ERBIL, Kurdistan Region – Geoffrey R. Pyatt, US assistant secretary of state for energy resources, discussed a range of issues related to Washington’s policies on gas, oil, and electricity with the Iraqi government and the Kurdistan Regional Government (KRG) in an interview with Rudaw on Monday in Washington, DC.
Regarding the Iraq-Turkey pipeline (ITP), the ambassador said the status quo is unsustainable and Washington is actively supporting all sides to find a solution. Pyatt also discusses the role of private US and Western energy companies that work in Iraq and the Kurdistan Region. Recalling his last visit to Erbil, “[Y]ou’ll remember in my visit to Erbil, I said a lot of it looked like a little Oklahoma, and – we really – that is our vision.”
Pyatt expressed US support for Iraq reaching energy independence by 2030, saying Baghdad given its abundant resources should be an energy exporter and not need to rely on imports from Iran and continued sanctions relief waivers.
The following is the transcript of Geoffrey R. Pyatt’s interview with Rudaw.
Rudaw: And now joining me, the Assistant Secretary of State for Energy Resources, Ambassador Geoffrey Pyatt, thank you so much, Ambassador, for this opportunity.
Ambassador Pyatt: Delighted to have this conversation. We had a really important visit in Houston last week, and I’m very proud of what we were able to accomplish.
So, speaking of that visit, the Iraqi oil minister, with a big delegation, including Kurdistan Regional Government (KRG) representatives, were in Houston. There, they met with you and with US companies. What do you want to tell us about these meetings, and what did you discuss with the Iraqi oil minister?
So, this visit was a follow up to the very successful visit earlier this year by Prime Minister [Mohammed Shia’ al-]Sudani. The central role in those conversations for energy issues, and in particular the Iraqi prime minister’s target of having full energy independence by 2030, but also my own visit to Baghdad, and Erbil in May, and the strong focus in that visit on America’s support for Iraq’s energy independence also closer energy ties between KRG and federal Iraq, the opportunity to leverage [the] KRG’s abundant energy resources to benefit Iraq’s energy independence. And then finally, the priority that the Biden administration has placed on reopening the ITP [Iraq-Turkey pipeline] as a mechanism to facilitate further energy integration, but also to put a cap on smuggling and other activities that are disadvantageous to all the Iraqi people.
We will come to the ITP, but first, let’s stay with energy independence. So how does the United States help Iraq with the gas flaring and on the road energy independence from Iran? Do you see real commitment from the Iraqi government on this?
So it was very important that Minister Hayyan [Abdul-Ghani] was in Houston with such a substantial delegation from Iraq, including two KRG representatives. And I want to just take a moment at this point to acknowledge Minister Hayyan ‘s illness after our meetings, just to say I’m very glad he was in Houston, which enjoys some of the world’s absolute best medical care, and I hope he has a very speedy recovery now that his initial emergency is passed, but it was important to us that Minister Hayyan was there with a very clear message in terms of the priority that Iraq is placing on attracting Western investment into some of these major oil blocks. I was in Baghdad. You’ll remember, right after the fifth and sixth bid rounds were completed, and I think it was pretty clear that everybody was disappointed by the fact that the only successful bidders in that context, with the exception of one Kurdish company, were Chinese. And they were small Chinese firms that don’t have the record technology and being able to deliver results. Iraq is an energy superpower. It’s a country with enormous potential to do much better, both in terms of extraction, but also, as you referred to, building a cleaner energy industry.
So much closer attention to the abatement of fugitive gasses, the ending of venting and flaring. This is what the super project of TOTAL is meant to accomplish, and the fact that TOTAL is working very closely with American companies, including Honeywell, as their technology provider, is very important. So, we want to see these projects move forward with a strong presence for Western companies, and that’s why I was there in Houston.
