Who Will Control Iraq’s Oil?
Patrick Cockburn
Counterpunch
Friday, June 19, 2009
Furious protests are threatening to undermine the Iraqi government’s plan to give international oil companies a stake in its giant oilfields in a desperate effort to increase its declining oil production and oil revenues.
In less than two weeks time, on June 29 and 30, the Iraqi Oil minister Hussain Shahristani will award service contracts to the world’s largest oil companies to develop six of Iraq’s largest oil producing fields over 20-25 years.
Senior figures within the Iraqi oil industry have denounced the deal. Fayad al-Nema, the director of the South Oil Company, which comes under the Oil Ministry and produces most of Iraq’s crude, said last weekend: “The service contracts will put the Iraqi economy in chains and shackle its independence for the next 20 years. They squander Iraq’s revenues.” Mr Nema is reported to have since been fired because of his opposition to the contracts, which he says is shared by many other officials in Iraq’s state-owned oil industry.
The government maintains that it is not compromising the ownership of Iraq’s huge oil reserves – the third in the world at 115 billion barrels – on which the country is wholly dependent to fund its recovery from 30 years of war, sanctions and occupation. But the fall in the price of oil over the last year has left the government facing a devastating financial crisis in which 80 per cent of its revenues goes to pay for salaries, food rations and recurrent costs. Almost nothing is left for reconstruction and it is finding it hard to pay even for vitally-needed items such as electrical plant from GE and Siemens.
The development of Iraq’s oil reserves is of great importance to the world’s energy supply in the 21st century. They may be even larger than Saudi Arabia’s, as there was little exploration while Iraq was ruled by Saddam Hussein. International oil companies are desperate to get their foot in the door. “Everyone wants to be in Iraq,” says Ruba Husari, an expert on Iraqi oil. “Togethor with Iran this is the only oil province in the world that has great potential. It is a great opportunity for oil companies because nobody knows the size of Iraq’s reserves. Iraq itself needs to know what is under its soil.”
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