|Picture Credit: The Independent
Iraq has the world's second largest proven oil reserves. According to oil industry experts, new exploration will probably raise Iraq's reserves to 200+ billion barrels of high-grade crude, extraordinarily cheap to produce. The four giant firms located in the US and the UK have been keen to get back into Iraq, from which they were excluded with the nationalization of 1972. During the final years of the Saddam era, they envied companies from France, Russia, China, and elsewhere, who had obtained major contracts. But UN sanctions (kept in place by the US and the UK) kept those contracts inoperable. Since the invasion and occupation of Iraq in 2003, much has changed. In the new setting, with Washington running the show, "friendly" companies expect to gain most of the lucrative oil deals that will be worth hundreds of billions of dollars in profits in the coming decades.
The Iraqi constitution of 2005, greatly influenced by US advisors, contains language that guarantees a major role for foreign companies. Negotiators hope soon to complete deals on Production Sharing Agreements that will give the companies control over dozens of fields, including the fabled super-giant Majnoon. But first the Parliament must pass a new oil sector investment law allowing foreign companies to assume a major role in the country. The US has threatened to withhold funding as well as financial and military support if the law does not soon pass. Although the Iraqi cabinet endorsed the draft law in July 2007, Parliament has balked at the legislation. Most Iraqis favor continued control by a national company and the powerful oil workers union strongly opposes de-nationalization. Iraq's political future is very much in flux, but oil remains the central feature of the political landscape.
Analysis | Articles | Tables and Charts
On this page we post many materials on the history of Iraq's oil and the international struggles to control it. Of special interest is information on the control of Iraq oil in the World War I era, the role of the international companies in Iraq and the Middle East, and the disputes leading up to Iraq's oil nationalization in 1972.
Noam Chomsky argues that since World War II, the US has wanted to control Iraq's huge oil resources, which prompted the US to invade Iraq in 2003. As the world's oil resources are diminishing, the US seeks control over Iraq's oil to secure its global power and influence. (Chomsky.info )
In this TomDispatch article, Dilip Hiro presents evidence detailing US ambitions for Iraq's oil industry prior to the 2003 invasion. According to Paul O'Neill, the former Treasury Secretary under President Bush, and Falah Al Jibury an Iraqi-American oil consultant, Iraq and its vast oil reserves were discussed "within weeks" of President George Bush being elected in January 2001. The author sheds light on the falsity of assertions by Washington that the war was not about oil and suggests reasons why the Bush administration has failed to fulfill its dreams of a privatized oil sector in Iraq.
James Paul sifts carefully through the document
to discover details of a secret lobbying meeting in London in May 2003, just two months after the Coalition ousted Saddam Hussein. Top managers of BHP Billiton meet with Australian Foreign Minister Alexander Downer and former UK Foreign Secretary Malcolm Rifkind to plan their strategy to gain control of Iraq's huge Halfayah oil field. Participants see Washington handing out the contracts, not the Iraqis, and they worry that an Australian bid, even with Anglo-Dutch Shell as a partner, may not win sufficient favor with the Pentagon. (Global Policy Forum
Greg Muttitt's bombshell paper confirms what many have long suspected -- the big US and UK companies have enormous interest in Iraq's giant untapped oilfields. He shows clearly how the companies have been angling to gain control of those fields and now, under the occupation, they are closing in on their goal. Production Sharing Agreements, the companies' favorite legal ploy, have already been negotiated with pliant Iraqi officials. Likely to be rushed-through after the December 2005 elections, these contracts may lock Iraq into decades-long arrangements that siphon as much as $200 billion from the Iraqi government into company coffers. (Platform, Global Policy Forum and others)
This short paper estimates potential long-term profits by private oil companies in Iraq. By using different estimates for four key variables, including price and company/government share out of oil rents, the paper arrives at total profit estimates ranging from approximately $600 billion to $9 trillion. The most probable estimate yields annual profits from Iraq production of $95 billion per year for 50 years, a rate three times greater than the 2002 worldwide profits of the five largest international companies.(Global Policy Forum)
This ministry cable provides a record of conversations in May 2003 between the Australian Minister for Foreign Affairs and Trade, several executives of Australia's biggest company and former UK Foreign Minister Sir Malcolm Rifkind. At issue was control of a large oilfield in Iraq. According to these minutes, the Anglo-Australian mining company was planning to "register an early bid" with the US government to "secure the Halfayah field investment" in partnership with Anglo-Dutch oil giant Shell. The cable refers to other negotiations by major oil companies for Iraq's biggest fields. The talks, which occurred in London, took place just two months after the Australians joined the UK and the US in the invasion of Iraq and shortly before the US president prematurely declared "victory." Though relatively brief, the document is very rich in evidence about the role of oil in the war and corporate and government maneuvers to line up the spoils. Participants clearly considered that the US would mainly control the division of the oil, rather than any future Iraqi government. (Australian Department of Foreign Affairs and Trade
) See GPF's commentary
Click here to view the original document from the website of the Cole Inquiry.
