Crude Designs: The Rip-Off of Iraq’s Oil Wealth

November 25, 2005 9:20 AM

As James Ridgeway in the Village Voice puts it:

A new report... prepared by a British consortium, reports that oil deals involving Iraq will be a bonanza for American and other Western companies. Iraq is expected to retain ownership of only 17 out of some 80 known oil fields, and these fields probably will end up under regional - not national - control... Current contract negotiations between Iraq and the big oil companies will result in the country literally signing away rights to its oil. Once these deals are done, we can declare victory...

Crude Designs: The Rip-Off of Iraq’s Oil Wealth
posted by y2karl (2 comments total)

From the conclusion:

We have seen in the preceding chapters that, under the influence of the US and the UK, powerful politicians and technocrats in the Iraqi Oil Ministry are pushing to hand all of Iraq’s undeveloped fields to multinational oil companies, to be developed under production sharing agreements. They aim to do this in the early part of 2006.

The results for Iraq would be devastating:


Iraq would lose an enormous amount of revenue (making it conversely highly profitable for the foreign companies);

The terms of the contracts would be agreed while the Iraqi state is very weak and still under occupation, but be fixed for 25-40 years;

PSAs would deny Iraq the ability to regulate or plan its oil industry, leaving foreign companies’ operations immune from future legislation;

PSAs would shift decisions on any disputes out of Iraq into international arbitration courts, where the Iraqi constitution, body of law and national interest are simply not relevant.
Yet, Iraq has other options for obtaining investment in its oil sector, including:


Direct financing from government budgets;

Government/state oil company borrowing; or

Less damaging contracts with multinational oil companies, such as buybacks or risk service agreements.
These decisions should be made with the full participation of the Iraqi people, not in secret by unaccountable elites. Care should be taken not to take major irreversible steps that would later be regretted.

Getting these decisions right is vital for the future of Iraq.

posted by y2karl at 9:21 AM on November 25, 2005

Double.
posted by Gator at 9:24 AM on November 25, 2005