Who benefits from Iraq oil law.

It is hardly surprising that the US should have as a benchmark a law that gives guarantees for foreign investment in Iraq oil. The Democratic opponents are probably just feigning opposition knowing that not enough of them will object to stop the bill going through the US system.
The whole idea of the US telling Iraq what they must do is of course counter the idea that it is a sovereign nation. However, with thousands of Iraqis in US jails in Iraq and continual operations by the military without Iraqi approval show how much sovereignty is respected by the occupiers.
The Iraq oil law seems still to be going nowhere fast. The Kurds are already letting a Norwegian company pump oil without central government sanction.


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Who are the real beneficiaries of Iraq’s oil law?
20/05/2007 07:15:00 ? GMT











By Emma Sabry

Iraq’s oil revenue-sharing law, one of the main “benchmarks” set for the Iraqi government by the Bush administration, was introduced as a key step toward uniting Iraq’s religious and ethnic groups. But now some analysts say the law could further escalate sectarian tensions in the war-torn country.

The law, drafted by Iraqi and U.S. officials, is strongly backed by the Bush administration, the Congress and the Iraq Study Group, whose 2006 report said such a law was needed to “create a fiscal and legal framework for investment" in the oil industry, where Iraq is considered a key player as it holds the world's second-largest proven oil reserves after Saudi Arabia. But the oil law’s status as a benchmark for progress in Iraq is stirring debate in Baghdad and Washington, according to an article on the Christian Science Monitor.

The Bush administration is angered by the Iraqi government’s perceived foot-dragging in passing the oil law. But the oil legislation is being closely examined in the United States as the Democrat-controlled Senate inches closer to drafting a new war-funding bill that includes benchmarks for progress in Iraq. Some American officials started to question the substance of the oil bill, particularly whether it really aims at easing Iraq’s sectarian tensions or granting international firms a substantial role in the country’s vast oil fields.

"While we can't confirm it, there are enough reports out there that appear to indicate that undue, unfair preference and the influence of our oil companies are part of the Iraqi hydrocarbon law, and if that is true, that is not correct," says Rep. Joe Sestak, a former admiral and defense adviser to the Clinton administration. "The aim of benchmarks is to help the process along, but we need benchmarks that are appropriate for the Iraqis and the Americans – not just our economy but our ideals."

Many in the U.S. and Baghdad express fears that the draft oil law says little about sharing oil revenues among Iraqi Shias, Sunnis and Kurds, and a lot about setting up a framework for investment that would benefit foreign companies and harm the Iraqis over the long term. Opposition intensified this week after a coalition of oil industry watchdog groups and peace activists called on House Speaker Nancy Pelosi and Senator Harry Reid to dismiss the Iraqi oil law as a benchmark for progress in Iraq. "If Democrats are perceived to be advocating withdrawal [of U.S. troops] only after access to Iraqi oil has been assured, this will do little to reassure critics," says Steve Kretzmann, executive director of Oil Change International, a watchdog group.

Hasan Jum'a Awwad, head of the Iraqi Federation of Oil Unions, reiterated this view last week in an open letter to Democrats in which he urged U.S. Senators “not to link withdrawal [of U.S. troops] with the oil law, especially since the U.S. claimed that it came to Iraq as a liberator and not in order to control Iraq's resources."

In Baghdad, many Iraqi lawmakers say the oil law is too complex and they shouldn’t be rushed to finish it. It should be last issue, not the first, to be resolved, they argue. The Iraqi cabinet passed the draft law on Feb. 26 and was expected to submit it to parliament by March 15. The Bush administration wanted Iraqi MPs to approve the entire oil package by the end of this month, but the draft law hasn’t even been sent to parliament yet.

Iraqi opponents of the oil bill say it doesn’t address the issues that Washington claims it does. "The actual draft law has nothing to do with sharing the oil revenue," says former Iraqi oil minister Issam Al Chalabi. It aims at setting a framework for investment by foreign oil companies, including favorable production-sharing agreements that are typically used to reward companies for taking on risk, he says.

