Global Policy Forum

Foreign oil companies continue to pressure the fragmented Iraqi government into handing over control of the country's vast oil sector "at a time when the Iraqi people are seeking to determine their own future while still under conditions of occupation." This Der Spiegel article draws attention to the murkiness surrounding the draft hydrocarbons law, which firms negotiated "behind closed doors" and with no input from those who stand to lose the most from the legislation – the Iraqi people. Though crucial for reconstruction and recovery, Iraq's oil industry may ultimately plunge the country deeper into social and economic turmoil.

The Iraqi Parliament is scheduled to pass a new oil law, which will give foreign oil companies control of Iraq's vast oil reserves and assure them huge profits. This Asia Times article argues that the US is maintaining troops in Iraq not for security reasons, but to protect Big Oil interests. The law, drafted by an Iraqi government committee, could also contribute to the escalation of sectarian violence as it proposes to centralize oil policy with the federal government.

In a joint statement, trade union leaders rejected plans to "hand control" over Iraq's oil production to foreign companies "whose aim is to make big profits at the expense of the Iraqi people, and to rob the national wealth, according to long-term, unfair contracts, that undermine the sovereignty of the state and the dignity of the Iraqi people." The US has repeatedly been calling for a law to encourage foreign investment in Iraq's oil.

The author of this Los Angeles Times piece argues that the US pursuit for control of oil in the Middle East continues to drive the Iraq war, citing recommendations from the Iraq Study Group as evidence. The study group has called on the US government to "assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise" and to "encourage investment in Iraq's oil sector by the international community and by international energy companies." The author points out that such recommendations reflect the US government's intention to privatize Iraq's currently nationalized oil industry, giving US corporations access to "the world's second-largest known oil reserves."

The semi-autonomous Kurdish region in northern Iraq has published the final draft of a petroleum law that, if passed, will place the provincial government at odds with the central government in Baghdad. This Radio Free Europe/Radio Liberty piece warns that the division of oil reserves between Iraq's provinces may become a "source of further instability" in a country already reeling from sectarian violence. The author concludes that partitioning the country into three autonomous regions – a Kurdish north, a Shiite south and a Sunni center – would further marginalize Sunni Arabs, who would be left with a "resource-poor" area of land, devoid of any natural resources.

The Big Four western oil giants hope to enter into Production Sharing Agreements (PSAs) with the Iraqi government to secure long-term control over the country's oil reserves. However, their share in Iraq's oil depends largely on the future of the Iraqi administration, and whether provincial governments will manage oil reserves within their region, or hand over control to the central government. As the author of this AlterNet piece concludes, Iraq and the US hold divergent views regarding Iraq's oil, with the majority of Iraqis believing that the US-led occupation was a manoeuvre to gain control of Iraqi oil.

The Iraqi government must finalize a law to regulate its oil industry by December 2006. This provision in the Iraqi constitution, inserted by the occupying powers prior to handing over "sovereignty" in June 2004, could see foreign multinationals assume control of as much as 87 percent of Iraq's oil. This AlterNet piece reveals that western oil companies, who were locked out of Iraq's oil sector for 12 years due to UN sanctions, seek to pressure the Iraqi government to pull out of the Organization of the Petroleum Exporting Countries (OPEC) and deal primarily with the Big Four oil giants in the US and UK.

This Carbon Web article warns that, if Iraq subjects its oil reserves to Production Sharing Agreements (PSAs) with multinational oil companies, it could follow the same fate as Russia – which remains at the mercy of European oil giant Shell, among others. Author Greg Muttit reveals that Russia's PSA contracts "were signed when the country was in a weak position," giving the multinationals unreasonably favorable terms. Muttit criticizes the current draft Iraqi oil law – drawn up by the US government and international oil giants – for its lack of input from the Iraqi parliament and the Iraqi people.

Iraqi Oil Minister Hussain al-Shahristani has announced his intention to discuss oil projects with China, Japan and Australia – a move that could shut out US oil giants from profitable post-war contracts in Iraq. The author of this Stratfor article suggests that countries such as China are more willing to send their firms into turbulent environments and do not face the same legal constraints as US firms. For reasons of "insurance, legal vulnerability and employee safety," US oil companies will hold off sending their employees into Iraq until a stable democratically elected government secures the country – a prospect that does not appear imminent.

Iraqi Oil Minister Hussain al-Shahristani has signaled that the race for oil deals worth US$20 billion could start within months. This Reuters article states that multinational companies have already started "maneuvering intently to win a stake in their oilfield of choice." Representatives from Shell, Exxon Mobil, BP, Total and Chevron have met with government officials to gain an edge over rival bidders when Iraq finally opens to investment. Such behind-the-scenes maneuvers have many critics worried that the final outcome will put Iraq's oil in the hands of the big Western companies.

This Carbon Web article looks at the Iraqi Oil Ministry plan to draft legislation governing the country's oil industry. Oil Minister Hussain al-Shahristani has requested comments and amendments from the US government, multinational oil companies and the IMF on the proposed hydrocarbon law which will privatize the energy sector and allow for greater foreign investment. US and Iraqi officials have excluded Iraqi civil society from participating in the process, since "most Iraqis consider oil a national asset which should remain in the public sector."

Iraq's Oil Minister Hussain al-Shahristani has signalled he will begin talks with major companies to develop the country's oilfields. Al-Shahristani said he has already met with officials from US and European oil giants during a visit to Washington. Many worry that such negotiations will conclude before the completion of an important hydrocarbon law, governing the country's huge oil sector. Any oil contracts signed prematurely will have a major bearing on Iraq's economy and politics for decades to come. (Reuters)

As the Iraqi Oil Minister prepares to draft legislation governing the country's huge oil sector, Niqash highlights the importance of involving unions. Since the US-led invasion of 2003, oil sector unions "have not enjoyed their legitimate rights," despite representing 70% of the labor force. As the author concludes, oil unions must participate "in political decisions relating to investment," and in the boards of directors of oil production companies in order to secure sufficient protection for workers.

