PAY DAY FINALLY COMES TO IRAQ

From Asia Times
Pepe Escobar

• On Monday, Prime Minister Nuri al-Maliki's cabinet in Baghdad approved the draft of the new Iraqi oil law.

• The key point of the law ... will be under the iron rule of a fuzzy "Federal Oil and Gas Council" boasting "a panel of oil experts from inside and outside Iraq". That is, nothing less than predominantly US Big Oil executives.

• it represents the death knell of nationalized (from 1972 to 1975) Iraqi resources, now replaced by production sharing agreements (PSAs) - which translate into savage privatization and monster profit rates of up to 75% for (basically US) Big Oil.

• Sixty-five of Iraq's roughly 80 oilfields already known will be offered for Big Oil to exploit.

• Oil wealth, in theory, will be distributed directly to Kurds in the north, Shi'ites in the south and Sunnis in the center. For all practical purposes, Iraq will be partitioned into three statelets.

• The approval of the draft law by the fractious 275-member Iraqi Parliament, in March, will be a mere formality.

• The law was in essence drafted, behind locked doors, by a US consulting firm hired by the Bush administration and then carefully retouched by Big Oil, the International Monetary Fund, former US deputy defense secretary Paul Wolfowitz' World Bank, and the United States Agency for International Development.

• It's virtually a US law (its original language is English, not Arabic).

• Scandalously, Iraqi public opinion had absolute no knowledge of it - not to mention the overwhelming majority of Parliament members.

• the pro-US Kurds will have all the power to sign oil contracts with whatever companies they want.

• Sunnis will be more dependent on the Oil Ministry in Baghdad. And

• Shi'ites will be more or less midway between total independence in the south and Baghdad's dictum (which they control anyway).

• But the crucial point remains: nobody will sign anything unless the "advisers" at the US-manipulated Federal Oil and Gas Council say so.

• According to the International Energy Agency, PSAs apply to only 12% of global oil reserves, in cases where costs are very high and nobody knows what will be found

• No big Middle Eastern oil producer works with PSAs.

• Russia and Venezuela are renegotiating all of them.

• Bolivia nationalized its gas.

• Algeria and Indonesia have new rules for future contracts.

• Gargantuan profits under the PSA arrangement are in a class by themselves. Iraqi oil costs only US$1 a barrel to extract.

• What revenue the regions do get will be distributed to all 18 provinces based on population size

From Foreign Policy in Focus
Antonia Juhasz and Raed Jarrar

From Reuters

Edward Wong writes in the Times that

• Highlights of the draft oil legislation include the pooling of revenues in a central account, to be distributed to each province, allegedly on a per capita basis;

• regional authority to sign international contracts, subject to review by a central board; and

• the allowing of controversial production-sharing agreements, arrangements which some have called too generous to foreign oil companies.

• Iraqi National Oil Company (INOC) will be spun off as a private company, presumably to compete with foreign concerns over oil rights, to which it once had exclusive access.

• The draft law now passes to the parliament for its approval. Iraq’s political parties setting a May 2007 deadline for passage, but debate could be intense.

• International giants are circling, eager to tap Iraq’s vast reserves but still unsure about the legal and security issues concerned.

ON THE OTHER HAND

From Informed Comment

Note that contrary to US hopes, it does not privatize petroleum, putting it under a government holding company instead. Receipts go to a government account for distribution to the population, a la Alaska. Some critics believe it will make possible deals that are overly generous to the oil companies and which essentially cheat Iraqis, given that the present government is desperate to jump-start new development and foreign companies won't try to operate in blood-soaked Iraq unless the deal is sweetened enormously. On the other hand, Husayn Shahristani, the oil minister, is an Iraqi nationalist close to Grand Ayatollah Sistani, and had no motivation to see Iraq cheated. I will try to get some readings from oil industry experts and report back.

From Missing Links