"We know the oil is there. Geological studies have been made for decades on these oil fields, so why would we let them [international firms] have a share of the oil?" Chalabi wonders. "Iraqis will say this is solid proof that Americans have staged the war ... because of this law."

Oil industry analyst Fadel Gheit of Oppenheimer & Co. Inc., who reviewed the official Arabic version of the draft law and the unofficial English translation, says that both drafts are ambiguous and seem to be written in a hurry. He also raised concerns over a condition that stipulates that the Iraqi government should create a new Federal Oil and Gas Council that must include foreign partners, saying that the stipulation did "raise a red flag.”

Under the draft law, the council should carry out Iraqi oil policies and set criteria for foreign companies working in the industry. "Why shouldn't Iraq use Iraqi nationals to decide how the contracts will be awarded? They have oil engineers. Use the best brains in the country and, hopefully, they will do what is in the best interest of the country," Gheit says. "Otherwise, there's an impression that American companies are telling Iraqis what to do."

While acknowledging that Iraq needs foreign investment to help modernize its oil industry, Gheit said the oil law won’t ease the concerns of international companies who are reluctant to send their engineers into a nation in turmoil. "It's very difficult for oil companies to recruit people willing to work in the Iraqi oil fields. It's mayhem," he says.

Mohammed al-Dynee, an Iraqi MP representing the Iraqi Front for National Dialogue, a Sunni group, is currently in Washington in an attempt to persuade Congress to drop calls for the oil law. “The U.S. talks about the sovereignty of Iraq, but why are they getting involved in this oil law?" he says. "Even if this law can pass, which I doubt, it will remain ink on paper and will not be implemented on the ground."

Iraq not yet negotiating with oil majors

This is from a Dubai newspaper via Reuters.


Iraq says not negotiating with oil majors yet. Although there are no negotiations there are memoranda of agreement and the former Russian agreement has been jettisoned. It remains to be seen if the law can get through parliament by the end of May. There is still no official release of the text to the media it seems. Imagine a bill as important as this not even publicly discussed. It is also not really discussed much in western media. I wonder why! The earlier leaked version was not discussed at all except in the blogosphere. What a poor excuse for a free press we have. It is free entertainment--well no you have to watch endless mind numbing ads.
(Reuters)

15 March 2007



VIENNA - Iraq is not conducting negotiations yet with major oil companies on new oilfield developments, although they wait keenly in the wings, Iraqi Oil Minister Hussain al-Shahristani said on Thursday.


He said that Baghdad was waiting first for its new oil sector law to pass through parliament.

“We are not negotiating with any major oil companies for the time being, we are waiting for the hydrocarbons law to be enacted by the parliament,” Shahristani said.

He repeated that the law was likely to be passed before the end of May. Iraq plans to tender for major oil projects in the second half of the year, he added.

“Meanwhile almost all the major oil companies have indicated interest to come and work in Iraq, we have MOUs with almost all of them,” the minister added.

“They are preparing themselves but there is no negotiation about the development of any particular field,” he said.

Memorandums of Understanding have been in place for several years with majors, who have expressed their interest in specific fields.

The new law will create the Iraq National Oil Company (INOC) which will be responsible for prized oilfields that are already discovered and producing.

These oilfields, such as West Qurna, Majnoon and Bin Umar are coveted by the majors.

Under Saddam Hussein a Russian consortium headed by LUKOIL LKOH.RTS had signed a deal to develop West Qurna, although that was cancelled by Iraq in 2002.

Iraq is also reviewing a deal to develop the Al-Ahdab field that had been signed with the China National Petroleum Corp 0135.HK and China’s state arms manufacturer Norinco.

France’s Total TOTF.PA has initialled deals for Majnoon and Bin Umar.