James A. Paul analyzes the power and influence of US and UK oil companies. He discusses their century-long interest in Iraqi oil and the likelihood that control of Iraq's huge oil reserves drove seven wars, including the 2003 conflict. (Global Policy Forum)
James A. Paul analyzes the influence of Iraq's oil on UN sanctions policy. Behind the threatened war on Iraq, there is a US drive for "free access" to Iraqi oil and control by US and UK companies over Iraq's vast riches in oil and gas resources. (Global Policy Forum)
International oil companies stand to profit enormously from control over Iraq's high-quality, plentiful oil supply and lucrative gas reserves. James A. Paul argues that a US-dominated Iraq would support US and UK oil companies' claims on Iraq's state-owned oil and nullify Iraqi contracts with France and Russia. (Global Policy Forum)
2013 | 2011 | 2010 | 2009 | 2008 | 2007 | Archive
A decade after the US-led invasion of Iraq, Iraqi citizens struggle to find a uniting vision. A violent war-legacy, Western interests, regional power plays and bitter sectarianism continue to divide Iraq. Sectarian strife has flared once again, with the ruling Shi’ites and Kurds accused of carrying out attacks against Sunnis. In return, the Sunni population is staging mass protests and strikes against political inequality, and demanding the end of Sunni disfranchisement under the new political system. Furthermore, business elites are taking advantage of the country’s divisions. Disputes between the Iraqi and Kurdish government grow over the control of oil fields. Both governments have amassed troops around the oil rich Kurdish region. Tensions are exacerbated by multinationals, such as Exxon, which has bypassed the central government in Baghdad to make lucrative oil and gas deals.
The controversial contract signed by oil giant Exxon with the semi-autonomous state of Kurdistan has created severe tensions between the government in Baghdad and Kurdistan. This “landmark deal” authorized Exxon to develop oil and gas in six blocks in the northern region. The deal was sealed with a law which had not been approved by Iraq’s federal authorities, and the uproar that followed demonstrates that Iraq is in an urgent need for a new oil and gas law. New legislation is crucial for Iraq’s future and for the stability of the region. (Niqash)
In Iraq, corruption and foreign occupations go hand in hand. Corruption within the Ministry of Oil (MoO) in Iraq is widespread and the level of transparency is extremely low. Corruption gave US administrations the support they needed to get Iraqi groups to sustain Washington’s efforts in privatizing and controlling Iraq’s natural resources. International Oil Companies and foreign National Oil Companies that operate in the country are just as corrupt as the Iraqi government. Transparency International World corruption index has put Iraq as the fourth most corrupt country in the world, out of 178 surveyed. (Znet)
Journalist Alaa al-Lami asserts that Iraq’s infamous oil wealth was the primary reason for the Iraq war eight years ago. This article follows the subsequent pillaging of the oil funds by both US and Iraqi military and political authorities as well as the widespread smuggling of oil into Kuwait. Al-Lami asserts that further exploitation of Iraq’s oil money has also been encouraged through the withholding of finances into the Iraqi Development Fund. This casts doubt onto the commitment to reconstruction by both the US and Iraq as funds, when released, may risk being pilfered by corrupt Iraqi officials or international powers. (Al Akhbar)
Iraq has requested UN assistance in locating $17billion in oil money it says was stolen by US institutions in the wake of the 2003 invasion. The Iraqi parliament Integrity Committee called the disappearance of the money a 'financial crime' but said UN Security Council resolutions prevent Iraq from making a claim against the US. The money came from the sale of Iraqi oil, surplus funds from the UN oil-for-food program and seized Iraqi assets. The money was intended to be used to pay the salaries and pensions of Iraqi government workers and for reconstruction projects. Last July, an audit report from the US Special Inspector General for Iraq Reconstruction admitted the US Department of Defense was unable to account properly for $8.7billion of Iraqi oil and gas money. (Daily Mail)
This story exposes the sordid history of the American University of Iraq-Sulaimaniya. Located in Kurdistan and first opened in 2007, AUI-S rapidly received accreditation and has since been beset by scandals and allegations of corruption. Students, former employees and other critics accuse the school of shoddy scholarship, ties to oil tycoons and political propagandizing. The story explores how AUI-S was founded primarily to promote oil and political interests, under the guise of an avant-garde teaching institution. (Salon)
The UN-appointed International Advisory and Monitoring Board (IAMB), which has been overseeing Iraq's oil export revenue since 2003, is facing criticism once again. The principle role of the IAMB was to ensure that the Development Fund for Iraq was used transparently for the benefit of the Iraqi population - a role it clearly failed to fulfill. Now, as reports of illegal oil exports to Iran emerge and the semiautonomous Kurdistan Regional Government strikes oil deals independently of the Iraqi central government, the IAMB's lack of investigative muscle and enforcement power is receiving greater media attention. (Iraq Oil Report)
The Iraqi Minister of Oil and Electricity issued a decree on July 20, 2010 banning trade unions in the energy sector; electricity union offices in Iraq have already been raided under this new law. Anti-labor and anti-union laws are relics from the Sadaam era which were strategically kept in place by the US to minimize challenges to the occupation and the oil sector in particular. They are a violation of ILO Conventions to which Iraq is signatory and are also undermining the Iraqi constitution, which calls for the enactment of a basic labor rights law. (In These Times)
As the US begins to withdraw from Iraq, former US officials are cashing in by building strong political and business ties with the oil-rich Kurdish region of the country. Among the growing list of is Zalmay Khalilzad, the former US ambassador to the UN and former US ambassador in Baghdad, who served as an advisor on Iraqi Kurdistan's board of investment. Many such former officials have also expressed support for the Kurdish right to statehood, thus contradicting the stated US policy of maintaining a neutral stance towards all groups in Iraq. (New York Times)
On March 30, BP awarded $500 million in contracts to drill wells in Iraq's massive Rumaila oil field. If successful, this move could be one of the largest expansions of crude-oil production ever-achieved. Iraq has an estimated 115-billion barrels of crude-oil, which - at current prices - would be worth $9.5 trillion. The multi-national corporations argue that employment, improved infrastructure and increased government revenues will be the knock-on effect of the investments. However, foreign-exploitation of natural resources is often rife with problems. (nenosplace.com)
US companies, including Halliburton, Baker Hughes, Weatherford International and Schlumberger, have arrived in Iraq to pursue rebuilding contracts which could total $10 billion over the next five years. As the Iraq government will administer the contracts directly, a system of transparency and accountability is necessary. But Iraq is notoriously corrupt and it lacks experienced managers, auditing systems and reliable enforcement. So it seems doubtful that Iraq can properly monitor these contracts - with companies already known for their bad Iraq performance in the past. (New York Times
Parliamentarian Shatha al-Musawi has sued the Iraqi Prime Minister and Oil Minister on the grounds that the oil contracts with foreign companies are unconstitutional. In order for an oil contract to become legal the Council of Ministers has to give its approval. In the case of the Rumaila contract, this approval resembled little more than a rubber stamp. The Council of Ministers agreed on the contract after only one meeting and did not wait for the opinion of its legal advisor, who raised no less than 65 critical observations in his subsequent memorandum. (Middle East Economic Survey)
The latest round in Iraq's oil auction took place on December 11, 2009. Foreign oil companies had been holding out for the most lucrative contracts, but as the Iraqi oil law fades from sight, the oil companies sat down at the negotiating table in November. The latest December round marked the last step in an oil revolution which has placed the majority of oil production in foreign hands for the first time in three decades. (Huffington Post)
Slideshow (December 11, 2009)
Click here to view photos of Iraq's November 2009 oil deals here.
