BASRA: An Iraqi oil company from Basra is putting full efforts into manufacturing high quality oil pipelines, hoping to encourage foreign investment after disappointing business interest in the domestic market.
The General Company of Iron and Steel Factory says it holds the Ministries of Oil, Agriculture and Water Resources and government owned South Oil Company responsible for not supporting Iraqi oil companies. It blames the government for not trying hard enough to secure contracts for domestic suppliers despite production meeting the necessary international standards.
“The Government is not cooperative, especially the ministry of oil, they contract with other Chinese companies with the same type of spiral-welded pipes and use it in the projects, leaving the national production, while all of the ministers talking in media about supporting the national production, but if it comes to reality there isn’t any real support to the national production,” said Abbas Hial al-Maliki, Director General of The Spiral Steel Pipes Factory.
In recent years, economic problems have plagued the Iraqi economy. Maliki says rife corruption has contributed to domestic suppliers losing out on business deals that have been awarded to foreign alternatives. The company was built in 1972 and briefly stopped works in the 1980s. It was revived in 2012 but has since failed to secure a contract with companies working in conjunction with the government.
“Some of the companies visited the factory and they were surprised that the ministry of oil didn’t even talk to them about the factory. (Reporter asking: What companies?) Eni, Shell – we met with them and LukOil – some of them came here –to be honest, the ministry of oil is able to impose our production on the companies, it’s all about cooperation as you know, I know that the companies are going to companies from their countries for support, the Italian companies are going to Italy, the British companies to England and Russian to Russia, so they bring their materials to Iraq with any price they like,” added Maliki.
The factory uses high-tech German equipment in its production and is able to produce 200 tons of materials a year. It employs over 600 staff, many of whom say they may have to look for alternative employment if the factory is unable to secure contracts soon. Iraq’s Oil Marketing Company (SOMO) allocated 5 million more barrels of Basra Light crude loading in June to upstream partners including PetroChina, Eni and Lukoil.
Foreign companies are paid in oil under technical service contracts (TSCs) signed with SOMO, although payments have been delayed after an oil price drop squeezed Iraq’s budget. Maliki says he hopes that one day contracts will be preferentially awarded to domestic supplies so that they are able to rebuild their country from within.
