Pipe Dreams by Erin Banco

Author:Erin Banco
Language: eng
Format: epub
ISBN: 9780997722956
Publisher: Columbia Global Reports
Published: 2017-12-05T16:00:00+00:00

Revolving Door

Oil is a fraught business requiring fixers, political connections, and the ability to navigate and abide ceaseless palace intrigue. Production-sharing agreements are negotiated behind closed doors, without a formal bidding process. Kurdish officials refrained from detailing exactly what they were up to, and once they struck a deal, U.S. oil executives never discussed the terms even with their best friends in the oil patch: The Kurds would see that as bad form, since it could alert Baghdad to deals it considered illegal. But according to American financial regulatory officials who were probing the Kurdish operations of U.S. oil companies under the Foreign Corrupt Practices Act, there was one institution dedicated to helping American companies, small and large, navigate the region and understand the complicated politics—the U.S. government.

Peter Galbraith, a former U.S. diplomat and staff member of the Senate Foreign Relations Committee, was tasked in 2003 with helping to draft the new Iraqi constitution that would allow the Kurds to control future oil development. At the same time, he was an advisor to the Norwegian oil company DNO, negotiating deals between that company and the Kurdish government.

The story behind Galbraith’s relationship with DNO began with the relationship between the Kurdish government and a company called Pinemont. The Kurdish government had hired Pinemont to develop the region’s energy potential, and since Pinemont was especially familiar with the Norwegian market, it reached out to Norsk Hydro, a Norwegian aluminum and renewable energy company, to sign a deal with the KRG. Behind closed doors, Hydro hired a “Norwegian businessman” and a “foreign politician” to help negotiate the contract with the Kurdish government, though senior Hydro executives questioned whether that was transparent enough. When finally Hydro concluded that it was not, the company terminated its development agreement. Hydro did, however, pay the “foreign politician” hundreds of thousands of dollars for his work.

The “Norwegian businessman” was a ship owner named Endre Rosjo who eventually became the chairman and director of Pinemont, and the “foreign politician” was none other than Galbraith, who also worked for Pinemont. When Pinemont was asked to find another Norwegian company for development and exploration in Iraqi Kurdistan, the oil firm DNO took over the Hydro contract—and it included a royalty to Galbraith because he helped negotiate the deal, according to interviews with financial regulatory enforcement officers.

Simultaneously, Galbraith formed a company called Porcupine that signed a deal with DNO for consultancy services. Galbraith worked for DNO to negotiate an oil contract for the Tawke field in Kurdistan, which the company signed onto in 2004. Galbraith told the New York Times later that he had held an “ongoing business relationship” through 2005, even after DNO signed the contract, despite the fact that he was helping to negotiate the terms of the Iraqi constitution. Rosjo told the newspaper that in addition to what he and Galbraith made for their consultancy work, they also garnered rights of 5 percent each in the Tawke field. A Yemeni investor ended up taking over Rosjo’s share, and he

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