Ambassador’s Keynote Speech at the Iraq Oil and Gas Show
Remarks for the Ambassador’s Keynote Speech at the Iraq Oil and Gas Show
Saturday, February 18, 10:45 a.m. (Babylon Rotana Hotel)
I have recently returned from Washington, D.C. where we had the privilege of hosting Foreign Minister Fuad Hussein and his 15-member delegation. This visit was historic. It was the first Higher Coordinating Committee that was focused on economic cooperation, energy sector development, and climate change. In Washington, the Foreign Minister and Prime Minister Sudani’s advisors laid out a plan to diversify Iraq’s economy from being more than just an oil exporting country to a country with vibrant private industries, where the private sector is the main engine of economic growth.
In addition to the meetings with Secretary of State Blinken and other senior government officials, the Foreign Minister’s delegation met with the U.S. Chamber of Commerce and about 40 U.S. companies inviting them to play a role in Iraq’s economic development, including in growing Iraq’s nascent private sector. I came away from this trip confident in the strong and expanding relationship between Iraq and the United States, and excited for the opportunities to foster real growth in Iraq’s economic future.
For Iraq to realize this bright future, Iraq must do at least three things: invest in critical infrastructure, combat corruption, and create a business environment that is favorable to foreign direct investment. By that I mean encouraging foreign companies to bring both their capital and their expertise to Iraq and where these investments generate jobs and companies train Iraqis to run their own businesses.
There is no place better to focus these opportunities than the energy sector, specifically the country’s electricity grid and oil and gas field development, including gas capture. These areas capture both Iraq’s greatest source of revenue and its greatest constraint on economic growth. We all know electricity demand will only grow and there is promising potential for investment and improvement.
I have spoken with the Minister of Oil, the Minister of Electricity, and the prime minister’s new adviser on energy, all of whom have laid out a vision for modernizing the energy industry, and not just in the oil sector, but by capturing and using the vast amounts of gas in Iraq to help develop the electricity sector to meet the power demands of a growing economy. The Biden Administration is encouraging U.S. energy companies–those already in Iraq and new ones, to explore opportunities in Iraq and where they could bring their world-class expertise and help generate jobs for Iraqis. On Thursday, General Electric and the Ministry of Electricity signed an MOU to develop the energy sector in production, transmission, maintenance, staff training, and reducing carbon emissions. And there is certainly more room for other companies.
Strengthening Iraq’s energy sector will require significant investment. Gas capture plants will have to be built along with new power plants to use the additional gas. The electricity grid will have to be upgraded and modernized to make sure that the 50 percent of power that is currently lost in transportation due to theft and poor equipment can instead be harnessed to power Iraqi homes and businesses.
That is why energy infrastructure is an obvious place to start with investment. Iraq has a valuable pre-existing resource that has the potential to advantage not just Iraqi citizens, but the economy – especially since the lack of electricity is one of the largest constraints facing manufacturing and industry today.
In the gas field, Iraq has both a challenge and an opportunity. After Russia, Iraq is the highest emitter of flared gas in the world. This causes severe environmental problems. Capturing the gas that is currently flared would dramatically improve Iraq’s climate, allowing Iraqis to breathe cleaner air, drink cleaner water, and suffer less from debilitating diseases such as cancer.
But capturing gas is also an economic opportunity. Most assessments conclude that if the amount of gas flared in Iraq today was processed in new electricity generating power plants, Iraq could double the total amount of its electricity production and meet the current shortages. By using captured gas to power electric generators, Iraq could dramatically increase the amount of electricity available to its people – as much as 3,500 MW of additional electricity, or an increase of 25 percent to the entire country’s electrical grid.
To fully take advantage of developing the energy sector, we must also address the important challenge of corruption. The business environment must convince foreign companies that their investments are protected, and the regulatory climate is predictable, transparent, and honest. Also companies, especially those that are going to do business with the government, must know they will get paid on time. Unfortunately, this has been an issue in the past.
Finally, the bureaucracy itself must modernize, efficiently process contracts and projects, and streamline the process for companies, both foreign and domestic, to do business here. When companies compare opportunities to do business, they will almost invariably choose those with less risk and greater ease of doing business. In today’s fast moving global economy, time matters to international investors.
So let me conclude by saying that modernizing Iraq’s energy sector is key to Iraq’s ability to become a secure, stable, sovereign country that can provide for its own people using its own vast natural resources.
In Washington last, the Biden Administration launched a new and expanded vision for Iraq focused on economic development. We are committed to working with the Sudani government to create new opportunities that strengthen the economic interests of both our countries and the region. American companies are ready to invest and participate in modernizing Iraq’s energy sector to the benefit of Iraq’s sovereignty and its environment and help build a more secure future for the Iraqi people. We are continuing this conversation with Prime Minister Sudani and his team at the Munich Security Conference. We look forward to working with the Government of Iraq, the private sector (including other western companies), and directly with the Iraqi people to make this happen. Thank you.