TVM Sector Perspective
How Sector Activities Impact People, Place, Planet and Profit
Chapter 15 - Energy
Energy: Oil and Gas
Great possibilities ... huge challenges
The energy sector has a capacity to be very profitable but the way the sector has been managed has given rise to something referred to as the “Energy Curse”.
The way in which this energy wealth is managed will determine the future of Iraq more than anything else. Whether Iraq will be able to do this depends a lot on the manner in which both the economic sectors and the governance sectors evolve.
It must be expected that everything to do with the oil and gas sector is going to be “hard ball” and that negotiators are going to have to work very hard to ensure that community interests are respected.
Within different communities are going to have an interest not only in the outcome of international agreements regarding oil and gas, but also what sort of arrangements are made internally so that oil and gas benefits are fairly allocated to different groups.
From an international perspective, the energy arena is not getting easier, but a lot more difficult. The oil and gas industry is not just big “western” companies, but also companies from Russia and China. In addition, companies from other countries like Venezuela, Mexico and India are going to change the energy sector landscape even more. Whether this will make the sector more beneficial to people at the “bottom of the pyramid” is not at all clear ... but there are interesting possibilities.
There is an opportunity for wealthy oil and gas enterprises to embrace the moral high ground and start doing a lot more for communities in places where they operate. Though politics is often controlled by the gun, people power can have an enormous impact. Guns did not get the British out of India, but people power with Mohatma Ghandi in the vanguard. Martin Luther King did not catalyze progress in racial relation with the gun, but by mobilizing people peacefully.
The electricity generating infrastructure is inadequate. Major upgrading is needed and there has been some work done on it since the end of the Saddam Hussein regime, but it is not at all clear how much work has been done and at what cost. This is essential management information that should be easily accessible to the public.
A major program to create adequate electric generating capacity should be a priority and done efficiently to the highest of standards.
The expansion of a nationwide electric grid is clearly desirable. This requires substantial capital funds, but the advantages are huge and long term.
The lack of electricity in poor places is a chronic problem. The technology exists to have adequate electricity supplies, and to distribute electricity to where it is needed. It takes investment, and it takes a reasonable approach to profit expectations. The key requirement is that electricity investment and electricity management and operations are done efficiently, ethically and without being dominated by greed and corruption from any quarter.
The cost of rural distribution is high, but the value is substantial. Iraq should make an investment in rural distribution so that its remote communities have a chance to move forward without being constrained unduly by the lack of electricity.
Energy: Non-Petroleum Fuels
Iraq is in a good position. It has abundant fossil fuel resources, especially oil and gas, and also coal.
But, on the other end of the scale, there is a dramatic shortage of fuelwood and charcoal for household cooking in remote rural areas. These energy sources are contributing to an environmental crisis caused by the loss of trees and the production of carbon dioxide.
Fuelwood is in very short supply and increased production of wood for household use should be a priority. Trees need to be planted and existing trees cut in a way that does not destroy their capacity to grow again. The manufacturing of charcoal should be considered to be an anti-social act.
Coal ... natural gas
The possibility of using the coal deposits as an alternative to wood and charcoal should be explored. This may not be a viable option if the coal is not suitable for use in the household environment. Bottled natural gas would probably be a better intermediate step forward.
The use of windmills to drive pumps and produce limited amounts of electricity may be an option. Windmills have been an important source of energy in the past and modern windmills are well suited to use in pumping water in remote areas.
Solar technology has reached the stage where it is a viable option for driving remote electrical equipment.