Iraq to award oil contracts to foreign firms

Iraq to award oil contracts to foreign firms

Jun 22 09:17 AM US/Eastern

Iraq will award contracts to 41 foreign oil firms in a bid to boost production that could give multinationals a potentially lucrative foothold in huge but underdeveloped oil fields, an official said on Sunday.


"We chose 35 companies of international standard, according to their finances, environment and experience, and we granted them permission to extract oil," oil ministry spokesman Asim Jihad told AFP.
Six other state-owned oil firms from Algeria, Angola, Pakistan, Thailand, Turkey and Vietnam will also be awarded extraction deals, Jihad said.

The agreements, to be signed on June 30, are expected to be short-term arrangements although the ministry has yet to provide a timeframe.

The deal paves the way for global energy giants to return to Iraq 36 years after late dictator Saddam Hussein chased them out, and is seen as a first step to access the earth's third largest proven crude reserves.

"They will have the first right to develop the fields," said Jihad, adding that competitive bidding would come later once the nation's long-delayed hydrocarbon law is passed by parliament.

Iraq wants to ramp up production by 500,000 barrels per day from the current average production of 2.5 million barrels per day (bpd), a level about equal to before the US-led invasion in March 2003.

Monthly exports of 2.11 million bpd currently form the bulk of the war-torn nation's revenues, and the oil ministry is keen to raise capacity over the next five years to 4.5 million barrels per day.

Iraq's crude reserves are estimated at about 115 billion barrels, but it is sorely lacking in infrastructure and the latest technology to which it was denied access under years of international sanctions after the 1991 Gulf War.

Before major investment is injected, the Baghdad parliament would also first have to finalise a controversial oil law considered by Washington as a key step towards national reconciliation.

The proposed law stipulates a fair distribution of oil revenues between Iraq's 18 provinces, a sensitive matter in a country wracked by inter-ethnic violence.

Oil Minister Hussein al-Shahristani said in February that he hoped an oil law would be finalised this year, but officials have said little progress has been made.

One major concern is whether the autonomous Kurdish region of northern Iraq will share revenues.

The Kurdish regional government has signed 15 exploration and export contracts with 20 international companies since passing its own oil law last August, infuriating the Baghdad government.

Stipulating how foreign investment will be governed is also critical amid concerns that Iraqi oil revenues will be squeezed by large oil firms granted special treatment with the help of the US government.

Multinationals involved in the current deals will be focused on fields in the north and the south where wells already exist, thus requiring minimal additional investment, and skirting around the national oil law.

These agreements will be announced alongside technical support agreements (TSAs) with five foreign oil majors.

They cover Kirkuk field (Shell), Rumaila (BP), Al-Zubair (ExxonMobil), West Qurna Phase I (Chevron and Total), Maysan province development (Shell and BHP Billiton) and the Subba and Luhais fields (Anadarko, Vitol and the UAE's Dome), according to a previous media report.

"The execution will be carried out by Iraqi staff while companies will provide expertise and the machinery," said Jihad, who stressed that these were not investment contracts.

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Forums Link and Discussion.

Here's a little different perspective, from the New York Times. They didn't find the diversity of bidders described in the above article. (Cityboy, can you cite a source?) I wonder which perspective is correct?

I've excerpted, and bolded, what I found interesting. Read the whole NYT article for a better picture.

It looks to me like like the Iraq Petroleum Co, the pre-Saddam consortium of multinationals who ran Iraq oil in the past, were just now given back what Saddam nationalized away from them years ago.

It appears that beyond these four multinationals plus one other consortium, the other bidders may be just window dressing.

A second article I cited below takes a much more radical view, it says these four will be the only ones invited to implement the industry plans that they presently, as insiders, are writing for the whole country.

Please don't jump and say I believe everything I read. I don't. Rather, I think we all need to consider the various views available, before we can understand what is going on here. I would like to read other articles that shed some light on the situation.

I am at the stage of exploratory research, not dictating a doctrine. Don't bother quoting other articles that don't get beyond name-calling.

