Re: Dick Cheney, Ahmed Chalabi Contemplated Value Of Iraqi Oil To U.S., David Frum Wr
The Iraq Oil Law
"One of our greatest helpers has been the State Department" - John D Rockefeller (1909)
"One of the more interesting pieces of political maneuvering in occupied Iraq has been the attempt to pass a law governing how Iraq's oil reserves and oil revenues will be divided and what role international oil companies will play in the country.
There have been persistent claims the law is about to be passed for well over a year, but so far the Iraqi Parliament has managed to avoid doing any such thing.
The proposed law has been the subject of a lot of controversy during that time (with the Bush administration making it one of the primary "benchmarks" it wants the Iraqi government to meet), with this summary of "key facts" from Oil Change International being a good outline of the major complaints:
The proposed Iraq hydrocarbon law would take the majority of Iraq’s oil out of the exclusive hands of the Iraqi government and open it to international oil companies for a generation or more. The law is a dramatic break from the past. Foreign oil companies will have a stake in Iraq’s vast oil wealth for the first time since 1972, when Iraq nationalized the oil industry.
BearingPoint, a Virginia based contractor is being paid $240m for its work in Iraq, winning an initial contract from the US Agency for International Development (USAid) within weeks of the fall of Saddam Hussein in 2003. A BearingPoint employee, based in the US embassy in Baghdad, was hired to advise the Iraqi Ministry of Oil on drawing up a new hydrocarbon law. BearingPoint employees gave $117,000 to the 2000 and 2004 Bush election campaigns, more than any other Iraq contractor.
The process of drafting the oil law has been particularly troubling. The timeline of which entities have seen the draft when suggests that Iraqi interests are not being considered first and foremost:
* Draft shown to US government and major oil companies – July 06
* Draft shown to the International Monetary Fund September 06
* Draft shown to Iraqi Parliament: February 07
The Iraq National Oil Company would have exclusive control of just 17 of Iraq’s 80 known oil fields, leaving two-thirds of known — and all of its as yet undiscovered — reserves open to foreign control.
The law sets no minimum standard for the extent to which foreign companies would not have to invest their earnings in the Iraqi economy, partner with Iraqi companies, hire Iraqi workers or share new technologies.
The international oil companies could also be offered some of the most corporate-friendly contracts in the world, including what are called production sharing agreements. These agreements are the oil industry’s preferred model, but are roundly rejected by all the top oil producing countries in the Middle East because they grant long-term contracts (20 to 30 years in the case of Iraq’s draft law) and greater control, ownership and profits to the companies than other models. In fact, they are used for only approximately 12 percent of the world’s oil.
Iraq’s neighbors Iran, Kuwait and Saudi Arabia maintain nationalized oil systems and have outlawed foreign control over oil development. They all hire international oil companies as contractors to provide specific services as needed, for a limited duration, and without giving the foreign company any direct interest in the oil produced
Iraqis may very well choose to use the expertise and experience of international oil companies. They are most likely to do so in a manner that best serves their own needs if they are freed from the tremendous external pressure being exercised by the Bush administration, the oil corporations — and the presence of 140,000 members of the American military.
The leadership of Iraq’s five trade union federations released a statement opposing the law and rejecting ‘’the handing of control over oil to foreign companies, which would undermine the sovereignty of the state and the dignity of the Iraqi people.’’ They ask for more time, less pressure and a chance at the democracy they have been promised.
When I first read about the proposed law, the point that instantly caught my eye was the handing over of all "undiscovered" oil to possible foreign exploitation - which makes a lot of sense if you consider Professor Blair's stories about suppressed oil discoveries back in the old days (along with large swathes of the country remaining unexplored).
Of course, the Iraqi government may have thwarted this particular tactic with it's announcement this year upping reserves to 350 billion barrels, thus restricting the "undiscovered" category to any amount found beyond this number.
The Iraqi Deputy Prime Minister told The Times that new exploration showed that his country has the world’s largest proven oil reserves, with as much as 350 billion barrels. The figure is triple the country’s present proven reserves and exceeds that of Saudi Arabia’s estimated 264 billion barrels of oil. Barham Salih said that the new estimate had been based on recent geological surveys and seismic data compiled by “reputable, international oil companies . . . This is a serious figure from credible sources.”
In the meantime the Iraqis are perhaps hoping they can dawdle over passing any law for as long as it takes for US troops to leave the country - something the Iraqis are asking to occur by 2011.
Various tactics have been tried by the oil companies as well, ranging from attempts to negotiate contracts directly with the Kurdish regional government in the north, to a range of no bid oil contracts (later cancelled) to the recent sell-off discussions in London that I started the post with (the outcome of which doesn't seem to have been reported anywhere that I can find)."
"Of course it’s about oil, we can’t really deny that" - General John Abizaid (2007)
"People say we’re not fighting for oil. Of course we are. They talk about America’s national interest. What the hell do you think they’re talking about? We’re not there for figs!" - Republican Senator Charles Hagel
Peak Energy: Iraq's Oil: The Greatest Prize Of All