Munir Chalabi assesses the first and second rounds of Iraq's oilfield bidding. He concludes that the Iraqi oil ministry should be initially creating an overall policy which takes into account Iraq's priorities. The first and second round will not rebuild and develop an independent Iraqi oil and gas industry but will give increasing power to International Oil Companies who will soon be in control of 95% of Iraq's oil output. (Znet)
Back in 2003 Britain and the US were shut out from the oil-producing contracts Saddam Hussein's government was negotiating. The contracts BP and ExxonMobil negotiated last week reflect the extent to which British and US "big oil" companies have gained from the war. But the biggest "prize" of all, the passing of the Iraq oil law, which would surrender power to the foreign companies to the detriment of the Iraqi people, remains out of reach. (Alternet)
British Petroleum and CNPC - a major Chinese company - have signed an agreement with the Iraqi Oil Ministry to develop the Rumaila oil field. The contract gives the companies $2 for every barrel extracted. Although ownership of the field remains in Iraqi hands, BP's involvement has sparked accusations of "colonialism". On a different level, several Iraqi MPs believe the deal is illegal, claiming that parliament, rather than the Oil Ministry, should have the final say in oil transactions. (The Times)
Oil tycoon T. Boone Pickens has complained to Congress that the Iraqi government has not awarded oil deals to US companies and has awarded contracts to non-US firms. He claimed that in light of the US soldiers killed in Iraq, and US dollars spent there, US companies are "entitled" to Iraqi oil. (Reuters)
US diplomat Peter Galbraith was a paid consultant to the Norwegian oil company, DNO, earning $200,000 from May through November 2004. This revelation adds yet another element to the question of whose interests Galbraith was serving - those of the Kurds or those of Western investors. The Kurds and the Iraqis are currently suffering from the extreme federalism supported by Galbraith, particularly in the oil sector. (Historiae)
US former diplomat Peter Galbraith has publicly admitted having economic interests in Kurdistan. Seeking to justify himself in front of a US audience, he states that his business interest "was consistent with [his] political views." But Galbraith's push for partition led to his US shareholders receiving economic "benefits". This will add to the questions surrounding Iraq's highly decentralized constitution. (Historiae)
Former US diplomat Peter Galbraith played a prominent role in the structuring of post-war Iraq, ardently and often successfully advocating for a strongly decentralized state. Recently, the Norwegian newspaper Dagens Næringsliv (DN) , has exposed the fact that Galbraith owned a substantial share in an oil field investment in Kurdistan. Galbraith's stakes in the oilfield suggest that his push for partition might not always have been motivated solely by an idealist belief in Kurdistani self-determination. (Historiae)
China has become the first foreign company to sign an oil production deal with the Iraqi government. However the residents of nearby al-Mazzagh, next to the designated oil field, receive no benefits. Expected employment opportunities have not materialized and the oil company drills on the villagers' land but provides no compensation. In response the residents have been committing acts of sabotage and warn of trouble ahead if they do not start receiving tangible benefits from the deal. (BBC News)
The future of Iraq's oil resources remains uncertain. The Oil Ministry hosted a major nergy auction on June 30 with a plan to develop many oil fields. Only two companies made a bid and won a contract. Munir Chalabi details the conflict surrounding Oil Minster Sharastani's ambiguous policies, as well as the international companies' maneuvers for control and de facto privatization. (ZMagazine)
Iraq's first major energy auction on June 30 resulted in the Oil Ministry's plan to award BP and China's CNPC with a contract to develop Iraq's largest producing oilfield. The Ministry plans to develop up to eight oil and gas fields throughout the country. Iraq's unions seek to mobilize people against the deal, which they believe will create greater unemployment in the oil sector and violates Iraqi law. Iraq's unions have been weak since Saddam's union ban in 1987, but the head of Parliament's Oil and Gas Committee argues that democracy is taking hold in Iraq and, as such, unions will one day regain power. (Reuters)
In spite of efforts to conceal the matter, US interest in Iraqi oil has never been a secret. Paul O'Neill, Bush's first Treasury Secretary, wrote a book that described the administration's plans to control Iraq's oil reserves. As the US begins its withdrawal from Iraqi cities, after 6 years of occupation, much more evidence has accumulated that the US invaded and ruled Iraq with oil as the main policy goal. (Truthout)
ZNet reports that large Iraqi oil and gas reserves will be privatized under US influence. The author suggests that the Iraqi government, the oil ministry in Baghdad and the Kurdish Regional Government want to open up to international oil companies. Shell has already acquired a 49 percent share in a joint venture with the Iraqi national gas company. Furthermore, the Iraqi government is working on a new oil and gas privatization law that will lead to large additional foreign stakes in the country's hydrocarbon resources.