Again, my quotes here are a cut-n-paste to bring attention to the issues. I recommend reading the original articles.

------- begin quote (this is the same article thcri posted on 6/18 and just now referenced) ---------
NYT: Deals With Iraq Are Set To Bring Oil Giants Back, Rare No-Bid Contracts...

Deals With Iraq Are Set To Bring Oil Giants Back.

Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts

There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. .... It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq’s Oil Ministry.

For the American government, increasing output in Iraq, as elsewhere, serves the foreign policy goal of increasing oil production globally to alleviate the exceptionally tight supply that is a cause of soaring prices.

The Iraqi Oil Ministry, through a spokesman, said the no-bid contracts were a stop-gap measure to bring modern skills into the fields while the oil law was pending in Parliament.

It said the companies had been chosen because they had been advising the ministry without charge for two years before being awarded the contracts

... an authority on Middle East oil at Cambridge Energy Research Associates, said ... The current contracts, she said, are a “foothold” in Iraq for companies striving for these longer-term deals.

The contracts, the two oil company officials said, are a continuation of work the companies had been conducting here to assist the Oil Ministry under two-year-old memorandums of understanding. The companies provided free advice and training to the Iraqis. This relationship with the ministry, said company officials and an American diplomat, was a reason the contracts were not opened to competitive bidding.

A total of 46 companies, including the leading oil companies of China, India and Russia, had memorandums of understanding with the Oil Ministry, yet were not awarded contracts.


... in a twist of corporate history for some of the world’s largest companies, all four oil majors that had lost their concessions in Iraq are now back.

[ExxonMobil] is clearly aware of the history. ... the former chief executive of Exxon, Lee Raymond, praised Iraq’s potential as an oil-producing country and added that Exxon was in a position to know. “There is an enormous amount of oil in Iraq,” Mr. Raymond said. “We were part of the consortium, the four companies that were there when Saddam Hussein threw us out, and we basically had the whole country.”
-----end quote -------

And now for the outraged radical perspective. I wonder if he's right. We don't presently know enough to validate his opinion, but I have a hunch that he is correctly predicting who will be in the driver's seat five years from now:

---------begin quote. Commenting on the above article... -------

Huffington Post: ExxonMobil Gets the Oil

U.S. oil companies with close ties to the Bush administration have used the leverage of the military occupation to muscle out competitors and win no-bid contracts to exploit Iraq's vast oil reserves. "A total of 46 companies, including the leading oil companies of China, India and Russia, had memorandums of understanding with the Oil Ministry, yet were not awarded contracts."

[The NYT article] goes on to point out that "in a twist of corporate history for some of the world's largest companies, all four oil majors that had lost their concessions in Iraq are now back." Kramer ends the story with a quote from the former chief executive of ExxonMobil, Lee Raymond, (who recently retired with a $600 million golden parachute), saying in a fleeting fit of honesty: "There is an enormous amount of oil in Iraq. We were part of the consortium, the four companies were there when Saddam Hussein threw us out, and we basically had the whole country."

So there you have it.

The oil conglomerates that were tossed out when the Baathist regime nationalized Iraq's oil industry are today back in place with the help of 140,000 American soldiers and $750 billion from the American taxpayer.

But the Iraq war had nothing to do with oil, right?

Can we all finally accept the facts, which the Senate Intelligence Committee and Scott McClellan most recently confirmed, that the Bush Administration lied to the American people about its true motives in attacking Iraq and that one of the major hidden objectives was the control of Iraq's oil reserves for U.S. companies intimately intertwined with Bush and Cheney and the Republican Party?

----end quote----

And another commentary on the NYT article:

--------begin-------
YahooNews: Contracts confirm earlier suspicions

Didn't you just know this was coming?

A consortium of Western oil companies -- the very definition of Big Oil -- is on the verge of receiving no-bid contracts in Iraq, giving them access to one of the most sought-after prizes in the petroleum industry, according to The New York Times. Can it be mere coincidence that the leading companies in the deal -- ExxonMobil, Shell, BP and Total -- are the very same companies that Saddam Hussein threw out

The American public has been reassured, repeatedly, that petroleum had absolutely nothing to do with the Bush administration's decision to invade Iraq. President Bush, the oilman from Texas, has scoffed at the idea. So has Vice President Dick Cheney.

