 | ||||
Menu
September 30, 2009
News
Four fundamental questions about DNO
Kurdishaspect.com - By Harem Karem and Dheyaa Al-Murabi
The ripples of the KRG’s “disputes” with DNO and OSE are growing wider and wider. Indeed following the unusually nervous reactions of Mr Ashti Hawrami, the minister of natural resources, and the KRG itself threaten to have more serious and far-reaching consequences.
The predicament started in recent days when the Oslo Stock Exchange (OSE) published information on last October sale of DNO treasury shares. DNO said it strongly objected to the SOE’s decision prompted by a freedom of information act.
Analysts said it was unusual for governments to act as a mediator in a fund-raising exercise for a private company on the other hand Khalid Salih, a senior to the Kurdish government’s prime minister, said the government decided to assist DNO in the capital raising process in order to help the company complete its work in preparation for exporting crude, “we did not want DNO to delay because of their cash needs” Salih Said.
The same argument was voiced by the KRG which added that “neither the KRG nor any of its ministers, official employees or advisors has benefited directly or indirectly, through DNO or Genel Enerji, from the transaction of subsequent resale of the shares referred to by SOE”
Before proceeding any further we have to raise the following questions;
(1) The KRG’s anger is not against the transaction, but against making it public. If the publication of this transaction is embarrassing and “shameful” to the KRG and causing “unjustifiable and incalculable” harm to the government’s reputation, why did it go through it? Is there any person in the world, to say nothing about a responsible constitutional government to spend millions of dollars for something when bring no benefits at all? To say nothing about incalculable harm.
(2) The official statement said that the KRG’s purchase of the DNO shares was prompted by the desire to “rescue” from its difficulties in Oct 08 to enable it to carry out the export of oil without delay. Here two questions arise;
(A) The export operations in question started on the 1st of June 2009, 8 months after the distress which the A/M Company might have gone through during the global financial and economic crunch. During this period many companies have recovered, so it could not be the real excuse, besides, the export was made through the national pipeline network entailing no additional coasts to DNO.
(B) If a company falls under the impact of the crunch, which was not unusual at that time, then it is up to the financial and economic authorities of its country to provide it with the necessary bail-out. In this case the Norwegian authorities are quite capable of doing this in the most efficient and effective manner. Suffice it to say that the Norwegian national oil company “Statohydro” has reserves of £240 billion (the financial time 29 Aug 09) besides all governments of developed and emerging economies initiated gigantic bail-out for their distressed companies – some companies, however, could not shoulder the staggering burdens facing them and subsequently yielded to acquisition bids from other corporations (e.g Fiat & Chrysler, siwopec & Adax, Kraft/ Cadbury etc).
(3) One of the main arguments to justify the KRG’s option for the production sharing agreements (PSA’s) in developing the oilfields in Kurdistan was that this was the only incentive to attract large investments in the region. Needless to say that unnecessary financial privileges were surrendered to the companies. If the latter have no capital to continue their operations, that are then their merits to justify the heavy price paid to them? If it were for their technical know-how, then this could be acquired through technical service contracts (TSC’s) and that is what the KRG should do, but not, it wants the OSE to remedy the situation, by finding some way to cover up the scandal. No wonder that Mr Salih suggested that DNO be listed on another bourse as a satisfactory way out!!
(4) Constitutionally the KRG is not allowed to hold shares of a foreign company operating on its territories – how can it act as the “employer” and that “contractor” at the same time? On which side will it stand in the case of a dispute? Furthermore, the matter here involves the whole Iraqi people to whom the oil wealth belongs. Have the elected representatives been consulted, or at least informed of this act? These are but preliminary remarks when may be followed by greater details.
_________________________
| ||||
Advertisements
Word of the Day
