Why did the KRG sign an oil deal with an inexperienced, broke co.?

Rizgar Khoshnaw | Exclusive to iKurd.net

Why did the Iraqi Kurdistan government sign an oil deal with a company that has no money or experience?

In the past fourteen years that I have been visiting and working in Kurdistan, I have never seen, or even heard, of so much corruption and mismanagement in my entire life. It is amazing to me that Kurdistan Regional Government, the KRG, is still functioning.

In my previous articles, and more to come in the future, I have pointed out few cases of mass corruption and, not surprisingly, the KRG does not seems want to tackle or acknowledge this issue at all. I hope, even thought I do not think it is possible, that the KRG would wake up and begin to be honest and transparent in its business and governance of Kurdistan.

It is not only the corruption that has/will hurt Kurdistan, but the fact that sometimes the KRG tend take certain actions that is obviously the wrong path, but still they take it. I also think sometimes that may be, just maybe, that the KRG does not see such actions are being wrong and truly believe that it is the right thing to do even though to may outsiders/observers, it seems clearly foolish and wrong.

I will now use this example to prove my point:

In 2008, the KRG awarded an oil block to a company that not only has no experience and track record in oil drilling, but also has no money of its own to operate! This company, Vast Exploration, with only $15 million of private placement fund to start, has an area that covers a huge area, 846 square Kilometers, to be exact! The area in referred to as Qara Dagh block.

Furthermore, the KRG instructed this company to issue common stock of their company. According to their web site, www.vastexploration.com, it states:

Qara Dagh block subject to the issue of 60,000,000 Vast common shares in accordance with the directions of the Kurdistan Regional Government.

I have been wondering why would KRG dictates/order an independent entity to issue stock in their company when operating in Kurdistan? What will this serve? Who will it serve and benefit?

As if this was not enough information/facts to have someone scratch their head in disbelief, Vast Exportation announced last month that they need to borrow $5 million to continue operation! As of April 2011,www.ekurd.net this company has only $1,684,075 cash on hand on their balance sheet! If this “oil” company is so broke, has no money, why did the KRG give them an oil block that requires at least $100 million to begin operation???

Furthermore, why is it that Vast Exploration did NOT pay a single dollar, what is referred to as “signing bonus” just like ALL other oil companies in Kurdistan? Is it because this company is owned, operated and managed by people that have “certain” mutually beneficial relationship with high level KRG personnel? Without going further into what I mean here, I suggest that any one reading this article go to Vast Exploration web site and read who is behind this company and then it will be clear why this company has a “special status” with the KRG!

The KRG acts as if the oil that is in Kurdistan ground belongs to them and their friends to profit and benefit from! I think someone need to remind the KRG that the oil is NOT their property to do as they please with and that it belongs to ALL the citizens of Kurdistan.

Moreover, we have a “foreign” oil company, that has an oil block in Kurdistan and they paid over $150 Million to the KRG before even begin to do any work in Kurdistan!!!! This $150 Million was given, paid to, KRG just for signing the deal! Where did this money go to??

I know of this deal simply because I received a phone call one day about a year ago, from “someone” in Kurdistan to see if I could convince my American investors to purchase/buyout this company’s interest in Kurdistan! Of course we did not pursue this deal because we knew that this oil company was “ripped off” by the KRG and no way would pay the unrealistic asking price.

Now, lets compare this Vast Exploration to the oil company, a joint venture between a US based company and a very well known Canadian oil company, that I brought the KRG last year and no one even bothered to hold one single meeting with us.

This company that I brought/introduced to the KRG, with an asset of over $7 Billion (that is Billions and NOT million) wanted to begin negotiation with the KRG, but we never received a single response from Ashti Hawrami. I had convinced, and it literally took me years to do, this group to work in Kurdistan and when they agreed, we were completely ignored by the KRG. May be because we are honest that we were ignored!

When I began to discuss this oil company to some people within the KRG, I was told to write a “Letter of Interest” to Ashti to request an appointment either in London or Kurdistan and we did. Moreover, we called, e-mailed and sent a text to Ashti and we never received a single response. Of course, in the end, we all gave up. Furthermore, I hand delivered the same letter to Mr. Barzani personally as well to ensure that the letter went to the highest people in Kurdistan, but still I got no response from anyone.

It seems that I am not the only individual that has an issues with the KRG oil ministry, managed and operated by Ashit Hawrami, for not respecting me and my investors, but there are others as well. I know of a law suit case that is pending involving the KRG oil ministry in an oil deal that is brought up by Excalibur Venture LLC, a U.S. based company, that was kept out of an oil deal in Kurdistan. This law suit is now being handled by the courts of United States and England as well.

Finally, and as I always say, that I do not see how the KRG can succeed by operating in such manner? But then again, when you have so many incompetent/corrupt individuals within the KRG, one can not be that surprised!

Rizgar Xoshnaw, a senior Kurdish writer based in Washington, a longtime contributing writer and columnist for iKurd.net.

The opinions are those of the writer and do not necessarily represent the views of iKurd.net or its editors.