While I never believed that oil was the only reason for toppling Saddam, my critics weren't willing to concede petroleum played any role. ("The Bush administration is saturated with oil industry bigwigs. ... Their natural mindset is to assume that oil must be consumed ever more abundantly, even if that means going to war to preserve access to the supply," I wrote.)

Yet, despite the vociferous denials, the four original partners of the Iraq Petroleum Co. (a misnomer, since all the companies are multinationals based in the United States or Western Europe) are about to receive contracts that allow them to service the fields in the country with the world's second-largest proven oil reserves. According to The New York Times, these are service contracts -- paying the companies for their work -- instead of the more lucrative licenses for oil deposits. But the contracts will give the global oil giants a leg up on more lucrative deals later on.

"It's been a long road, but the oil companies seem set to get much of what they have been seeking," said James Paul, executive director of the Global Policy Forum. "The Iraqi public is overwhelmingly opposed to this privatization of Iraqi oil, just like they are overwhelmingly opposed to the so-called security pact with the U.S."

Not that the opinions of Iraqis matter to everybody.

There is a rather significant segment of Americans who believe that we have a God-given right to take what we want (though they'd never be so forthright in saying so). The United States is the world's remaining superpower; we have the biggest, baddest military. A belief in American exceptionalism leads some of us to think that we should stand astride the globe.

Writing in the London Review of Books in October 2007, American journalist Jim Holt observed that "the U.S. may be 'stuck' exactly where Bush et al want it to be," in a country with as much as 300 billion barrels of undiscovered oil reserves.

---And finally---
YahooNews: Why doesn't the press ever talk about Oil?

Today, the major American oil companies came back into Iraq by getting ... you guessed it ... no-bid contracts! In fact, the four major oil companies that were thrown out by Saddam Hussein 36 years ago made their triumphant return to occupied Iraq.

Former chief executive of Exxon, Lee Raymond, explained the history behind it. "There is an enormous amount of oil in Iraq," he said. "We were part of the consortium, the four companies that were there when Saddam Hussein threw us out, and we basically had the whole country."

Do Americans realize that the whole rest of the world, including Iraq, is absolutely convinced we went in for the oil? That doesn't mean it's true, but maybe we might want to look into it.

And now Exxon-Mobil is sitting back on top of its perch. Saddam is gone, and they once again control the oil in Iraq. And they got there through no-bid contracts. In case, you're wondering if there was a shortage of companies who wanted to bid on these projects, there were over 40 of the largest oil companies in the world who wanted to bid and were not allowed.

Well, congratulations, you now have it back! Mission accomplished!

One of the principal problems with American media now is that they have become far too credulous. They take government slogans and propaganda and print it in their papers and repeat it on their networks as if they have some golden touch of credibility. It's not just that they can't see that the government might be lying about its real aims, it's that they view the government as the most legitimate source of news. This turns the point of the press on its head. You're supposed to challenge the government, not help it by printing out its press releases.

There is a reason to challenge the government. It isn't to be unpatriotic. It's to help the country by keeping a check on government power.

-----end quote, see the original article for the rest of it. ---

California said:

(this is the same article thcri posted on 6/18 and just now referenced)

Click to expand...

California said:

Can we all finally accept the facts, which the Senate Intelligence Committee and Scott McClellan most recently confirmed, that the Bush Administration lied to the American people about its true motives in attacking Iraq and that one of the major hidden objectives was the control of Iraq's oil reserves for U.S. companies intimately intertwined with Bush and Cheney and the Republican Party?

Click to expand...

My whole intent of posting the original article was to see what the MSM was going to do with it. I kind of thought the original article was going to bring up the conversation of "Bush went to Iraq for oil" and the MSM was going to jump all over this. They did

California said:

(Cityboy, can you cite a source?)

Click to expand...

http://www.breitbart.com/article.php?id=080622113024.5rfe5v9s&show_article=1