Global Policy Forum

Foreign Office Helped Set Up Iraqi Oil Deals


Ambassador Passed 'Roadmap' Report to Baghdad

By Tim Webb

March 11, 2007

The British Government intervened to help UK and US energy giants in their attempts to secure lucrative contracts to exploit Iraq's ruined oilfields. The Foreign Office delivered a report by the International Tax and Investment Center (ITIC) - a Washington-based think-tank backed by a host of multinationals, including oil companies such as Shell and BP - to Iraqi officials in Baghdad, it has emerged. The British ambassador to Iraq formally sent the "road-map" study on the Iraqi oil industry to the then Iraqi minister of finance, according to documents seen by The Independent on Sunday. The study recommended the Iraqi government sign long-term production-sharing agreements with foreign oil companies.

Emails between civil servants also showed that the Foreign Office helped the ITIC secure an audience with senior officials from the Iraqi Oil Ministry so that it could present its report. The ITIC hosted a conference in Beirut in January 2005 to give a formal presentation to Iraqi ministers. Executives from BP, Shell, ChevronTexaco, the Italian oil company ENI and its French rival Total attended. A diplomat from the Foreign Office, who helped the ITIC further its relationship with the Iraqis, was also present.

The story of the envoys' involvement was revealed on Friday night by the Arab broadcaster Al-Jazeera as part of its People and Power documentary series. Greg Muttitt, the co-director of the campaign group Platform, said: "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." Kim Howells, a Foreign Office minister, told the Al-Jazeera programme that the accusation that the British government was influencing Iraq's oil industry was "paranoia gone completely loopy".

Separately, the IoS has learnt that the ITIC is planning another key conference to be attended by oil company executives and senior Iraqi government figures. They will discuss in greater detail the tax regime that will accompany the long-awaited hydrocarbon law, which should be approved by the Iraqi parliament by the summer. The ITIC chairman, Daniel Witt, stressed that it would be an "educational programme" rather than an opportunity for oil majors to lobby Iraqi ministers.

Asked if the Foreign Office had helped organise the new conference, pencilled in for May, he replied: "Not yet. I do not know if they will." He said that the British Government's support for the ITIC was in line with its policy of supporting an open investment policy. "It's not unusual for human beings who share common views to work together and help each other. I would not view it as wider co-operation pushing a common agenda." But Mr Witt admitted the Foreign Office had helped the ITIC gain access to more senior Iraqi officials. Production-sharing agreements allow companies to make vast profits once they have recouped their costs. Because of the controversy caused by the inclusion of the term in early drafts of the hydrocarbon law, it has now been dropped. It is not clear what will replace this.

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