Shahristani said production sharing contracts, favoured by majors, had not been proposed yet as an investment model.

“We are not discussing that form of contract yet,” he said. Production sharing deals are not favoured by producing countries keen to maintain as much control as possible over their energy assets.

“The law has left this (the investment model) open for INOC to decide what is the best for the interests of Iraq for the development of any field,” he said, speaking before the start of an OPEC meeting.



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Hardly news. Iraq is about oil.

The actual article is old, from last December but it is worth reminding people from time to time since articles about the new oil law are notably missing from most of the large dailies. The actual law was secret and still has not been released to the media. A leaked copy was translated and widely circulated on the internet but there is deafening silence in the mainstream press. There was virtually nothing until the Iraqi cabinet approved the law and there has been almost nothing since as it goes before parliament. Apparently no one thinks it odd that a supposedly democratic government refuses to give to the public a key document that will determine the future of Iraq to a considerable extent, a document that was prepared at the behest of and no doubt with the guidance of the US and UK occupiers.

This Month Iraq's Government May Sign Long-term Agreements Giving Big Western Companies Control of Its Oil Resources; Do You Think That Has Any Bearing on White House Decisions About Iraq?
By Joe Rothstein
Editor, USPolitics.einnews.com
December 1, 2006

Iraq has the second largest proven oil reserves in the world. Many experts believe Iraq actually is #1, and that serious exploration in its western sands would turn up enough oil for Iraq to surpass Saudi Arabia.

Petroleum analysts believe that when Iraq is fully explored, its reserves will represent 25-30% of the entire world's supply.

Not only is Iraqi oil plentiful, it's close to the surface and easy to extract, making it all the more profitable. Under normal conditions, oil companies can produce a barrel of Iraqi oil for less than $1.50 and possibly as little as $1, including all exploration, oilfield development and production costs. Contrast that with other areas where oil is considered cheap to produce at $5 per barrel or the North Sea, where production costs are $12-16 per barrel.

As part of the community of energy producing nations of the world, Iraq should be a star player. In the hands of the bad guys of the world, Iraqi oil wealth could finance considerable deadly mischief.
But in all the talk about resolving the Iraqi tragedy o-i-l has become something of an unmentionable three-letter word.

The Iraqis certainly know the score. A recent poll showed that when asked what Iraqis thought were the three main reasons why the United States invaded Iraq, 76% gave "to control Iraqi oil" as their first choice.

For years the White House has been fending off the "O" word, fearful of playing into the "blood for oil" scenario painted by many of those who opposed the invasion.

But in the heat of the recent political campaign, Bush was reaching for arguments to justify his Iraqi policy to skeptical voters, and finally added oil to the list.

"You can imagine a world in which these extremists and radicals got control of energy resources," Bush said at a campaign rally. "And then you can imagine them saying, 'We're going to pull a bunch of oil off the market to run your price of oil up unless you do the following. And the following would be along the lines of, well, retreat and let us continue to expand our dark vision."

At another campaign stop, Bush said extremists controlling Iraq "would use energy as economic blackmail" and try to pressure the United States to abandon its alliance with Israel. He suggested that such radicals would be "able to pull millions of barrels of oil off the market, driving the price up to $300 or $400 a barrel."

Maybe. Maybe not. After all, Iran has a lot of oil, too, and it's a big part of Bush's "axis of evil." But Iran keeps selling oil because it needs to finance its government and support its people. Hugo Chavez in Venezuela considers Bush the devil incarnate. ("I can still smell the sulfur"). But Chavez is selling heating oil at a discount in the U.S. to embarrass Bush, not blackmail him.

Maybe Iraq would be different if anti-American insurgents got their hands on the oil. But here's a more likely scenario. Our troops will stay in Iraq indefinitely to protect oil production and distribution, because the U.S. and other western countries, through their big oil companies, will control Iraq's resources. It's not conceivable that the U.S., Britain and others with such huge financial interests will give them up.