The UK government's former chief scientific adviser, David King, rejects the argument that the US-UK invasion of Iraq took place to remove Saddam Hussein and to eliminate Iraq's weapons of mass destruction. He suggests that the real reason for the invasion was US interest in oil. King contends that in a world with growing resource shortages the Iraq war was the first "resource war" of the century, in which "powerful nations [will] secure the resources for their own people at the expense of others." (CommonDreams)
Iraq's parliamentary oil and gas committee vows to challenge the agreement between the Oil Ministry and Shell concerning the production of gas in southern Iraq. Committee member Noor al Deen denounces the agreement for lacking transparency and argues that Shell will have a complete monopoly on gas in southern Iraq. (Reuters)
Jim Fine argues that Washington will seek to control Iraq's oil resources, irrespective of whether the Iraqi Parliament passes the Status of Forces Agreement. President Bush issued a signing statement excusing himself from a provision in the 2009 Defense Authorization Bill, intended to curtail US power over Iraq's oil. This article states that the next two months will measure just how far Washington will go to fulfill its objectives for the occupation. (Truthout)
Shell has secured a 25-year contract with the Iraqi government giving the oil giant control of the production and the export of natural gas in southern Iraq. Shell will be the sole gas company to operate in southern Iraq and Iraqi MP Jabir Khalifa Jabir argues that the agreement "is a long term monopoly that allows Shell to export gas when Iraq is in need of that gas." (United Press International)
The Iraqi government plans to give foreign oil companies, such as Shell, BP and Exxon-Mobil, access to 40 percent of Iraq's oil reserves. Issam al-Chalabi, former Iraqi oil minister between1987 to 1990, disapproves of the deal and states that Iraq is needlessly giving away Iraq's oil to foreign companies. (AlterNet)
The US secretly promoted a US$4 billion oil agreement between oil giant Shell and the Iraqi oil ministry on September 22, 2008. Shell enjoys a close relationship with the US and annually receives US military contracts worth billions of dollars. (AlterNet)
Royal Dutch Shell PLC opened an office in Iraq, the first major oil and gas firm since 1972 to do so. Shell plans to expand its operations in Iraq but many Iraqis view Shell as exploiting Iraq's oil resources with little benefit for the Iraqi people. (McClatchy)
This Jurist article examines how the proposed Iraqi draft oil law would take sovereignty from the Iraqi State and give control over the majority of Iraqi oil resources to foreign companies such as Exon Mobil, Shell, and BP. Foreign oil companies in Iraq stand to make enormous profits at the expense of the welfare of Iraq's people.
Ever since President Franklin D. Roosevelt promised to protect Saudi Arabian royalty in return for privileged US access to Saudi oil, US governments have regarded access to overseas oil supplies a matter of "national security." Troops have guarded pipelines and refineries and the US has engaged in wars to secure their sources of energy. This article from Le Monde diplomatique argues that the US should change its tactics, end its warfare in the Middle East and instead create an energy policy with focus on domestic, renewable sources of energy.
Ray Hunt, CEO of Hunt Oil and a close friend of Vice President Dick Cheney and the Bush family, landed a major oil deal in 2007 with Iraq's Kurdistan regional government. Despite the fact that Hunt donated more than US$1.5 million to the Republican Party, the Bush administration denies any knowledge of the agreement. According to Congressman Henry Waxman, the Hunt-Kurdish contract raises questions about the Bush administration's role in other deals between Iraq and Western firms like Exxon Mobil, Shell, BP and Chevron. (al-Jazeera)
This article by Noam Chomsky states that the main goal of the US in Iraq was to open its oil resources to foreign investment. Bush has continually signed agreements to secure an indefinite US military presence in Iraq. Extensive resort to "signing statements" to expand executive power is yet another Bush innovation, condemned as "contrary to the rule of law and our constitutional separation of powers." (Khaleej Times Online)
The so-called "war on terror" is more about oil than about fighting al-Qaeda and spreading democracy in the Middle East. This is revealed in interviews with important CEOs and lobbyists - like Alan Greenspan, the former chairman of the Federal Reserve. At the same time a large number of Western companies like Exxon Mobil, Shell and Total gain direct access to Iraq's oil reserves, proving the theory about US interest in Iraqi oil right. This article suggests that the invasion of Iraq was even planned long before the infamous attacks on the World Trade Center in 2001. (al-Jazeera)
The Bush administration is working behind the scenes to ensure Western access to Iraqi oil. US government lawyers and private-sector consultants have provided templates and detailed suggestions on drafting the much criticized contracts between the Iraqi governments and five major Western oil companies. The companies will be working some of the largest fields in Iraq, although critics warn that meddling in the country's oil policies can inflame the opinion of Arab nations against the US. (New York Times)
Iraq may lose a large amount of its national revenue to five Western oil corporations that will enjoy direct access to the country's largest oilfields. The lucrative deal has been drawn up by the corporations themselves, who wrote the contracts without input from the Iraqi government. The businesses have ensured their right to match any competing bid once the two year-contracts run out. They will have a claim to long-term control over at least one third of Iraq's known oil reserves. (Niqash.org)
After a 36 year absence, four Western oil companies are returning to Iraq. Exxon Mobil, Shell, Total and BP lost their oil concession as Saddam Hussein rose to power, now, with US support they have negotiated new contracts with Iraq's Oil Ministry. Due to Iraq's vast resources, these oil companies expect to profit immensely from the renewed deals yet claim their investments will also help rebuild the country's decrepit industry. (New York Times)
Great powers can no longer secure energy resources through military means as the side "with the most guns goes bankrupt," this essay claims. Iran has negotiated lucrative energy contracts with Iraq, whilst the US spends US$1 billion a week in fuel costs to secure Iraq's oil reserves. China and Russia project global influence through economic alliances that keep them out of the battlefield. This American Conservative analysis concludes that the US can either "chase its own fuel tail," or adapt to a world where markets trump militarism.
