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Iraq

Despite decades of tragedy and even though the task of rebuilding that country’s oil output will be lengthy and expensive, by some estimates, it will cost between US$30 billion and US$40 billion to bring Iraq’s oil sector up to modern-day standards and sustain output at two to three million barrels a day. At two million barrels a day, Iraq’s annual oil income could total US$15 billion. For the foreseeable future, that will not be enough to meet the essential needs of the Iraqi people while rebuilding and expanding the country’s energy sector. Clearly, an infusion of external investment and know-how is required if Iraq is to further develop its existing oilfields and find new ones. The international oil industry, teamed with the capital markets, is equipped for that task.

ChevronTexaco is prepared to make the investments once Iraq’s new government takes root with popular support, a new legal system is established and its tax regime is defined. Although the final decision for inviting foreign investment ultimately rests with a representative Iraqi government, it is believed that, in due course, the invitation will be forthcoming. In the meantime, immediate assistance is being provided Iraq by setting up commercial arrangements for lifting and transporting current production and assisting with humanitarian aid. ChevronTexaco has also offered its help in establishing new legal and tax systems, as was undertaken in Kazakhstan with a consortium of experts. Other proposals are ready to be considered that could help speed reconstruction.

In May 2003, Robertson Research International Ltd released its annual survey on the nations and regions most favoured by international oil companies for new exploration ventures. (1) The results of the survey concluded that the region of the world viewed most positively for new ventures is the Middle East. The report made special note of the fact that the companies were polled during January and February 2003 when the outcome of the crisis in Iraq was far less certain.

International oil companies clearly understand the promise of this region’s energy resources and those companies are encouraged by the steps that nations are taking to expand their economies by engaging the capabilities of the private sector and the support of outside capital. If Middle Eastern attitudes about foreign investment and privatisation are in transition, it is not a moment too soon.

Jobs and a Healthy Economy

Earlier in 2003, the UN released an exhaustive report on Arab human development, compiled by a group of Arab scholars. (2) The report underscores the persistent problems in many Arab nations: high illiteracy rates, the deterioration of education, the slowdown of scientific research and development, poor production bases and competitive capacity and mounting unemployment. In particular, the lack of job-creation opportunities in Arab nations was noted. About six million individuals enter the labour force each year, but nowhere near that number of new jobs become available. The average unemployment rate is about 15% across the Arab world and much higher in some individual countries.

More than half of the Middle East’s population is under the age of 18. Economies of the region should be growing by at least 5% per year in order to absorb the currently unemployed as well as to provide jobs for the millions of young people entering the labour pool. For that to happen, the following need to occur:

Sustained job creation is fundamental to a healthy economy, and energy investments create jobs. While the development of energy is traditionally viewed as a capital-intensive enterprise, its overall employment impact can be highly positive. Energy investments generate the need for dozens of various suppliers and services, many of which can be furnished on a local basis. The jobs provided in these industries in turn help create and support employment in the financial, retail and commercial sectors. Within ChevronTexaco, job creation is seen as much more than a secondary effect of the company’s presence in a host country. The provision of quality employment is part of the responsibility of an active partner in furthering the wellbeing of the nations in which it operates.

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