December 7, 2009 / 12:45 PM / 10 years ago

Job fears, hopes temper Iraq welcome for oil majors

* Many Iraqis optimistic foreign oil firms will bring jobs

* Iraq state oil workers fear losing theirs

* Poor Iraqis say must see benefits, fear corruption

By Aref Mohammed and Mohammed Abbas

BASRA, Iraq, Dec 7 (Reuters) - Like a camel laden with gold but fed with thorns, as locals say, the impoverished Iraqi city of Basra has seen little benefit from its oil wealth, but new deals with foreign oil majors have stirred cautious optimism.

Deals with firms including Britain’s BP (BP.L) and China’s CNPC to develop Iraq’s lucrative oilfields have led to high hopes for jobs and investment, but also wariness in a country that for decades has had few dealings with foreign companies.

“I’m really optimistic. Let them come, I’ll welcome them with open arms and even give them some of my land if they need it, as long as they invest,” said Leftah Abbas, a farmer living in a mud house on one of Iraq’s richest oilfields.

Iraq has the world’s third largest oil reserves, most of it in and around Basra in the south, but years of war, sanctions and neglect have stifled oil exports and seen slums and sewage inundate a region that should be awash with petrodollars.

The Oil Ministry in recent months struck a deal with BP and CNPC to develop the super giant Rumaila oilfield, and is negotiating contracts with firms including Italy’s ENI (ENI.MI) and Exxon Mobil (XOM.N) that could catapult Iraq into the world’s oil exporting big leagues.

Ten untapped oilfields will be auctioned off Dec. 11-12 in Iraq’s second tender of contracts since the 2003 U.S. invasion.

Yet Iraqi oil workers employed by the state’s South Oil Company (SOC) — which oversees most Iraqi oil production and is set to partner the foreign oil majors — are worried.

They fear losing their secure government jobs and being made to work in the private sector under foreigners, or being made redundant by modern technology.

“If they’re here with new equipment and they help us make use of our gas, then they’re welcome, but we need guarantees about our jobs and benefits,” said gas technician Hussein Ali at the south Rumaila oilfield.

A job with the SOC or other Iraqi state entity is highly prized. Under a state-dominated economy, Iraqis have grown used to government jobs for life. The private sector is seen by many as risky and capitalism viewed with suspicion.

Uncertainty over how the new oil deals will affect SOC employees has led the oil workers’ union to reject the Rumaila contract, but its stance is not shared by all oil workers.

“This is our first experience working with foreign firms, so there’s going to be some fears and doubts, but I’m optimistic we’ll learn and grow,” said Abdul Wahid Abdul Ridha, deputy manager of a gas plant at south Rumaila.


The oil worker’s union said it had opened a “line of communication” with oil majors to discuss job guarantees.

The foreign firms, who have not yet begun work in Iraq, are obliged under their contracts to employ Iraqis wherever possible and provide funds for training.

The prospect has given hope to Basra’s legions of unemployed, who queued in their thousands over several nights in October to apply for newly advertised jobs at the SOC. Scuffles broke out with the police.

Expectations are high and the consequences of disappointment potentially dangerous.

Basra and regions nearby were ruled by gangs and militias until a government crackdown last year.

“This is my country, my house, so I want some benefit …- If these foreign companies come and there’s no benefit, there will be problems,” said slum dweller Mohammed Abdullah.

Unprotected oil pipelines run yards from his breeze block home, amid mounds of rubbish and raw sewage.

Uncertainty over how jobs will be allocated is also fuelling anxiety.

Iraqis have long complained that getting a job is more a matter of who you know than what you know, and the middlemen and contacts needed in securing work — known as “waasta” — usually require payment.

“I really want the foreigners to come because they’re not so corrupt,” said Um Haider, a technical manager at the SOC.

Abbas, who ekes out a living growing tomatoes, has never been able to afford to get his son a job.

“I’m worried it will be waasta all over again. Yes they’re foreigners, but as long as there’s an Iraqi hand in there, there’s going to be corruption.” (Writing by Mohammed Abbas, Editing by Michael Christie)

For a factbox on political risks associated with the 10 oilfields on offer Dec. 11-12, click on [ID:nGEE5B50C8] For a factbox on the history of the involvement of foreign firms in Iraq's oil sector, click on [ID:nGEE5B60HD]

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