In the aftermath of the US-led invasion of Iraq, over seventy oil firms have applied for the right to develop Iraq's oil. With the third largest oil reserve in the world, Iraq has unsurprisingly received bids from "established oil firms with plans for years to gain access to these natural resources." Foreign oil companies are not the only ones concerned with the reserves; Iraqi legislators and the government in Baghdad have yet to resolve questions over who will control the oil. (Al-Jazeera)
In this letter to the Iraqi Parliament, 60 Iraqi Oil Professionals announce their support for the Ministry of Oil's decision to make illegal 15 production sharing agreements signed by the Kurdistan Regional Government (KRG) and foreign companies. The professionals agree with the blacklisting of the foreign companies in question. This letter follows similar warnings by the group in early 2007 that the negotiation and signing of oil contracts remain exclusively with the Ministry. The letter further asks that the draft oil law be approached with caution and that it be amended to ensure the rights of Iraqis. (After Downing Street)
The US Navy is constructing a military installation on one of two Iraqi petroleum-export platforms in the Persian Gulf. The Khwar Al Amaya oil terminal and the Al Basra oil terminal have the potential to load almost 2.4 percent of the world's daily oil needs. Commentators suggest the construction signals US intentions to establish long term bases in the region, with particular interest in protecting Iraq's oil industry. Some commentators suggest the installation will also allow the US to monitor Iran's Revolutionary Guards Corps who are stationed near Khwar Al Amaya. (Wall Street Journal)
The Iraqi government cancels a contract with the Russian oil company, Lukoil, for development of the supergiant West Qurna oil field. In response, Russia threatens to retract a promise to forgo Iraq's US$13 billion debt. Lukoil claims a contract signed with Saddam Hussein is still valid despite the former Iraqi leader canceling it. Since the occupation, the Iraqi government has honored other contracts with Chinese, Indonesian and Indian oil companies. Russia argues that with US pressure, the Iraqi government is selectively enforcing contracts. (New York Times)
The Bush administration and some Democratic presidential candidates justify continued US presence in Iraq as necessary to secure vital national security interests and to fight terrorism. According to Michael Schwartz this vague reasoning cannot hide the reality that since the Second World War the US has viewed oil in the Middle East as "one of the greatest material prizes in world history." He argues that the rise of OPEC, the US alliance with Saudi Arabia, the formation of foreign policy by neoconservatives including Donald Rumsfeld and Dick Cheney provide the historical background for the invasion of Iraq. (Tomdispatch)
Two conferences on Iraq's oil were held simultaneously in September 2007. In Dubai, big international oil companies declare Iraq as "open for business," while in Basra, workers, experts and civil society leaders argue that the "oil belongs to the Iraqi people." The author of this Carbon Web Newsletter article suggests the meetings demonstrate the great divide between what Iraqis want and what the oil law will actually provide. Further, while the US claims the law will allow for political reconciliation, the author notes that the law barely mentions revenue sharing.
The Iraqi Federation of Oil Workers (IFOU) is the main opposition to the privatization of oil in the country and is one of few voices speaking out the rights of millions of Iraqi workers. In June 2007, the Union organized a strike which, although short lived, resulted in Prime Minister Nouri al-Maliki agreeing to delay the implementation of a controversial oil law until October 2007. Despite heavy pressure from the US, the oil law has not yet passed parliament. Commentators suggest the union represents a large threat to the Bush administration's goal of privatizating Iraq's oil. (Dollars and Sense)
In this Independent article, Ewa Jasiewicz speaks of the fight for access to Iraq's vast oil reserves. The author says that the growing public opposition to foreign control of Iraq's oil has stalled the "black goldrush" that oil companies were hoping for.
In this Huffington Post article, Robert Weissman analyzes statements by Alan Greenspan and Henry Kissinger that the Iraq war is about oil. Greenspan says that it is "politically inconvenient to acknowledge what everyone knows," the the war was largely about oil. Further, Henry Kissinger argues that oil control will be the determining factor in the US decision to undertake military action against Iran. These comments are in stark contrast to the justifications given by the US and UK governments, which have strenuously denied the oil motivation.
Former Federal Reserve Chairman Alan Greenspan argues that the removal of Saddam Hussein from Iraq was essential to secure world oil supplies. In this Washington Post article, Greenspan confirms that he supported the ouster of Saddam Hussein and did not foresee a "Plan B - an alternative to war." He suggests that without the oil reserves, the US response to Saddam Hussein would not have been as strong as it was in both the first and now the second gulf war.
