Iraq's massive oil reserves, the third-largest in the world, are about to be thrown open for large-scale exploitation by Western oil companies under a controversial law which is expected to come before the Iraqi parliament within days. The US government has been involved in drawing up the law, a draft of which has been seen by The Independent on Sunday. It would give big oil companies such as BP, Shell and Exxon 30-year contracts to extract Iraqi crude and allow the first large-scale operation of foreign oil interests in the country since the industry was nationalised in 1972.
We are doing it again. This is part of the payoff for propping up the Shia regime. Big oil is going to be sitting with legal 30 year deals to exploit the hell out of the oilfields with the profits going mostly to them, with the Iraqi people getting screwed in the bargain.
Back in November, I wrote a diary about why Iran hates us so much. One of the things done there were these massive decade long oil contracts with thugs that the Brittish installed, that worked to the benefit of the UK, but not Iran. This literally is history repeating itself. After all is said and done, and things are starting to collapse completely, we are now having the same thing happen but this time on acid.
The huge potential prizes for Western firms will give ammunition to critics who say the Iraq war was fought for oil. They point to statements such as one from Vice-President Dick Cheney, who said in 1999, while he was still chief executive of the oil services company Halliburton, that the world would need an additional 50 million barrels of oil a day by 2010. "So where is the oil going to come from?... The Middle East, with two-thirds of the world's oil and the lowest cost, is still where the prize ultimately lies," he said.
Oil industry executives and analysts say the law, which would permit Western companies to pocket up to three-quarters of profits in the early years, is the only way to get Iraq's oil industry back on its feet after years of sanctions, war and loss of expertise. But it will operate through "production-sharing agreements" (or PSAs) which are highly unusual in the Middle East, where the oil industry in Saudi Arabia and Iran, the world's two largest producers, is state controlled.
This is one of the most important stories in the past 5 years. It will not get the coverage it deserves. Those who complained that this was a war to exploit resources were dismissed as cranks. Now comes validation of these concerns. Iraq is broke in any way you can use that term. So, now we get contracts on our terms. This isn't contingency drilling here. This contract basically says that when the oil fields are there most productive, the oil companies are going to loot the profits as the cost of their R&D. When things slow down, they will share a bit more in the profit, if it's even there. Don't like it, renegotiate the contract in 2037.
There have been so many outrages. This one though can literally be what keeps the country unstable for generations. We just need to look at the Iranian experience to see where this is going. This must not stand unchallenged. Please write your congress members and have them address this in the media. This can not stand without us challenging it.
Jerome a Paris has his own take on this story with a different perspective that you might learn from as well.