Oil giant BP’s chief executive delivered a serious setback to hopes of rebuilding Iraq when he said that the oil company has no future there.
Lord John Browne, one of British Prime Minister Tony Blair’s favourite industrialists, indicated he had given up on Iraq because the political and security situation in the country had deteriorated so much.
Yet only 18 months ago he was enthusiastic about prospects, lobbying in Washington and London to ensure American rivals did not cut him out of the action.
”We need a government, we need laws and we need decisions. We have not got any of that yet. A whole range of steps need to be taken,” said the BP boss as he unveiled new record profits this week. ”It’s not obvious to me you need foreign oil companies to do that [redevelopment].”
He added that private oil firms could destabilise an already sensitive situation and perhaps it should be left to local state-owned groups.
The pessimistic view of the future in Iraq was expressed hours after Browne had met Blair at the launch of a new climate change organisation.
The downbeat message contrasts with the optimism expressed in 2002 when the BP chief was desperately worried that American firms would monopolise Iraq once Saddam Hussein was overthrown.
Western oil firms originally hoped there would be a bonanza as the country with the second-biggest oil reserves in the world expanded its production dramatically.
But these aspirations have evaporated as the hopes of peace following invasion by United States and British forces have given way to ferocious guerrilla attacks.
Bruce Evers, oil analyst with Investec Securities, said the future of Iraq depended on foreign oil companies such as BP rehabilitating the country’s only real export earner.
”Iraq could not begin to get itself back on its feet without the Western oil companies. It needs their technology, expertise and balance sheets [cash], apart from anything,” he said.
The Iraqi oil fields were dilapidated and the surface equipment was so out of date it was a ”miracle that anything functioned at all”.
While Halliburton and other large energy services firms won major contracts to get the oil industry running at pre-war levels, it is the oil majors such as BP who drill wells and produce oil, he added.
BP and some other large foreign oil firms have become wary of the Middle East, preferring to invest in Russia, if not in Angola or the Caspian. — Â