The Bush administration defines the conflict in Iraq as a â€˜religious civil war,' with â€˜sectarian conflict' between â€˜militants' being the root cause of violence. In this significant Alternet article, Joshua Holland and Raed Jarrar argue that the struggle is due to political questions about Iraq's future, namely, whether Iraq will have a central government or partitioned regional governments; who will control Iraq's oil industry and the extent of foreign influence in the country. The authors indicate "the religious civil war narrative obscures the fact that the US is not working towards political reconciliation in Iraq."
The US Commerce Department has announced it will appoint an international legal adviser to assist in the drafting of laws and regulations governing Iraq's oil and gas fields. The Department says the adviser will provide technical assistance to Iraq and US government agencies to allow for "domestic and foreign investment in Iraq's key economic sectors, starting with the mineral resources sector." According to Walter Pincus from the Washington Post, the appointment comes as the US intensifies its pressure on the Iraq government to pass the oil and revenue sharing laws. The announcement signals US intentions to have a long term say in Iraq's oil industry.
In this Washington Post article, the author tracks the development of Iraq's oil law as a "political achievement" capable of uniting Iraqis. over an issue that has instead "torn Iraqis further apart." Responding to US pressure, the Iraqi oil ministry drafted a national oil law in 2006. Since then, disputes between the Baghdad government and the Kurdistan regional government over the terms of the draft have led to a breakdown in negotiations. However, a US Embassy official suggests that oil revenue is already being distributed throughout Iraq without a legislative framework. This indicates there is time for an oil law to be drafted that benefits the Iraqi people and promotes rather than hinders reconciliation between the central and regional powers.
The Federal Parliament in Baghdad has not officially adopted the oil law in Iraq despite pressure from the US, the IMF and international oil companies. According to Munir Chalabi from ZNet, the delays are partly caused by an increase in public awareness of the oil law, a worsening security situation, and voiced opposition from Iraqi trade unions, economists, lawyers and some members of the Iraqi government. Washington desperately needs the Iraqi Parliament to pass the law to show Congress that there is "progress" in Iraq. But, "as time passes and more people come to understand the law, this will increase the chance of its defeat."
BP, Shell, Exxon and Chevron are amongst several oil companies attending conferences in Dubai in September 2007 to discuss Iraq's oil. Political analysts expect the Iraqi government to enact an oil law which will allow oil companies to sign exploration and production deals and take advantage of generous profits. Meanwhile as oil giants "salivate" over Iraq's oil, the humanitarian crisis in Iraq worsens. (Observer)
Iraq's Oil Workers Union strongly opposes Iraq's draft oil law. The Union has popular support and is a symbol of national unity in an otherwise divided country. However, Washington insists that opposition to the oil law is evidence of a weak Iraqi government. In response, Prime Minister Nouri al-Maliki has banned collective bargaining, seized union funds, imposed low wage laws and ignored assassinations against union leaders. One labor leader in Iraq suggests "war makes privatization easy: First you destroy society, then you let the corporations rebuild it." (San Francisco Chronicle)
Iraqis from different ethnic and religious groups are uniting in their opposition to the proposed hydrocarbon and oil revenue law which would result in a high percentage of Iraq's oil wealth going to foreign companies. The US is promoting the law as necessary for a stable and sovereign Iraq and insisting that it will allow for investment in war torn oil infrastructure. Iraqis have expressed concern that the Baghdad government, under pressure from Washington, will force passage of the oil law by parliament without considering that the oil and its revenue "belongs to all future generations" of Iraqis. (AlterNet)
Oil companies, Total and Chevron have signed a services agreement to explore and develop hydrocarbons from the Majnoon oil field, Iraq's fourth largest oil field with an estimated reserve of 12 billion barrels. The agreement between Total and Chevron does not involve the Iraqi government. It further signals the plans of foreign oil companies to enter into deals in preparation for the US-backed hydrocarbon law, despite widespread opposition in Iraq to foreign corporations developing Iraq's oil fields. (Dow Jones Newswires)
An NGO-sponsored survey for the first time asked ordinary Iraqis their view on the highly contentious draft oil law. According to the poll, 76 percent of Iraqis feel "inadequately" informed about the contents of the proposed law. Nonetheless, 63 percent responded that they would prefer Iraqi state-owned companies â€“ and not foreign corporations â€“ to develop Iraq's extensive oil fields. (Oil Change International, Institute for Policy Studies, War on Want, PLATFORM and Global Policy Forum)
Senior Iraqi politician Ali al-Adeeb urges Parliament to postpone any decision-making on the draft US-backed oil law until coalition forces withdraw completely. Adeeb, a member of Prime Minister Nouri al-Maliki's party, joins a growing number of government officials who reject the proposed law and endorse state ownership of Iraqi oil. (United Press International)
To the disappointment of the Bush administration and oil lobbyists, Iraq's Parliament adjourned for the summer without adopting the controversial US-backed hydrocarbon law. More and more Iraqis, including oil technocrats, trade unions and even government officials, recognize that the proposed legislation does not serve their national interests. In light of Washington's attempts to hastily push through the oil law, this Guardian article concludes that "the more people [understand] what the law entails, the greater the chances of its defeat."
