Fear of Powerful Politicians Causes 'Corruption That Slows the Economy,' Iraq's Oil Minister Says

Iraqi Oil Minister Ihsan Abdul-Jabbar Ismail blames indecision and delays in the ministry on fear of powerful lawmakers whose interests are not served, the Associated Press reported.

"This is the culture: To stay away from any case, to stay away from inspectors, to say, 'Let us not do it.' I think this is the corruption that slows the economy," he told the AP.

While oil minister, Ismail has tried to fast-track projects. He said he is hopeful the coming months will bring signed contracts to develop key projects that could boost Iraq's gas capacity by 3 billion cubic feet by 2025.

Ihsan Abdul-Jabbar Ismail, Oil Minister Iraq
Ihsan Abdul-Jabbar Ismail, Iraq's oil minister, speaks during an interview with the Associated Press in Baghdad on June 11. Iraq's oil sector is rebounding after a catastrophic year triggered by the coronavirus pandemic, with key investment projects on the horizon. But Ismail warns an enduring bureaucratic culture of fear threatens to stand in the way. Hadi Mizban/Associated Press

For more reporting from the Associated Press, see below:

Iraq is currently trading oil at $68 per barrel, close to the approximately $76 needed for the state to operate without reliance on the central bank to meet government expenditures.

Ismail took over the unenviable job of supervising Iraq's most vital industry at the height of an oil price crash that slashed oil revenues by more than half last year. Since then, he has had to balance domestic demands for more revenue to fund state coffers and pressure from OPEC to keep exports low to stabilize the global oil market.

With the sector rebounding, Ismail told the AP, he can now focus on other priorities. In the interview, he offered a rare glimpse into the inner workings of the country's most significant ministry—Iraq's oil industry is responsible for 90 percent of state revenues.

He recounted how cutthroat Iraqi politics and corruption fears have often derailed critical investment projects during his tenure and those of his predecessors—a source of long-term frustration for international companies working in Iraq.

"In the Ministry of Oil, the big mistake, the big challenge are the delays in decision-making or no decision-making at all," he said, attributing indecisiveness to fears of political reprisal from groups or powerful lawmakers whose interests are not served.

He described a warped work culture where allegations of corruption are used as tools by political players to get their way—and the mere possibility is often enough to keep high-ranking officials in ministry from signing off on important projects.

Top on his list is developing the country's gas sector, a central condition for Iraq to be eligible for U.S. sanction waivers enabling energy imports from neighboring Iran. To that end, Iraq is looking to develop long-neglected gas fields and capture gas flared from oil sites.

Iraq currently imports 2 billion standard cubic feet to meet domestic needs.

The ministry is close to signing with China's Sinopec to develop the Mansuriya gas field in Diyala province, said Ismail. The field could add 300 million standard cubic feet of gas to domestic production. He hopes to finalize the deal by mid-July.

The ministry is also in talks with France's Total to develop an ambitious multibillion-dollar mega-investment project in southern Iraq, including the Ratawi gas hub, development of Ratawi oil field and a scheme to provide water to oil fields required to boost production.

Early talks are also ongoing to develop the Akkas gas field, in Anbar province, with the American company Schlumberger and Saudi Arabia oil giant Aramco, Ismail said, expressing hopes for an agreement there too.

Though negotiations with international companies have picked up speed, Ismail said entrenched indecision within his ministry persists. Investors have blamed glacial bureaucracy and indecision within ministry ranks for thwarting projects.

Among Ismail's deepest regrets is the collapse in talks—after five years of negotiations—between the ministry and ExxonMobil over a multibillion-dollar investment project that would have been key to increase Iraq's production and exports.

"For me, it was a big mistake from our side," said Ismail, who was the former director-general of the state-owned Basra Oil Co.

Ismail himself came under scrutiny when lawmakers accused him of corruption. Cabinet dismissed him as head of the Basra company in October 2019 during a purge against alleged corruption. He was reinstated a few months later.

Iraqi media are often used as a pressure tool, Ismail said.

"Someone sends me a contract, and it would be illegal to say yes, so I say no, and he starts to say bad things in the media," Ismail said.

Also, he said, 80 percent of his time is spent fielding requests from political parties and individuals asking for employment, contracts or job transfers—requests he says he routinely rejects.

"They say, 'Move this person from this position to this, we need this position, we need this department, we need this company,'" he recalled.

Iraq Energy Gas Worker
An employee turns a valve at the Nahr Bin Omar natural gas field, north of the southern Iraqi port of Basra, on April 21, 2020. Hussein Faleh/Getty Images