Winning the bids by China’s companies was one of my questions. Was there any pressure on the Iraqi government to come up with an initiative to do contracts with US companies for round six – that is only with the US companies and Western companies? Did you put any pressure on Iraq in this regard?
It’s not really our place to put pressure on the federal Iraq government, but we want the same thing Iraq wants. We want to see the Iraqi energy economy move forward. The presentations in Houston were well prepared. I think one of the big takeaways for me was the lesson from the successful TOTAL project, which is that our biggest companies that can mobilize significant amounts of capital are much more likely to be successful in the context of direct negotiations between the companies and the Iraqi government to understand the opportunities to define the requirements for the Western firms, and then to deliver success for both sides. And I think that’s something that we need to follow up on. I was very glad also that we had a significant presence in Houston from the US Chamber of Commerce. The Chamber did a brilliant job of preparing a paper which was shared with the Iraqi delegation that laid out some of the lessons learned from the fifth and sixth bid rounds and offered positive, constructive recommendations about additional steps that Iraq could take if it’s interested in attracting further Western investment.
Staying on energy independence, before the Iraqi oil minister visited Houston, some US members of Congress sent a letter to President Biden…
Correct.
They were accusing him or raising concerns about the Iraqi involvement in selling Iranian oil. So, when you are speaking to get energy independence from Iran, we see there are some voices here in the United States saying that they are not doing this, but they are helping them.
Right.
And I have learned that the issue of this letter was discussed in your meeting with Minister Hayyan. So, do you have any concern about that? Do you think there is any truth in this letter?
So, we generally don’t comment on congressional correspondence. But let me say this first of all, the issues that the members of Congress raised in that letter are issues that we all should be concerned about, because to the extent that Iraq’s national oil resources are being smuggled out of the country by middlemen through Iranian ports that delivers no benefit to Iraq. The only profits are coming to the smugglers who pay one low price for the crude oil and get a higher price from the Iranians, and then it benefits Iran with all of the malign influence that Tehran has exercised over many years on Iraqi decision making, it’s very clear to me, and Minister Hayyan was quite eloquent in talking about the Iraqi government’s continuing commitment to the goal that Prime Minister Sudani laid out in his visit to Washington in his joint statement with President Biden, of getting to energy independence by 2030; you can’t do that if crude oil is going out through the back door via Iran. And that, again, is why ITP is so important.
Before going to the ITP, I will ask a question on the sanctions waivers. It’s been 21 or 22 times you have renewed the sanctions waiver?
Correct.
So, until when you are renewing sanctions waivers for Iraq to buy energy from Iran?
I hope we won’t have to do those waivers very soon, because the day when we don’t have to do those waivers is the day when Iraq will have achieved its energy independence and will no longer be depending on Iran for energy supplies.
Is it by 2030, or?
At the very least by 2030 but we’ve been clear from the beginning, the waiver was never meant to be a permanent state of affairs. It was meant to be a transitional mechanism to facilitate Iraq’s investment in additional activities, including the capturing of vented and flare gas and new production from projects like Basra Gas, and I was glad also to see the progress recently with BP on some of their activities as well. Iraq is not an energy poor country. It should not be an energy importer. Iraq should be like the United States. It should be a huge exporter of energy. So, we want to facilitate that, and when that’s achieved, the waiver goes away.
And there is no guarantee of renewing these waivers each three or four months?
There’s never a guarantee on waivers – because they have to – each time is the subject of a decision making process in the building, this building, we’ll offer a recommendation, but Secretary of State Blinken has to make the decision, and he will make the decision based on the circumstances at the time.
And speaking of the ITP, in your meeting, I’ve learned that there were two different ideas, one from the Iraqi delegation and the other one from KRG.
You have good sources.
And then they were not on the same page, and they have been discussing this issue for a long time, but there’s no light at the end of the tunnel.
Right.
So, do you have any leverage? Because the KRG says that the US has leverage, and we want them to be present or monitoring our meetings, because Baghdad is saying something, but on the ground, we see a different outcome.