Iraq's Oil Minister, Hussein Shahrastani, has recalled a 1987 decree from the Saddam Hussein era, banning all trade union activity. The Iraqi Federation of Oil Unions launched a strike in June 2007 and organized demonstrations the following month, both to protest the US-backed draft hydrocarbon law. Union leaders dismiss the minister's directive as yet another attempt to derail the thriving campaign against privatization of Iraq's oil industry and against the overall occupation. (Naftana)
The US, Britain and the IMF put economic and diplomatic pressure on Prime Minister Nouri al-Maliki to enact the proposed oil law as a political benchmark, claiming the law will promote modernization and equity. The truth is that Iraq will become a "weak unproductive economy that remains subservient to oil interests and imperial powers," argues Kamil Mahadi of the Transnational Institute. The law will give multinational companies control over Iraq's oil and inhibit Iraqis from taking control over their own resources to invest in developing the country.
Over the years, US rhetoric on how to restructure Iraq's oil industry has changed from "advisory" to imperious. Using such tactics as threatening to withdraw funding as well as political and military support, Washington pressured the Iraqi government to pass a highly contentious oil law. This article concludes that this law "has almost nothing to do with revenue distribution among Iraq's sectarian groups, and everything to do with creating highly profitable opportunities" for Big Oil. (Foreign Policy In Focus)
Led by the Iraqi Federation of Oil Unions (IFOU), hundreds of Iraqis took to the streets to protest the proposed hydrocarbon law and a hike in fuel prices. The IFOU also called on Parliament to legalize trade unions and to establish workers' rights. Observers charge that the draft law would not serve the interests of the Iraqi people, as it would divert oil revenues from Iraq's economy to foreign companies. (US Labor Against the War & Oil Change International)
Iraqis continue to show solidarity in their opposition to the privatization of the country's oil industry. Oil workers have rejected the latest draft of a hydrocarbon law that would give much of the control of Iraq's immense oilfields to foreign companies. While acknowledging that new technology from abroad could prove vital for reviving oil production, union leader Faleh Abood Umara emphasizes that "[Iraqis] would like to be sole owner of their wealth." (In These Times)
Australian Prime Minister â€“ and staunch US ally â€“ John Howard supported the invasion of Iraq, purportedly to "give the people of Iraq a possibility of embracing democracy." But Defense Minister Brendan Nelson invalidates such justifications for the war, conceding that oil interests hugely motivated Australia's involvement in Iraq. (BBC)
Many Iraqis believe that the US-backed draft hydrocarbon law will surrender Iraq's economic sovereignty to foreign companies. Iraqi unions â€“ long a symbol of activism â€“ have banded together to reject the proposed legislation. "Conscious of the supreme importance of their industry and the greed that surrounds it," Iraqi oil workers seek full consultation on the future of their country's natural resources. (Socialist Review)
Faleh Abood Umara of the Southern Oil Company Union and the Iraqi Federation of Oil Workers' Unions explains that, if passed, a Washington-backed law would insure US "hegemony" over Iraqi oil reserves. The law represents "a raid by the international oil cartel" on Iraqi resources, he adds. Furthermore, it does not allocate sufficient revenues to the Iraqi state to benefit the Iraqi people. Umara warns that oil workers will not tolerate the proposed law because it favors foreign oil companies at their expense. (Reuters)
The Iraqi Federation of Oil Unions went on strike in opposition to the proposed hydrocarbon law. Prime Minister Nouri al-Maliki responded forcefully by sending the army and issuing arrest warrants against the union's leaders. Iraqi unions are a strong, secular voice against oil privatization and the occupation in general. (truthout)
US Congress has passed a bill to continue funding the occupation in Iraq. However, restrictions demand that the Iraqi government meet certain benchmarks in order to receive US money for reconstruction. One of these benchmarks is the privatization of Iraq's oil which would mean unhindered access for foreign firms to the majority of Iraq's oilfields for the next 30 years. This truthout article argues that the US$120 billion dollar "Support the Troops" legislation has more to do with protecting US oil interests than supporting US troops, who will likely remain in Iraq for many years.
After four years of US occupation, oil production in Iraq remains far below prewar levels. Pipeline sabotage and theft, especially in the north of the country where Kurds and Arabs are struggling over oil, have made Iraqis lose billions of dollars in revenue. This Wall Street Journal article shows that a sophisticated network of smugglers, corrupt officials, desert tribes and insurgents are diverting crude oil from Iraq's pipeline, producing fuel at clandestine refineries and selling it on the black market. Since 2003, the US and Iraqi governments have been unable to fix the oil meters, allowing thousands of barrels of oil a day to disappear.
Washington has been pressing the Iraqi government to reach benchmarks such as national reconciliation, a ban on deba'thification and approval of the oil law. But, the hydrocarbon law has stalled in Parliament due to growing dissatisfaction with the document. Many Iraqi legislators believe the May 2007 deadline imposed by the US will not be achieved. According to parliamentarians, the law is a "sloppy document," rushed forward to satisfy Washington's own agenda. (Los Angeles Times)
According to a draft report released by the US Government Accountability Office and energy analysts, between 100,000 and 300,000 barrels a day of Iraq's oil are unaccounted for. The loss of Iraqi oil could be explained by sabotage of pipelines, theft by smugglers, and corrupt US officials. The US government has spent roughly US$ 9 billion in rebuilding the electricity and oil sectors with no success to date. While Washington has been unable to fix the oil meters, Iraq continues to lose billions of dollars a year in revenue. (New York Times)
This TomDispatch article shows that the US government has always seen Iraq's oil as vital to its national interests and is willing to use "all means necessary" to ensure access to it. According to experts, Iraq's oil reserves could be the biggest in the world, exceeding 400 billion barrels. Washington is trying to have Iraq's Parliament pass a hydrocarbon law that would grant US companies exclusive control over Iraq's oil resources and assure them huge profits. However, the law is stalled in the Parliament as most Iraqis believe it "aims to rob Iraq's national wealth and undermine the sovereignty of the state."
