Iraq's Weakened Unions Fight Foreign Oil Firms

By: Aref Mohammed
Reuters
July 14, 2009

http://www.reuters.com/article/marketsNews/idUSLD405220
20090713

Iraq unions deem energy deals illegal. Labor
movement fears unemployment and threatens strikes.

Basra, Iraq

Unions are lobbying against Iraq's new oil contract
with BP and China's CNPC, but the weakened labour
movement may have a hard time thwarting deals
desperately needed to revive a struggling oil sector.

The Federation of Oil Unions of Iraq and the Federation
of Workers Councils and Unions in Iraq have condemned
the Oil Ministry's decision to award a foreign
consortium the contract to develop Rumaila, the
country's largest producing oilfield.

"We have written a letter to BP and the British consul
in Basra, warning them against entering Basra as it
will be illegal ... If they do, we will protest and
strike," said Faleh Aboud Amara, a top official with
the Federation of Oil Unions.

Unions were one of the opponents of the ministry's plan
to award foreign firms contracts to develop as many as
eight oil and gas fields in Iraq's first major energy
auction last month, a centrepiece of government efforts
to more than double output of around 2.5 million
barrels per day (bpd).

Just one field was awarded in the June 30 auction.
Bidding revealed a big gap between what the government
thought should be paid for the work and what firms
considered fair.

But Oil Minister Hussain al-Shahristani is likely to
pull out all the stops to make sure the Rumaila deal,
in which BP and CNPC promise to increase the field's
output to 2.85 million bpd, almost three times its
current capacity, goes ahead.

BP had no comment and no one at the British embassy
could be reached for comment.

Ali Abbas Khafif, head of the Worker Councils and
Unions' branch in Basra, Iraq's southern oil hub, said
the Rumaila deal would violate Iraqi law because it was
brokered in the absence of new national energy
legislation, whose passage has been held up for years
by a bitter feud between Arabs and minority Kurds.

He also complained about the terms of the fixed-fee
contract, which he said would overcompensate companies,
and said such deals might lead to greater unemployment
in the oil sector.

The union strategy centers around efforts to scare off
firms thinking about coming to Iraq, where sectarian
bloodshed has ebbed but violence still poses a major
threat, Khafif said.

"We have the ability to halt their work entirely. We
can mobilise people against them. We will use sit-ins
and strikes."

Weak Labor Movement

Yet union clout in Iraq is not strong. Saddam Hussein
effectively banned them in 1987 and they have scant
legal protection today.

"Unions don't have enough power to stop these
contracts. The labour movement in Iraq is not organised
enough to give it influence over political decisions,"
said Saad Saloum, a professor and political analyst at
Baghdad University.

Abboud said the oil union has 10,000 active members in
Basra, against an estimated 46,000 oil workers there.

Parliamentarian Nassir al-Esawi said unions had no
special protections under Iraqi law, on the same legal
footing as civil societies like aid groups. Some in the
labour movement accuse the Maliki government of trying
to weaken them even further.

Iraqi lawmakers also insist foreign oil deals they have
not approved are invalid, and some within the state oil
industry also oppose auctioning off fields in
production.

The minister has also come in for criticism from
foreign firms, who prefer more lucrative production
sharing deals and who complained of his exacting terms
in last month's auction.

The conflicting critiques may, in the end, signal that
Shahristani has struck the right balance between
nationalism and pragmatism, but the firestorm he faces
is not likely to go away.

There is less opposition to ministry plans for a second
round at the end of the year for 11 fields yet
undeveloped.

Ali Hussain Balou, the head of parliament's oil and gas
committee and a vocal opponent of Shahristani,
acknowledged that union influence was limited but said
that it would grow.

"Iraq is on a democratic course. If these unions are
not powerful today, they will be tomorrow," he said.
(Additional reporting by Muhanad Mohammed, Aseel Kami
and Khalid al-Ansary in Baghdad and Tom Bergin in
London; writing by Missy Ryan; editing by Karen Foster
and)