Eric Watkins
Oil Diplomacy Editor
Iraq's Oil Minister Hussain al-Shahristani was promoted to the country's deputy prime minister for energy, with current deputy oil minister Abdul Kareem Luaibi being designated as his successor.
"In the cabinet formation list submitted ... by Prime Minister Nuri al-Maliki, Hussain al-Shahristani is nominated as deputy prime minister for energy and Abdul Kareem Luaibi is the oil minister," said Iraq's former Prime Minister Ibrahim al-Jaafari.
The new oil minister was born in Baghdad in 1959 and holds a BA degree in oil engineering from the University of Baghdad. Luaibi began his career in 1983 with Iraq's state-owned South Oil Co., and he held several posts within the ministry before reaching his latest position.
As senior deputy in the ministry of oil, Luaibi is said to have been instrumental in the country's recent oil and gas contracts with international oil companies and other agreements with neighboring countries.
Altogether, Iraq has awarded 15 oil and gas contracts since 2008 to international energy companies, representing the first major investment in the country's energy industry for more than 30 years.
"[Luaibi] means good continuity for the oil companies," said Samuel Ciszuk, Mideast energy analyst with IHS Global Insight. "He was very much involved in the negotiations of the contracts. He was very much involved in the talks with the oil companies."
Despite the appointment of Luaibi as minister, observers said that al-Shahristani would remain the dominant figure in the country's oil and gas industry.
"Hussain al-Shahristani asked for broader authority in the oil industry, especially with the issues of the contracts in the country's bidding rounds, and to have a say in running Iraq's energy sector," said a senior official. "When he got these assurances he accepted the post of deputy prime minister for energy."
Al-Shahristani led the oil ministry through a series of agreements with IOC's that could increase Iraq's production capacity to 12 million b/d from the current 2.5 million b/d, subject to approval by the Organization of Petroleum Exporting Countries.
Observers suggested that al-Shahristani's continued control over the oil sector will be seen as assurance that contracts he agreed with IOC's will be honored in the absence of formal guarantees, given the country's lack of a new hydrocarbons law.
Some observers said that al-Shahristani would have only accepted his new position on condition he retained overall control of oil, which provides around 95% of Iraq's budget revenues.
The promotion of al-Shahristani, a nuclear scientist by profession, also followed last week's decision by the United Nations Security Council to grant Iraq permission to develop a civilian nuclear program after 19 years of restrictions aimed at preventing the country from developing atomic weapons.
Following the UNSC announcement, al-Shahristani told the Aswat al-Iraq news agency that his country "is striving to develop and activate the nuclear energy for peaceful purposes, with local potentials and efficiencies, because it possesses a very special program, compared with other developing nations."
Al-Shahristani studied in Britain, Russia and Canada before reaching the position of senior scientific adviser at Iraq's Atomic Energy Commission during the 1970s. He was arrested in 1979 by agents of Iraq's former president Saddam Hussein for his alleged activities against the regime. He was eventually sentenced to 20 years and spent 11 in prison.
Al-Shahristani escaped the infamous Abu Ghraib prison during the 1991 Gulf War and fled to Iran. He returned to Iraq in 2003, turning down an opportunity to head the interim government before being made oil minister in 2006.
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