Iraq Handing Oil Reserves To U.S. Energy Giants

The Independent, which obtained a leaked version of the law, reported Sunday, “The Iraqi Council of Ministers is expected to approve, as early as today, a controversial new hydrocarbon law, heavily pushed by the US and UK governments, that will radically redraw the Iraqi oil industry and throw open the doors to the third-largest oil reserves in the world. It would allow the first large-scale operation of foreign oil companies in the country since the industry was nationalised in 1972.” The newspaper added that the new law would be “radical departure from the norm for developing countries” and would be the first of its kind for any major oil producer in the Middle East, where Saudi Arabia and Iran, the world’s number one and two largest producers, “both tightly control their industries through state-owned companies with no appreciable foreign collaboration,” as do most members of the Organization of Petroleum Exporting Countries (OPEC). The most significant legal aspect of the pending legislation is the introduction of so-called production-sharing agreements (PSAs), in which the state maintains formal ownership of oil reserves but pours out billions in compensation to foreign oil companies for their investment in the infrastructure and operation of drills, pipelines and refineries. According to the draft of the legislation, the PSAs in Iraq would be fixed for 30 years or more, allowing foreign oil companies to maintain favorable arrangements no matter what a future government might do to regulate their profits, tax rates or production levels. One provision in an earlier draft of the new law—which may or may not be retained in the latest version—insists that any disputes with a foreign company must ultimately be settled by international, rather than Iraqi, arbitration. http://www.wsws.org/articles/2007/jan2007/oil-j11.shtml

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