made a deliberate choice. The choice of living in a pluralistic, federel, democratic, and constitutional Iraq. Kurds have a right to self determination and no kurd will be dissuaded of the commetment to that very basic human and national rights. But we were very deliberate and very serious about commitment to a federal democratic Iraq.
We believe that the era of centralized system of government that invariably ends with dictatorship and tyranny has been proven a total and utter failure in Iraq. We believe federalism is not only good for Kurdistan but it is a safety net, an insurance policy for a united Iraq. And it is also of significance to all the communities of Iraq. It is, therefore, of little surprise to me to see that more and more of our Iraqi compatriots of ours are thinking along the same lines and are looking to Kurdistan for inspiration. They look at Kurdistan as a successful model. And if Kurds can do it through decentralization and federalism, why they should be denied that very basic right enshrined in the constitution. I believe Kurdistan’s advancement, is proving to be a catalyst for a successful democratic and federal Iraq.
The passage of the Kurdistan oil and gas law was a crucial step for the Kurdistan Region. Our law is consistent with Iraq’s federal constitution and creates a modern, investment-friendly and transparent legal framework for the oil industry to work in. Our law is constitutionally valid, endorsed and ratified by an elected legislative body, recognized in the country’s federal constitution. We are in no doubt that it is providing a much-needed contribution to Iraq’s public revenues.
Ladies and Gentlemen:
We are committed to promoting a democratic¡ federal¡ and prosperous Iraq. On the eve of liberation of Iraq, many predicted that Kurdistan will be a source of instability and problems and conflict in the post-Saddam Iraq. In reality, however, Kurdistan emerged as the most stable part of Iraq - a hub of economic activity - and a promoter of regional stability. Kurdistan has emerged as indispensable link of trade and economic cooperation among our neighbours and a gateway to the wider Iraqi market. We have a major stake in a successful and strong Iraq- federal democratic Iraq, and I expect Kurdistan will continue to play an active and important role in Iraq for years to come. We are seeking coordination and cooperation with the federal government in Baghdad to achieve our goals—goals that are in the best interests of all the Iraqi people.
This requires that we work hard with our partners in Baghdad to promote economic prosperity; specifically, it requires us to work hard together to ensure the implementation of the necessary laws and regulations that allow for this objective of prosperity to be achieved, including the ratification and implementation of a new package of hydrocarbon laws.
We remind our colleagues in Baghdad that Kurdistan’s success is a success for the whole of Iraq. Every barrel of oil produced in Kurdistan is added revenue to Iraqi treasury. We affirm our commitment to the Iraqi constitution which stipulates that oil revenues end up with the federal treasury and redistributed in accordance with Iraqi constitution among all the regions of Iraq.
This year we achieved an important arrangement with our colleagues in Baghdad- by which oil produced in Kurdistan was exported and parts of the costs of production were paid to the companies. During my recent visit to Baghdad, we also agreed that for next year the level of exports should increase to 175,000 bpd and also to review the auditing procedures to enable the payments to the companies with less bureaucratic complexities.
We agreed with Prime Minister Maliki to submit the draft oil law of 2007 to parliament before the end of the year. If we can deliver on this, this will be an important step to resolving an important issue of contention in this area, and I believe it will be a major contribution to the political stability and economic prosperity of Iraq.
I know and you know, there are dissenting voices in certain circles in Baghdad- we heard few of them recently. My response is that we should move on. Eight years on from the demise of Saddam Hussein, Iraq’s oil exports are still stagnant and far below what Iraq’s reconstruction needs. Iraq needs to maximize revenues in the shortest possible of time to overcome the legacies of destruction, mismanagement and poverty that the former regime has left us. Once again, I say it to the doubters and dissenters in Baghdad every barrel of oil produced in Kurdistan is added revenue for all the people of Iraq and this should be the focus of our attention.
I also say to our partners in Baghdad very clearly and directly: Kurdistan has a constitutional right to developing its oil resources—and there is no way that we will allow ourselves ever again to be held hostage to the whims of bureaucrats in Baghdad.
That history that Gwen Robert put before you is one that we cannot ignore that easily. The oil revenues of Iraq must be turned from the curse it has been to a blessing for all the people of Iraq and we should be pursuing economic policies that will ensure the best usage of these resources, maximise revenues in the shortest possible time so that Iraqi reconstruction can take on and we can move our country forward.
Ladies and Gentlemen
I am also proud to tell you that our government is committed to transparency. We have recently published all the production sharing contracts, at least 42 of them so far, 3 or 4 that need to be also published very soon. We have enshrined in our contracts a commitment to EITI (the Extractive Industry’s Transparency Initiative) as required by the oil and gas law of Kurdistan. But we will need to ensure also that our development of oil sector and watch for any potential pitfalls, hence rendering it imperative that we strengthen our legal and administrative process to ensure that the international standards we have adopted and remain committed to continue to be effective and so that our investors remain protected.
In Kurdistan, we have a modern investment law that is conducive to economic growth and an internationally commended oil law. Investors must take this opportunity to come to our region and when circumstances permit, expand their ambitions to the rest of Iraq. Our country is rich and diverse. Our diversity is a sign of our strength, and one that we invite investors to come and see for themselves.
From our perspective it is important to diversify. While much attention has been on the exploration and upstream activities, I want to invite you to also be interested in the downstream area. And again, the vision Kurdistan as the stable part of Iraq, an economic hub, a gateway to the rest of Iraq. Your investments in Kurdistan are not investments in the Kurdish market alone, no matter how important that may be, but it is also an investment in the larger Iraqi market.
Another untapped sector in Kurdistan is the mining sector; Kurdistan is one of the richest areas of Iraq for its natural resources; the geological surveys indicate we have large deposits of phosphate, iron, copper, urea and marble to name but few. We will be drawing a road map for these resources, with the aim of utilising them in the interests of our people.
Another investment that we at the KRG are determined to make is in our people; it was the policy of the KRG to develop the human resources of our country and the human capacity in our society. We have an ambitious scholarship program and I commend the oil companies that have invested in education and the building of schools and they helped the universities some of which we have seen during that important documentary that Gwen has produced. At the end of the day the challange for us in the government and the challenge for you, the oil companies, is to ensure that the communities feel the benefits from investment in oil. The more we invest locally, the more we invest in people and improve the quality of life of people, the more support and stake we have from our communities which is most important, and I also dare say this will be what should be held out as an example to the rest of Iraq.
Ladies and Gentlemen
We are in the beginning. As some reporters have recently identified Kurdistan as the last frontier for oil exploration, I dare dream that from the devastation and the destruction and agonies of genocide, we truly can eye a future that is democratic, that is prosperous, a future in which Kurdistan will not be the case of genocide and victimisation of ethnic cleansing but can be a pillar of stability, prosperity, a hub for economic activity, a link among the nations of this part of the world and a gateway to a prosperous democratic Iraq.
Thank you very much Ladies and Gentlemen.
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