By Ahmed Mousa Jiyad. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
MoO Should Brace for ROCs’ Coerced Exodus
The tripartite (UK, EU and US) sanctions against Russian oil companies (ROCs), Lukoil and Rosneft, present direct, immediate and impacting threats to the development of the upstream petroleum sector in Iraq.
US Treasury Department’s Office of Foreign Assets Control (OFAC) compels Lukoil to sell its international assets by November 21, and, later, rejects the Gunvor deal. The Ministry of Oil (MoO) and the Iraqi government should act swiftly to address this dramatic imminent eventuality, to minimise the detrimental and long-lasting impacts of such sanctions.
ROCs are integrated international oil giants; their involvement stretched along the global petroleum industry value chain, i.e., from exploration to service petrol stations. Hence, each has a rather wide, large, diversified network of subsidiaries and cooperating entities around the world (some 85 entities).
Analytically, these specific sanctions on the two ROCs were premised on and related to geopolitical and geostrategic aspects of the sanctions endgame to inflicting effective impact on Russia to the extent of becoming a “deterrence” for continuing the war in Ukraine. Views differ widely on such eventuality; an issue that falls outside the focus of this article.
That said, these specific sanctions, have a rather high likelihood of negative, effective, direct, and immediate impacts on Iraq. The imposed sanctions resemble the highest level of global geopolitical rivalries and geostrategic positioning, with significant risk and strategic implication for Iraq.
Though the tripartite sanctions focus, for the time being, on Lukoil and Rosneft, other Russia companies such as Gazprom could be next in the sanctions’ pipeline.
This article focuses on the impacts on Iraq due to sanctioning all three ROCs, as the federal MoO and KRG will be impacted, though at different levels and scale, and which of the three ROCs.
After briefly assess the latest status of each project, I proposed a set of options which I think MoO should consider to averting or minimising sanction’ risk.
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Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.