Under intense U.S. pressure, Iraq's government is faced with a December deadline to come up with an oil policy that favors big U.S. oil companies. Not only is the pressure on for Iraq to deal with the major oil companies of the West, but to sign agreements that will give those companies control of Iraq's oil for a very long time.

The White House effort to control Iraqi oil began in 2002 with a "Future of Iraq" project, bringing together influential exiled Iraqis with U.S. government officials and oil company consultants. Some of the exiles became part of the Iraqi government. The result of the project's work was a draft framework for Iraq's oil policy recommending a major role for foreign companies, through long-term contracts--an approach different than other Middle Eastern countries where major oil producers keep their oil in the public sector.

Oil accounts for more than 90% of Iraqi government revenue. If the Iraqi government signs on to agreements being pursued by the U.S. government, contracts with western oil companies will not be reversible. They will control Iraq's income and future.

Maybe that's not such a bad thing. The U.S. depends on foreign oil for more than half of its energy supply. Having western oil companies in control, managing a rational flow of oil from one of the world's richest oil sources could be seen as a positive outcome to our Iraqi adventure---certainly when compared with many potential alternatives.

Whether you agree with the Bush administration's efforts to corner Iraqi oil for the long term, or not, the fact is that oil plays a huge role in White House decision-making about the region. To deny that is to ignore the 800 pound guerilla occupying the stool in the middle of the room. And since we hear virtually nothing about this from those in our government, or our media, that's exactly what everyone seems to be doing.







Joe Rothstein, editor of US Politics Today, is a former daily newspaper editor and long-time national political strategist based in Washington, D.C.

Time Mag on the new Iraq oil law

This is not a bad article considering it comes from Time, but it contrasts with the Escobar article that goes into detail about the secrecy and the actual involvement of foreign oil executives and IMF and US and UK governments. Time is not just mum about this but quotes as saying that the oil companies are laying low! So low that Time cant even see them!

Barely two days have passed since Iraq's Prime Minister Nouri al-Maliki hailed the country's new petroleum law as a "solid base for unity of all Iraqis" — a rare boast these days. President Bush has also trumpeted it as proof that Iraq has a viable future. But parliamentarians and Iraq's oil unions have already begun mobilizing against the draft legislation, arguing that it is a desperate attempt by al-Maliki's government to satisfy Western demands, which could damage Iraq's economic future and speed the country's ultimate disintegration.

The law is a dramatic break from the past. Foreign oil companies will have a stake in Iraq's vast oil wealth for the first time since 1972, when Iraq nationalized the oil industry. In theory, that could finally fix Iraq's shambolic oil sector, whose infrastructure has been crippled by decades of wars and sanctions. Production these days hovers around 2 million barrels a day, a big drop from Iraq's prewar peak of more than 3 million barrels a day.

But political infighting could yet scuttle the deal once it goes to a vote in parliament, perhaps in early March, say the law's detractors. "The feeling is that the law is focused very much on sectarianism," says Saleh al-Mutlaq, who heads the National Dialogue Front, a small secular party with 11 seats in parliament. "It divides the country and the wealth into groups — Kurds, Sunnis, Shi'ites," he said on the phone from Amman on Tuesday.

Some Sunni groups fear that their less oil-rich areas could lose out when Iraq's potentially huge wealth is distributed. The ability of regions to sign their own contracts was bitterly argued for months by negotiators from Kurdistan, where there is deep distrust of Baghdad's politicians. Under the law, companies can deal with both the central Ministry of Oil, as well as regional entities. But that concession has provoked intense anxiety that Iraq could break apart, if some regions — or perhaps even powerful Shi'ite clans in southern Iraq — calculate that they can finance autonomous states from their massive oil deposits.

