Analysis: Hunt, State talked on Iraq oil

By BEN LANDO, UPI Energy Editor

WASHINGTON, Oct. 12 (UPI) -- A representative from Dallas-based Hunt Oil Corp. did talk with the U.S. State Department prior to signing a controversial oil deal with Iraq’s Kurdistan Regional Government, according to an internal department communication obtained by United Press International.

Hunt Oil, whose chief executive officer is connected to the Bush administration by campaign donations and a seat on an intelligence advisory board, had previously denied the meeting.


The company now says the meeting took place but that Hunt did not seek advice from the U.S. government on investing in a country with the world’s third-largest proven oil reserves.

The Sept. 8 production-sharing contract with the KRG set off Baghdad, which accuses the region of unilaterally and illegally signing oil deals. The Hunt deal wasn’t the first or final such contract signed between private oil companies and the Kurds, who say they have the constitutional right to sign deals and blame Baghdad for its inability to make headway on a national oil law.


The U.S. government has been cautious in comment, aside from maintaining that it hurts their efforts in bolstering the ability of the central government to reconcile and rule the country.

A day after the Kurds announced two more oil deals, with Canadian and French companies, Hunt Chief Executive Officer Ray Hunt told the Wall Street Journal: "The State Department must have been misinformed. … We did not consult with anyone in the (U.S. government) prior to signing our agreement."

On Sept. 5, according to the State Department communication transmitted Sept. 6, the Hunt official in charge of the region met in Irbil, the KRG capital, with officials from the U.S. Agency for International Development.

“Hunt is expecting to sign an exploration contract with the KRG,” the communication stated.

“Asked about concerns over potential conflicts between the recently passed KRG hydrocarbon law and a national law, (the Hunt official) said the 'significant opportunity' outweighs the legal ambiguity,” the communication states. “Unlike the large players, Hunt is not looking at the entire Iraqi market. He also thought that it may take years to pass a national law.”

When asked about the conflicting statements, Jeanne Phillips, Hunt senior vice president for corporate affairs and international relations, confirmed the Sept. 5 meeting and a Hunt delegation led by David McDonald, Hunt general manager for Europe, Africa and the Middle East.


"It is correct that four Hunt technical representatives involved in a due diligence meeting for risk analysis and opportunity assessment in the Kurdistan region of Iraq properly met with USAID officials in Irbil in a routine, courtesy meeting seeking information on the risks of doing business in the Kurdistan area,” McDonald, who is now in Iraq, said in a statement passed on to UPI by Phillips. “We specifically noted that Hunt was interested in evaluating petroleum opportunities. We did not seek advice as to whether or not Hunt should proceed with an exploration contract, and we were never advised not to do so."

State Department spokesman Tom Casey, when asked Sept. 28 if there were any meetings, said, “I’m not sure how much contact there was between the company and officials, either in Baghdad or here.

“Our public and private advice to any company anywhere in the world, regardless of who’s running it or who’s on the board … we don’t think that these kinds of deals are helpful,” he said, a message that jives more with the department communication than McDonald’s recap of the meeting.

Ray Hunt is no ordinary Texan. He’s known as a maverick, the first foreigner to set up shop in Yemen, and now entering the unknown but highly prospective world of Iraqi Kurdistan oil. He’s donated $75,000 over the past two years to Republican Party fundraising committees and $35 million to the George W. Bush presidential library at Southern Methodist University.


He also sits on the National Petroleum Council, an industry advisory board to the secretary of energy, and the president’s Foreign Intelligence Advisory Board, whose members the president selects to advise him “concerning the quality and adequacy of intelligence collection, of analysis and estimates, of counterintelligence, and of other intelligence activities,” according to the White House Web site.

This connection has raised concerns of at least two members of Congress. Rep. Dennis Kucinich, D-Ohio, a candidate for his party’s presidential nod, decried the deal nearly immediately and called for an investigation.

Rep. Edward Markey, D-Mass., has sent a letter to Secretary of State Condoleezza Rice demanding answers to a dozen questions, including:

“Are you concerned that the involvement of such a high-level adviser to the president in this contract will create the impression that the negation between Hunt and the Kurdish government was sanctioned by you, or, indeed, by the president himself?”

“The White House has had no contact with Hunt Oil. I'm not aware of any contacts between Hunt Oil and other offices,” White House spokesman Gordon Johndroe told UPI. “This was a private transaction."

Phillips, the Hunt vice president, said neither Ray Hunt nor any other official met with any other branches of the U.S. government.


“I know for a fact he hasn’t talked to anyone himself in the government prior to this deal being signed,” she said. “We just don’t, as a matter of policy, we don’t pick up the phone, regardless of what people might imagine, we just don’t pick up the phone and ask permission to drill oil.”



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