April 27, 2003
By Oliver Morgan
Iraq may have to leave the Organisation of Petroleum Exporting Countries so it can pump out extra oil to pay for the country's reconstruction, says a former Iraqi oil minister who is now a key adviser to the American government.
The extra oil needed would be more than twice Iraq's pre-sanctions Opec quota and almost triple the present output of about 7 million barrels a day, said Fadhil Chalabi, who rejected a US invitation to become interim head of his country's oil sector.
Chalabi, who served on the US State Department's Future of Iraq Oil and Energy Working Group, says the Iraqi industry must be privatised to attract foreign investment following the war.
In the right hands the output of 7 million barrels a day is achievable in about six years. Such high production would, however, place a strain on Iraq's relations with Opec and threaten a slump in world oil prices.
Chalabi's preference would be for Iraq to stay in the cartel. However, he said: 'Iraq must maximise revenue from its oil. I would choose maximising the revenue through oil, with or without Opec.
'If it is within Opec it would be better, but it may not be possible.'
Chalabi, cousin of Ahmed Chalabi, the Pentagon's choice to head the country, said he would be prepared to serve the Iraqi oil industry if a democratically elected government was in place.
He said selling off Iraq's oil assets was the only way to secure investment in his country. 'Iraq is going to need a lot of money in the next five years, up to $300bn.
'Privatisation or partial privatisation is the way to secure this investment.
Chalabi added: 'The nationalised oil industry [in the Middle East] I believe has led to shrinkage of the share of Middle Eastern Opec countries in the world market to the benefit of non-Opec producers - the growth of the oil industry outside the Gulf.'
However, he believed that strong 'oil nationalist' opinion in Iraq would make such a move difficult in the short term.