Billions of dollars — and Iraq's future — are at stake. Virtually all the revenues Iraq has to rebuild its shattered economy will come from its mammoth energy deposits — some of the world's biggest untapped reserves — of about 115 billion barrels of oil and about 110 trillion cubic feet of natural gas. In addition, Iraq's major creditors have made clear they expect a working oil industry, as a precondition for forgiving billions of dollars in Iraqi debt incurred largely by Saddam Hussein's wars against Iran and Kuwait and by his mega-splurging at home.

Under the new law, agreed on Monday by Iraq's cabinet, foreign oil companies will be allowed to cut long-term exploration and development deals with the government for 20 years, renewable for a further five years. Companies willing to operate in a country with high physical risks — insurgents regularly blow up pipelines and kill contractors — will be allowed to export their oil after paying the government a minimum 12.5% royalty, although there are usually also cash signing bonuses to the government, and most "profit oil," extracted after operating costs are met, would likely go to Baghdad. Regional governments — only Kurdistan has one right now — can sign their own contracts under the law, a dizzying change from decades when Saddam dictated the terms and stifled oil production in Kurdistan. A Baghdad-based Federal Council on Oil & Gas will be formed; it will have 60 days to appoint a team to arbitrate a contract, if it has strong concerns.

Despite the grumbling from politicians, it is still unclear whether opposition to the law is strong enough to kill it. Among the parliamentarians arguing against the law are Moqtada al-Sadr's bloc, which fears that foreign oil companies will move into Iraq in force, and stay long after U.S. soldiers have left. But logistically they will have to race back to Baghdad to vote against it. Many parliamentarians, like al-Mutlaq, spend much of their time outside Iraq — al-Sadr himself is frequently in Iran. "I'm going back for this very reason," al-Mutlaq says. "We cannot yet figure out how many people will stand against it." He says he is certain he will find allies among his colleagues, who he says believe that the law is geared to the needs of Western oil companies rather than Iraqis. There has been no public hearing on the draft, whose details have largely been kept secret. Iraqi lawmakers fumed last July when U.S. Energy Secretary Samuel Bodman discussed the draft during a trip to the region, "when hardly a single parliamentarian had seen it," says Kamil Mahdi, an Iraqi who is senior lecturer in Middle East economics at the University of Exeter in Britain, and who spent Tuesday discussing the law by phone with several parliamentarians. He said several believe that the government should wait until the war ends before locking Iraq into long-term deals with foreigners, he says. "This draft is totally out of synch with any notion of the interests of Iraq," he says.

The rumblings of opposition go beyond parliament to the oil fields themselves. Iraq's biggest oil unions, which could potentially disrupt production, have been among the law's strongest opponents. Hassan Jum'ah Awwad Al-Asadi, head of Iraq's Federation of Oil Unions, the largest union group, says he intends to mobilize his 23,000 or so members against the draft. "We want a new, different law, which will be in the interests of Iraqis," he said by phone from Basra on Wednesday. "If there is no solution we can stop production, stop exports." In a more threatening tone, he told union members at a conference on the law in Basra in early February: "We strongly warn all the foreign companies and foreign capital in the form of American companies against coming into our lands under the guise of production-sharing agreements."

The view inside the negotiating room, through months of wrangling over the law, was starkly different. At least one person who sat through the talks said he was amazed to find that U.S. officials and diplomats appeared to lie low, perhaps because they were overwhelmed by fighting the war. "The U.S. was so afraid to be seen to be meddling in Iraq's oil that they took a backseat," says Jonathan Morrow, legal adviser to the Kurdistan Regional Government and a former senior legal adviser to the U.S. Institute of Peace in Washington. Rather than simply satisfying oil companies, the new law "offers oil companies risk and reward" deals, which are necessary to attract the multibillion-dollar investments needed for companies to create new fields and extract large quantities of oil, Morrow says. "It's very obvious to me that oil companies, including large ones, are following these negotiations closely, looking for a clear legal regime for Iraq." But before they find clarity, they are likely to be looking at some fiery arguments in Iraq's parliament.