MSI‘s Iraq Public Administration Reform Project (USAID-Tarabot), in cooperation with the Ministry of Oil, carried out a Rapid Oil Sector Assessment of technical, administrative, political, and legal problems stalling key oil projects. The Tarabot Team identified a short-list of practical solutions in the refining, export, and distribution systems that will generate $13.5 billion in revenue annually.
Iraq now faces a double whammy of the ISIS insurgency and the precipitous fall of international oil prices.
Recent Tarabot Meeting with the Minister of Oil
For the last ten years, Iraq’s oil industry has determinedly rebuilt its infrastructure, negotiated agreements with international oil companies, and made Iraq the fastest growing oil sector in the world, and the second largest producer in OPEC. Under challenging circumstances, Iraq managed to almost double its oil production by 2014, with plans for the continuation of this trend through 2020. Beyond funding Iraq’s recent oil sector Investments, the growing oil production and strong oil prices provided government revenue for critical improvements in key public services such as electricity, water, transportation, and social services.
This progress is now jeopardized as the government’s funds have drastically shrunk due to the worldwide 50% drop in crude oil prices, and the necessity of diverting resources into fighting ISIS. This puts at risk Iraq’s ambitious plans to increase oil exports, and is wreaking havoc on service delivery in all sectors.
The MSI Oil Sector Assessment Team of American and Iraqi experts identified a list of fixable stalled projects in refinery operations, export facilities, and oil product distribution systems that are currently costing Iraq a total of over $13.5 billion per year in lost oil revenue and real opportunity costs. The Team analyzed the reasons for these delays, proposed solutions to put them on track within a year, and proposed a set of immediate targeted administrative reforms and skills development aimed at bringing an end to the repetition of the contracting and management problems that have long beset the sector.
An important contribution of this assessment is shining a light on the billions of dollars in opportunity costs in recent years stemming largely from indecision and delays regarding resolvable problems.
MSI formally presented the recommendations to the Minister of Oil, the US Ambassador, the USAID Mission Director, and their oil sector and economic experts. The Tarabot Team proposals were hailed by all parties as providing an important and practical road map for these times of crisis.
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Click here to read about how MSI is supporting the Government of Iraq’s response to their internally displaced persons (IDP) crisis.
Baiji, Iraq’s largest refinery, shut down by ISIS. © THAIER AL-SUDANI/Reuters/Corbis