THE WISDOM FUND: News & Views
June 20, 2008
The Independent (UK)

Oil Giants Return To Iraq

Shell, BP, Exxon Mobil and Total set to sign deal with Baghdad

by Patrick Cockburn

Nearly four decades after the four biggest Western oil companies were expelled from Iraq by Saddam Hussein, they are negotiating their return. By the end of the month, Royal Dutch Shell, BP, Exxon Mobil and Total will sign agreements with the Baghdad government, Iraq's first with big Western oil firms since the US-led invasion in 2003.

The deals are for repair and technical support in some of the country's largest oilfields, the Oil Ministry in Baghdad said yesterday. The return of "Big Oil" will add to the suspicions of those in the Middle East who claimed that the overthrow of Saddam was secretly driven by the West's desire to gain control of Iraq's oil. It will also be greeted with dismay by many Iraqis who fear losing control of their vast oil reserves.

Iraq's reserves are believed to be second only to Saudi Arabia in the Middle East, but their exploitation has long been hampered by UN sanctions, imposed on Iraq after Saddam Hussein invaded Kuwait in 1990. . . .

For the four oil giants, the new agreements will bring them back to a country where they have a long history. BP, Exxon Mobil, Total and Shell were co-owners of a British, American and French consortium that kept Iraq's oil reserves in foreign control for more than 40 years.

The Iraq Petroleum Company (once the Turkish Petroleum Company) was formed in 1912 by oil companies eager to grab the resources in parts of the Ottoman Empire.

The company was formalised in 1928 and each of the four shareholders had a 23.75 per cent share of all the oil produced. The final 5 per cent went to Calouste Gulbenkian, an Armenian businessman.

In 1931, an agreement was signed with Iraq, giving the company complete control over the oi fields of Mosul in return for annual royalties. After Saddam's coup in 1958, nationalisation came in 1972.

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Enver Masud, "A Clash Between Justice and Greed, Not Islam and the West," The Wisdom Fund, September 2, 2002

Lutz Kleveman, "The New Great Game," Guardian, October 20, 2003

Patrick Cockburn, "Revealed: Secret Plan to Keep Iraq Under U.S. Control," Independent, June 5, 2008

Cynthia Tucker, "Big Oil's slick no-bid contracts will keep us mired in Iraq," Atlanta Journal-Constitution, June 22, 2008

Tom Engelhardt, "Media Tell Us About Iraq War-Oil Connection Five Years After the Fact," Tomdispatch.com, June 25, 2008

Bill Moyers and Michael Winship, "It Was Oil, All Along," truthout.org, June 28, 2008

Andrew E. Kramer, "U.S. Advised Iraqi Ministry on Oil Deals," New York Times, June 30, 2008

[And not only have companies like BP and Texaco been offered these no-bid contracts, but what's strange about it is that they're service contracts, and these are not oil service companies. So what's significant about these contracts is that they appear to be giving these oil companies the right of first refusal on future, more significant contracts. So, one week after these smaller service agreements were announced, the Iraqi Oil Ministry announced that they also will be handing out longer-term management agreements, which will give oil companies the ability to manage existing fields in Iraq and hold onto 75 percent of the worth of those contracts and leave only 25 percent for Iraqis, which is absolutely unheard of in the region, where 51 percent for the country is the baseline for new exploration, for new fields. These are existing fields. They're already working. The technology is already there. And these foreign companies are going to be taking 75 percent of the worth of those existing fields in Iraq. So it's daylight robbery. It's armed robbery--"Naomi Klein Reexamines 'The Shock Doctrine'," democracynow.org, July 15, 2008]

[President Bush says the Iraq war is not about oil but his actions belie that claim. In the months before the March 2003 invasion, members of the U.S. State Department "Oil and Energy Working Group" met to plan how to open Iraq to international oil companies. The oil law now proposed by the Iraqi Council of Ministers is a virtual photocopy of a plan first drafted by U.S. oil industry executives and consultants in Houston long before Iraq was "liberated."

Giving credence to Iraqis' fears, the oil law presented to the Iraqi Parliament, if enacted, would put effective control of most of Iraq's vast oil resources into the hands of foreign companies. Despite great pressure from the U.S. for its adoption, the law remains stalled in the Iraqi Parliament because a majority clearly oppose it. Prior to the first Gulf war and the sanctions that followed, Iraq's oil, nationalized since 1975, provided the foundation for a relatively good standard of living, producing a high level of literacy, the largest number of engineers per capita in the Arab world and a health care system considered the best in the region.

The proposed oil law creates a Federal Oil and Gas Council on which would sit representatives of Exxon-Mobil, Shell, BP, etc., whose tasks include approving their own contracts. . . .

One Iraqi oil company manager previously employed by Shell told her, "I see the future of Iraq as the United Arab Emirates... separate states."

