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Digging for trouble: Iraqi tribes pose new challenge for oil firms

Digging for trouble: Iraqi tribes pose new challenge for oil firms

Marsh tribesmen want a share in Iraq's oil wealth; Oil firms moving in, some farmers resisting; Compensating landowners is new obstacle facing companies

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May 30, 2011 10:04 by



Sitting in his reed meeting house in what was once Iraq’s marshes, sheikh Rashash al-Imara warns of potential trouble if his poor tribesmen are driven off their land by foreign companies digging for oil.

“If I’m someone who is starving and an oil well has been drilled next to me, do you think I will remain quiet?” said sheikh Rashash, a former Iraqi army general, who is now a leading figure in the al-Imara tribe in southern Iraq.

“I swear by God I will take it to pieces. We have told them anything can happen. These are the marshes.”

Thought to be the site of the biblical Garden of Eden, Iraq’s ancient marshes have for years been known locally as a dangerous haven for smugglers, bandits and kidnappers.

Tribes here also live above some of the richest oil reserves in Iraq, and negotiating with them is the latest challenge for international companies working the country’s petroleum fields in some of the largest deals the industry has seen.

Saddam Hussein, ousted by a 2003 US-led invasion and subsequently executed, had accused the Marsh Arabs of treason during his 1980-88 war with Iran. He had dammed and drained the marshes to flush out rebels hiding among the reed stalks.

The Imara tribe dwells in what is now the outskirts of the marshes. Miles of wasteland scattered with palm trees, baked mud huts, stagnant water canals and rusty pipelines are all that remain of the ancient wetlands.

“The area here is backward, it needs schools, hospitals, roads, water and electricity,” said sheikh Rashash, waving a palm leaf hand fan to cool off the sweltering summer heat.

Oil is the backbone of Iraq’s economy, which was left in tatters after years of war and economic sanctions. Baghdad signed a series of deals with oil companies to develop its vast oil reserves that could boost its output potential to Saudi Arabian levels and generate billions of cash needed to rebuild.

International oil companies working in Iraq already grapple with many challenges, from security to crumbling infrastructure, logistical bottlenecks and bureaucracy.

DELAYS, DRAWN-OUT NEGOTIATIONS

Russian energy company Lukoil and its consortium partner Norway’s Statoil are developing West Qurna Phase Two oilfield, partly crossing through farms where the Imara live, fueling fears among tribesman they will be evicted.

Many tribesmen are illiterate and have little chance of finding work outside the farms. They want compensation for land used by foreign oil companies, or for companies to employ them.

Sheikh Rashash said he has met with the oil companies to explain his tribe’s concerns and warned that some may sue South Oil Co., the Iraqi state-run partner, and seek compensation.

Already, some farmers have prevented oil workers from operating in the field, he added, without giving details.

“Some pipelines were supposed to be extended, but people who live on the land prevented them (the companies). They told them ‘we won’t let you work if you do not recruit our children.’”

The Lukoil-led consortium delayed the start of production in the West Qurna Phase Two field by a year until 2013, partially due to troubles with the tribe living there, the head of state-run South Oil Co., Dhiya Jaffar, told Reuters.

“We have an unresolved problem, the issue of compensating the people for their land. Some have official ownership contracts for land, while others have lease contracts,” he said. “This issue is confusing the international oil companies.”

During Saddam’s 24-year rule, the government allowed farmers to live and plant the land around oilfields under annual leases with the oil ministry. Now, the farmers say, they are being stalled by officials when they ask for compensation.

The Iraqi oil ministry has said before the government would offer compensation of cash or other land in some cases but the state was always the rightful owner of the oilfields.

Hoping to resolve the dispute, the oil ministry has set up committees to negotiate with local communities in the West Qurna Phase Two and Majnoon oilfields, Jaffar said. The latter field is developed by Royal Dutch Shell and Malaysia’s Petronas.

NO BENEFITS FROM SEA OF OIL

In a village near al-Khoyout, where the Imara tribe lives, another tribe, the Bani Mansour, complains of similar problems. Their farmland sits atop West Qurna Phase One oilfield, which is being developed mainly by US oil giant ExxonMobil .

“Our area has suffered a lot. The (South) Oil Company has drilled wells and extended oil pipelines in our farmlands without any compensation,” said tribal sheikh Wafi Abdul-Razzak, standing near an oil well as gas flared behind him.

“If they paid me to leave? Of course I would, what would make me stay here? There are no services, no hospital or clinic, or clean water and electricity comes only two hours a day.”

In Bani Mansour village, the water canals are filthy pools of stagnant water filled with heaps of rubbish. A decaying oil pipeline lies on the ground in the middle of a cluster of huts. Barefooted and dust-covered children played inside the tube.

“All our youth are unemployed and all our land has gone to the oil company,” said tribesman Doueir Azab, who said the Iraqi government drilled an oil well on his land in 1973, for which he was not compensated.

“We are living atop of a sea of oil and we have seen no benefit.” (By Rania El Gamal, Editing by Patrick Markey and Jon Loades-Carter)



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