U.S. Rule Would
Privatize Iraq Oil

To date, all legislation calling for withdrawal from Iraq includes approval by the Iraq parliament of an oil law as a major benchmark before withdrawal can begin. However, the media is not telling us about the contents of this law and most people are unaware of its significance.

This law was essentially drafted in Washington and is meant to privatize the Iraq oil industry. In the past, Iraq oil revenues paid for modern infrastructure, education, health care, and many other citizen benefits. Ask your congressional delegation how Iraqis are to rebuild their country if they lose access to their oil revenues, and demand that they remove the benchmark for the oil law. This may allow the Iraq parliament to defeat the law and introduce one that will benefit their country.

The oil law is around 30 pages and has 40 articles. It may be found at www.iraqoillaw.com.

Here are a few of the main points:

The Iraq National Oil Company would have exclusive control of just 17 of Iraq’s 80 known oil fields, leaving two-thirds of known, and all of its yet undiscovered fields open to foreign control. This company will have representatives from the foreign oil companies on its board who will have a say in approving their own contracts.

Iraq will not be able to control the levels—the limits of production—which means it cannot be part of OPEC any more. The foreign companies would not have to invest earnings in the Iraq economy, partner with Iraq companies, hire Iraqi workers or share new technologies.

Saudi Arabia and Iran, the world’s number one and two oil exporters, tightly control their industries through state-owned companies, as do most members of OPEC. They all use foreign companies only to carry out specified services under contract for a limited period of time and for a fixed fee. This system is currently in place in Iraq.

However, under the oil law, international oil companies could be offered Product Sharing Agreements, which would allow them to sign deals of up to thirty years to extract oil. PSAs allow a country to retain legal ownership but give a share of the profits to the international oil companies that invest in infrastructure and operation of the wells, pipelines and refineries. In Russia, where political upheaval was followed by rapid opening up of industry to the private sector in the 1990s, PSAs have cost the state billions of dollars.

The law will also allow all of the regional and small provincial authorities to deal with oil, instead of giving this final say to the central government, thus opening the doors to splitting Iraq into three regions.

Valerie Mullen

Vershire