The draft oil law provides for "production sharing agreements," or long-term contracts whereby foreign companies would control production, development and sale of the oil for up to 30 years, and reap as much as 70% of the profits. --Nancy Wohlforth and Fred Mason, "The Draft Iraqi Oil Law: Making a Mockery of Sovereignty," Jurist, September 9, 2008]

Nick Turse, "Pentagon Hands Iraq Oil Deal to Shell," AlterNet, October 2, 2008

[. . . crude oil prices . . . are this high, and they are this volatile, because of deregulation, the exact same deregulation that fed the mortgage meltdown, the exact same deregulation that gave us Enron, if folks remember Enron, deregulation of crude oil futures markets led by the lobbying efforts of Big Oil and big banks, who are now reaping big benefits.

. . . campaign contributions are just the very tip of the iceberg. It really is lobbying, where the big money comes in. It's the front groups that you don't even know are associated with the oil industry, where the influence comes in.--"Antonia Juhasz on 'The World's Most Powerful Industry - What We Must Do to Stop It'," democracynow.org, October 7, 2008]

[Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces.--Terry Macalister and Nicholas Watt, "Iraqi government fuels 'war for oil' theories by putting reserves up for biggest ever sale," Guardian, October 13, 2008]

[International oil companies are preparing to go back into Iraq by the end of the year, in spite of Baghdad's failure to pass an oil law and continuing concerns over security.--Carola Hoyos, "Oil groups to end 40-year exile from Iraq," Financial Times, May 6, 2009]

Patrick Cockburn, "Iraqi Oil Minister accused of mother of all sell-outs," Independent, June 18, 2009

Patrick Cockburn, "Oil rush: Scramble for Iraq's wealth," Independent, June 21, 2009

[The award of contracts began in Baghdad yesterday and was broadcast live on television to show there were no secret corrupt deals. But the process was immediately in trouble as some of the 32 international oil companies involved baulked at the low level of fees they would be paid by Iraq. . . .

At stake yesterday were six producing oilfields and two undeveloped gas fields, the most important of which is the massive south Rumaila oilfield just north of the Kuwaiti border. The contract finally went to a consortium led by BP and included the China National Petroleum Company, but only after its initial bid, as well as that of a rival consortium led by Exxon Mobil, had been rejected by the Iraqi Oil Ministry as too low. Other fields attracted less interest.--Patrick Cockburn, "Bidding war for Iraq's huge oil contracts sputters into life: Government plays hardball in fees payable to international oil companies," Independent, July 1, 2009]

[Two years before the invasion of Iraq, oil executives and foreign policy advisers told the Bush administration that the United States would remain "a prisoner of its energy dilemma" as long as Saddam Hussein was in power.

That April 2001 report, "Strategic Policy Challenges for the 21st Century," was prepared by the James A. Baker Institute for Public Policy and the U.S. Council on Foreign Relations at the request of then-Vice President Dick Cheney.--Jason Leopold, "Eager to Tap Iraq's Vast Oil Reserves, Industry Execs Suggested Invasion," truthout.org, July 3, 2009]

Tom Doggett, "Pickens says U.S. firms 'entitled' to Iraqi oil," Reuters, October 22, 2009

[Now Mr. Galbraith, 58, son of the renowned economist John Kenneth Galbraith, stands to earn perhaps a hundred million or more dollars as a result of his closeness to the Kurds, his relations with a Norwegian oil company and constitutional provisions he helped the Kurds extract.--James Glanz and Walter Gibbs, "American Adviser to Kurds Stands to Reap Oil Profits," New York Times, November 12, 2009]

[Iraq is on course to overtake Iran as the holder of the world's second-largest proven oil reserves, solidifying its position as the energy industry's new frontier in the scramble to secure fresh resources.

Baghdad agreed on Friday to deals with Royal Dutch Shell and China's CNPC for two large oilfields, following on from similar accords with ExxonMobil, Eni and BP.--Carola Hoyos, "Iraq set to be second in oil league table," Financial Times, December 11, 2009]

[Cheney's and Rumsfeld's script was never supposed to develop like this. Instead of US Big Oil getting the lion's share, strategic competitors Russia and China turned out to be big winners.--Pepe Escobar, "Iraq's oil auction hits the jackpot," Asia Times, December 16, 2009]

Sinan Salaheddin, "Chinese-Turkish consortium seals Iraq oil deal," AP, May 17, 2010

[The map of the world's main energy suppliers is about to change as Iraq's oil output quadruples over the next 10 years according to new forecasts. Iraq will eventually displace Saudi Arabia as the world's biggest exporter, experts predict, giving Baghdad crucial influence over the future price of oil. . . .

Increased Iraqi output will total 7.5 million, far in excess of the expected increased production capacity of all of the rest of Opec. . . .

It has long been known that Iraq has vast oil reserves, mostly in the south of the country around Basra, but these have been under-exploited because international oil companies were locked out of Iraq after the nationalisation of oil by Iraq in 1972.--Patrick Cockburn, "Iraq looks to spectacular oil boom to revive its political fortunes," Independent, July 1, 2010]

Patrick Cockburn, "Exxon's deal with the Kurds inflames Baghdad," Independent, December 9, 2011

Greg Muttit, "'Fuel on the Fire": Author Greg Muttit on Oil and Politics in Occupied Iraq, Arab Spring'," democracynow.org, July 16, 2012

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