So, let me say a couple of things, and I’m not going to talk about our diplomatic exchanges with either side. I should add also, I had a very good phone call on Friday morning with KRG Prime Minister [Masrour] Barzani. I again, told him how grateful I was for the warm hospitality I enjoyed in Erbil and how impressed I was by what’s happening on the ground there in the KRG, in terms of new investment, additional power transmission from Türkiye, opportunities to do more taking some of the gas turbines, the GE gas turbines, that are currently sitting idle in KRG, and using them for gas-to-power, some of which can be exported south. I said – you’ll remember in my visit to Erbil, I said a lot of it looked like a little Oklahoma, and we really that is our vision. So in terms of either the perspective in Erbil or the perspective in Baghdad, the United States has been clear, we believe the ITP needs to be restored to operation. We believe that doing so is a particular priority, because right now, crude oil production in KRG is practically up to the level it was before the pipeline was suspended. All that oil is going somewhere. A lot of it is being smuggled. It’s going in trucks that exact a toll on the highways of the KRG region. It is going out through the back door in a way that doesn’t benefit either the budget in Erbil or federal Iraq. There has been progress with some of the recent court cases.
This is something you are concerned about?
We are very concerned about this because we consider the status quo unsustainable. We have been very clear from the beginning that the pipeline needs to be restored to operations. I will be traveling to Houston in just a few hours. I am delighted, in that setting, I’ll be able to see Turkish Energy Minister [Alparslan] Bayraktar again. We have talked about this issue on multiple occasions around the world: in Istanbul; in Washington, DC; in Abu Dhabi. So I look forward to continuing the conversation on that side of the equation, but it’s very clear that the fundamental requirement is an understanding between Baghdad and Erbil. I was clear on that with Minister Hayyan, I was clear on that with Prime Minister Barzani, we’re not casting blame. We’re not blaming one side or another, but we are urging both sides to work together intently in order to bring the pipeline back online as fast as possible. I should add, by the way, I was clear in Houston that restoring the pipeline to operation so that our Western companies that are invested in the KRG region in oil production can get back to normal business. But that’s a significant confidence builder for Western companies who were looking at opportunities across federal Iraq. I was delighted when I was in Houston to see the CEO and the leadership team from Hunt. I was also glad to see that the CEO of Hunt also met with Minister Hayyan. So conversations are happening there, but our goal is simple, get the pipeline working again.
So my last question, I know you have a busy schedule and travel. But on this ITP issue, the Iraqi government requests them to bring the contracts, and the KRG says that we are not doing this, but we will give you the commercial terms.
Right.
And the second issue is about the costs. And in that meeting, the US was in a position to support that the Iraqi government should pay the costs, I mean the real costs of the US companies and other companies that are working in the Kurdistan Region. What’s your thoughts on that?
So, first of all, the cost issues are a commercial matter. I don’t get involved in negotiating costs anywhere in the world on issues around oil extraction. On the question of the contracts. I think to some degree, this is what we in the United States would call a red herring. It’s a distraction because as a practical matter, this kind of information is findable, oftentimes, is published as part of stock filings and other things. So what we want to see is the two sides, sitting down, Baghdad and Erbil, negotiating, intently, getting to a bottom line, doing so in a way that benefits federal Iraq but also benefits the KRG region. Because right now, as far as I can tell, the only party that’s benefiting from the current state of affairs are the smugglers and the Iranians who are taking the oil out through the back door.
Thank you so much Ambassador Pyatt.
Great to see you. Thank you for the attention to this issue, and thank you for highlighting what we’re doing in Houston, because it’s meant to be a signal of very strong US government support, Biden administration’s support for Prime Minister Sudani’s vision, but also for the Iraqi people, for the people of the Kurdistan Region, and for all of both governments.
Thank you so much. Looking forward to having you on Rudaw again in the near future.
Thank you very much.
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