Iraq's Oil Production Unscathed for Now by Trump Travel Ban
(Bloomberg) -- Iraq won’t bar U.S. citizens from entering the country, Prime Minister Haider Al-Abadi said, averting a potential disruption to the oil industry of OPEC’s second-biggest producer.
U.S. President Donald Trump issued an executive order on Jan. 27 banning citizens of Iraq and six other Muslim-majority countries from entering the U.S., in the name of fighting terrorism. Iraqi lawmakers on Monday condemned the move, noting that Iraqi forces are on the front line in the battle against Islamic State militants, and urged their government to reciprocate.
A reciprocal ban would have denied entry to U.S. oil workers in companies such as Exxon Mobil Corp., which support Iraq’s most important industry, and to American military personnel advising Iraqi forces in their offensive to oust the militants. Abadi said on Tuesday that those contributions outweighed the “damage” caused by the U.S. ban. Iraq is the biggest oil supplier after Saudi Arabia in the Organization of Petroleum Exporting Countries.
“We won’t apply the same rules,” the prime minister said. “Fighting terror is a strategic issue for us.”
Abadi’s refusal, for now, to take tit-for-tat measures offers some reassurance for U.S. oil companies working in Iraq, as well as the myriad service providers and security contractors who support the industry. Most expatriates in Iraq work on rotation, leaving and returning to the country every few weeks, a routine that any entry ban would have disrupted.
“If the policy was reciprocated, it could have been catastrophic for both countries,” Luay Al Khatteeb, a fellow at Columbia University’s Center on Global Energy Policy, said by phone from London. “It would have affected production.” Iraq pumped 4.61 million barrels a day in December, data compiled by Bloomberg show.
U.S. companies working in Iraq include Exxon Mobil and oil-service providers Schlumberger Ltd., Halliburton Co. and Baker Hughes Inc. Exxon, Baker Hughes and Halliburton declined to comment on the Iraqi prime minister’s decision, while representatives for Schlumberger didn’t immediately respond when asked for comment.
Trump’s visa ban probably won’t have a direct impact on their operations in Iraq, as many companies send their Iraqi staff to other places in the Middle East for training and meetings rather than to the U.S., said Robin Mills, Chief Executive Officer of consultant Qamar Energy in Dubai. “It wasn’t easy for Iraqis to get visas before anyway,” he said.
Mistrust and hostility caused by Trump’s order could harm U.S. businesses’ chances of winning future contracts in Iraq, Mills said. No U.S. oil companies have sought to take part in a bidding round to develop 12 small to medium-sized oil fields, due to take place this year.
The U.S. ban also applies to the semi-autonomous Kurdish region in northern Iraq. Chevron Corp, which is exploring for oil in the Kurdish enclave, said on Monday that it didn’t anticipate any impact from the travel ban.
Kurdish authorities consider the U.S. an ally but expect “more assistance and understanding” from the Trump administration to help Iraq and the Kurds, who have been battling Islamic State and harboring refugees, Safeen Dizayee, spokesman of the Kurdistan Regional Government, said in a text message.
The U.S. measure bars citizens of Iraq, Iran, Libya, Somalia, Sudan, Syria and Yemen from entering the U.S. World leaders including Canadian Prime Minister Justin Trudeau and German Chancellor Angela Merkel have denounced the move.
Of the seven countries targeted by the order, only Iran has so far announced reciprocal measures. Iran’s Foreign Minister Mohammad Javad Zarif tweeted that his country would stop issuing visas to Americans but not bar those who already hold one, describing the U.S. measure as a “great gift to extremists.” No U.S. companies work in Iran’s oil industry or in that of fellow OPEC member Libya.
The entry ban, which followed comments by Trump that the U.S. should have “kept the oil” after invading Iraq in 2003, has strained an already complicated relationship between the two countries. The Popular Mobilization Forces, a band of Shiite Muslim militias fighting alongside Iraq’s army against Islamic State, called on the government last week to stop U.S. citizens from entering. Influential Shiite cleric Moqtada al-Sadr called for all Americans to be expelled from the Middle Eastern country.
Iraq’s government “is in a tricky position politically,” Richard Mallinson, an analyst at Energy Aspects Ltd., said by phone from London. “Simply not taking any action because the U.S. is a key ally could be risky for Abadi in terms of the political fallout.”
With assistance from Joe Carroll and David Wethe. To contact the reporters on this story: Sam Wilkin in Dubai at firstname.lastname@example.org ;Khalid Al-Ansary in Erbil at email@example.com To contact the editors responsible for this story: Nayla Razzouk at firstname.lastname@example.org Bruce Stanley
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