This United Press International article warns of the fragile security situation in the city of Basra, in the heart of Iraq's main oil producing area. Two opposing Shia groups have clashed violently. Moqtada al-Sadr's party and the Fadila Party are battling over control of the city, as well as influence over the central government in Baghdad and the oil industry. The battles over the Iraq's Oil Ministry could destabilize the government. Further, these rivalries could lead to disruption of the oil sector, threatening Iraq's most important source of revenue.
After four years of occupation, the US has not fixed the oil meters in Iraq, allowing between 200,000 and 500,000 barrels a day to disappear. Although the two companies hired to fix the oil fields, Halliburton and Parsons, have millions of dollars to spend and substantial experience with oil infrastructure in Iraq, they have not made such the necessary repairs citing security reasons. The lack of oil meters allows smugglers to divert billions of dollars in oil. Neither the US, nor private contractors have provided good explanations for failing to fix the problem, suggesting that there are vested interests benefiting from the absence of oil meters. (CorpWatch)
Since the invasion of Iraq in 2003, the US government has been trying aggressively to push for the passage of the oil law and the adoption of production sharing agreements. These contracts would give exclusive control of Iraqi oil reserves to foreign companies and assure them huge profits to the detriment of Iraq's economy. Almost all the countries in the Middle East oppose these agreements, as they grant petroleum companies 20 to 35 year long contracts. Iraq's five trade union federations insist the hydrocarbon law "would undermine the sovereignty of the state and the dignity of the Iraqi people" and demand more time and less pressure. (New York Times)
The British government is trying to influence Iraqi policy-making to assure US and UK oil companies lucrative contracts to explore Iraq's oil fields. The British Foreign Office sent a study by the Tax and Investment Center, a multinationals-backed think-tank, to the Iraqi Minister of Finance, recommending that the Iraqi government sign product-sharing agreements with foreign petroleum companies. According to Greg Muttit, the co-director of the campaign group PLATFORM, "there is no question that the British government is exploiting its position as an occupation power to push its own oil interests and those of multinational companies." (Independent)
According to this Telegraph article, the British BG Group could be the first major western oil company to invest in Iraq. The company appears to be interested in exploring oil in the north of the country and has sent teams to this region, where a fifth of Iraqi reserves are located. Nevertheless, an agreement with BG would be seen as a coup for the Kurdish government, which contends that it should be able to sign its own deals. Although the draft oil law approved by the Iraqi cabinet established that the Kurdish authorities could make their own agreements, it failed to state clearly how the revenues will be distributed among the regions.
The Iraqi Cabinet approved a hydrocarbon law that will allow foreign companies to control Iraq's vast oil resources. In order to avoid controversy, the term Production Sharing Agreements was replaced by Exploration and Risk Contracts, but both mean that Iraq is renouncing its sovereignty and handing over exclusive rights and huge profits to private oil companies. According to Ewa Jasiewicz, a researcher at PLATFORM, "the law's unfair, untransparent and undemocratic provisions reflect the influence and interests of external actors, namely the US and British governments and their major oil companies."
The revised draft of the Iraqi oil law is expected to go to the Parliament for debate and ratification, if approved by the Iraqi cabinet. Nevertheless, this law still faces controversy. A key trade union of oil workers declared it would oppose the law, claiming the legislation was "unbalanced and incoherent with the hopes of those who work in the oil industry." Former Iraqi oil officials are also against this law and according to one of them "rushing through a petroleum law could cause more harm then good to the industry." (Wall Street Journal)
During a seminar in Amman, several former Iraqi oil officials and technocrats said the timing for enacting an oil law is not appropriate, as the situation in Iraq remains chaotic. Further, experts believe the draft law has ceased to be a means of uniting the Iraqis and rushing the legislative process will only worsen the country's situation. One of the controversial points of the hydrocarbon law is how much control should be handed over to the regional governments and former Iraqi oil officials said that giving the Kurdish government authority to manage oil resources could set a precedent in the oil-rich South. (Dow Jones Newswires)
Observers expect the Iraqi Parliament to pass legislation re-shaping the country's oil industry. However, because of differences between Iraqâ€™s federal and local governments, this Dow Jones article foresees a possible delay of several months in the passage of the law. The semi-autonomous Kurdish region in northern Iraq has already signed agreements with small oil companies, and the central government in Baghdad fears that this could set a precedent in the oil-rich South. Further, no consensus exists on the sharing of oil revenues, the types of contracts to award foreign oil companies and the creation of the Iraqi National Oil Company. These issues could lead to further opposition to the occupation.
The controversial oil law that the Iraqi Parliament is expected to pass will give foreign companies control of the world's third-largest oil resources. Several oil companies have reportedly sent teams to the country to lobby for contracts. This Independent article points out that since the Iraqi government lacks the capacity to negotiate better deals, the country risks renouncing much of its sovereignty as well as significant financial gains from any agreements. According to James Paul, the executive director of Global Policy Forum, "it is not an exaggeration to say that the overwhelming majority of the population would be opposed to this. To do it anyway, with minimal discussion within the [Iraqi] parliament is really just pouring more oil on the fire."
Tables and Charts
Time Magazine comparatively details the cost of oil in 1979 between the US, Saudi Arabia, the North Sea and Iraq.
This chart shows the number of wells producing oil and the daily average barrels per well in 1979. It covers Saudi Arabia, Iraq, Iran, Kuwait, Qatar, Libya, Egypt, and the US. (Time Magazine)