Oil in Iraq

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.

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Analysis

Oil in Iraqi History

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.

Status of Forces Agreement (August 9, 2008)

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 )

How the Bush Administration's Iraqi Oil Grab Went Awry (September 25, 2007)

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.

Iraq Oil Lobbying Comments on the Confidential Document (July 14, 2006)

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)

Crude Designs: the Rip-off of Iraq's Oil Wealth (November 22, 2005)

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)

The Iraq Oil Bonanza: Estimating Future Profits (January 28, 2004)

This short paper estimates p