GPF on Great Iraq Oil Ripoff

FERAL SCHOLAR

I am posting the link to this study in the hope that people will take the trouble to actually read it. The “produciton sharing agreement,” as explained herein, may seem too technical to engage us on the gut level, but it is extremely important. I especially hope Iraqi English readers will render this account available to other Iraqis in Arabic, explicitly to generate the opposition necessary inside Iraq to kill this staggering rip-off of Iraqi national assets by multinationals under the wing of the US state. This new PSA arrangement was produced with the intention to continue colonial exploitation without the “privatization” standard that generates nationalist opposition. It is exactly that opposition I hope to encourage by posting this.

While the Iraqi people struggle to define their future amid political chaos and violence, the fate of their most valuable economic asset, oil, is being decided behind closed doors.

This report reveals how an oil policy with origins in the US State Department is on course to be adopted in Iraq, soon after the December elections, with no public debate and at enormous potential cost. The policy allocates the majority (1) of Iraq’s oilfields – accounting for at least 64% of the country’s oil reserves – for development by multinational oil companies.

Iraqi public opinion is strongly opposed to handing control over oil development to foreign companies. But with the active involvement of the US and British governments a group of powerful Iraqi politicians and technocrats is pushing for a system of long term contracts with foreign oil companies which will be beyond the reach of Iraqi courts, public scrutiny or democratic control.

COSTING IRAQ BILLIONS

Economic projections published here for the first time show that the model of oil development that is being proposed will cost Iraq hundreds of billions of dollars in lost revenue, while providing foreign companies with enormous profits.

Our key findings are:

# At an oil price of $40 per barrel, Iraq stands to lose between $74 billion and $194 billion over the lifetime of the proposed contracts (2), from only the first 12 oilfields to be developed. These estimates, based on conservative assumptions, represent between two and seven times the current Iraqi government budget.

# Under the likely terms of the contracts, oil company rates of return from investing in Iraq would range from 42% to 162%, far in excess of usual industry minimum target of around 12% return on investment.

A CONTRACTUAL RIP-OFF

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