This article warns against Iraq signing contracts with multinational oil companies before the restoration of full sovereignty and stability. Such contracts "could last for several decades" and would affect Iraq's "economy, development and politics." Looking at the history of such deal-making in the oil-producing world, author Greg Muttitt concludes that the Iraqi government should not make any moves until the end of the US-led occupation to ensure it "obtains a fair deal on its own terms." (Niqash)

BHP Billiton, the world's largest mining company, attempted to land a lucrative oil contract in Iraq just weeks after the outbreak of war in 2003. According to an Australian Royal Commission inquiry, the Anglo-Australian group held secret meetings in May 2003 to discuss lobbying US Vice President Dick Cheney for control of the Halfaya oil field in southern Iraq. The Independent describes the findings as "the most blatant evidence to so far emerge about Western businesses jockeying for a slice of Iraq's oil wealth."

Iraq's Oil Minister plans to enable the Iraqi government to sign "production sharing agreements" (PSA) with Western oil companies. Such agreements give the appearance of state sovereignty over natural resources, while in fact handing it over to foreign companies. Author Greg Muttitt argues that PSAs will negatively affect Iraqi employment and human rights and "sow the seeds of economic and political difficulties for years to come." (Niqash)

Iraqi-run website Niqash looks at the debate over the control of Iraq's oil sector, in particular the issues of federalism and privatization. Kurds oppose amending the oil-related articles of the Constitution, and call for greater regional autonomy. Others fear that too much decentralization could lead to "an uncoordinated and bureaucratic system." In addition, greater regional autonomy could end up transferring power - and more of Iraq's oil wealth "from public to private sector, and from Iraqis to foreign companies."

Iraqi Oil Minister Husayn al-Sharistani has announced a plan to draft legislation governing Iraq's oil sector within two months. The oil law will deal with potentially divisive issues of federalism and privatization – issues that could both "redraw the map and rewrite the history of Iraq." Author Greg Muttitt argues that the Oil Ministry should request and consider the views of political parties, civil society groups, experts and trade unions before deciding on the future shape of Iraq's oil industry. (Niqash)

While Baghdad negotiates a controversial national oil law, the Kurdish-administered northern region has signed numerous exploration and production contracts with foreign oil companies. Norwegian firm DNO has discovered new reserves, outside of Iraq's two main fields, and plans to begin production. Though the majors have been waiting for Baghdad to pass a national oil law, smaller firms such as DNO have eagerly signed contracts in the relatively peaceful Kurdish north. (Radio Free Europe/Radio Liberty)

With the Iraqi government preparing to draft the country's petroleum law, the US Agency for International Development (USAID) has sent a "petroleum adviser" to Iraq to help formulate oil- and energy-related legislation. The US government has emphasized foreign participation as the best way to develop Iraq's oil industry, and through its contract with the consultancy BearingPoint, USAID will "provide advice" on incorporating foreign investment in Iraq's petroleum law. Oil majors, such as Royal Dutch Shell, are eager to gain access to Iraqi oil and have approached the oil ministry about exploration and production contracts. (Dow Jones Newswires)

Kurdish leaders have begun making plans to create a Ministry of Natural Resources within the semi-autonomous Kurdish parliament. The Ministry would control oil and natural gas in three Kurdish provinces of northern Iraq, where officials have already contracted a Norwegian energy company to survey and drill for oil. Though the move does not violate Iraq's constitution, officials in Baghdad worry that the de-centralization of oil revenues and control may further weaken Iraq's national government. (Los Angeles Times)

In January 2005, conveniently after the December elections but before the appointment of a new Iraqi government, the International Monetary Fund (IMF) agreed to cancel 30% of Iraq's debt in exchange for Iraqi compliance with IMF conditioned economic policies. Nestled in the fine print, the agreement forces Iraq to pass an oil law by the end of 2006 and allow the IMF to help draft the law. With little public oversight or discussion, Iraq's Oil Ministry has begun negotiating with multinational oil firms, and may soon sign long-term production sharing agreements as part of the IMF-mandated oil law. Studies indicate that Iraq could lose up to US$ 200 billion in revenue from the deals, and Iraqi trade unions have unanimously opposed the foreign control of Iraqi oil. (Carbon Web)

US General John Abizaid announced that Washington may seek to maintain a long-term military presence in Iraq. Along with security concerns, Abizaid referenced Iraqi oil as a justification for permanent bases, noting that "the prosperity of [the US] and everybody else in the world depend[s]" on the "free flow of goods and resources" from Iraq. (Reuters)

In this speech, Hassan Jumaa Awad, President of the General Union of Oil Employees in Basra, outlines the Iraqi labor movement's opposition to foreign occupation and US plans for privatizing and controlling Iraqi oil. Despite the incursions of firms like Halliburton, the Iraqi labor movement has fought to maintain public control over Iraqi natural resources while striving for economic justice and a united and democratic Iraqi society.

In an interview with Newsweek, Professor Noam Chomsky discusses the relationship between Iraqi oil and the US occupation. The US would not have "liberated" Iraq, Chomsky argues, if Iraq's main products were pickles and lettuce instead of oil. By invading Iraq, the US sought to control Iraqi oil and gain "critical leverage" over its competitors

Since the December 15 parliamentary elections, the price of fuel in Iraq has increased significantly. As part of an International Monetary Fund debt-forgiveness plan, the Iraqi government has cut fuel subsidies, including those for both cooking and heating gas, and initiated economic reforms that have prompted rioting and threaten millions of poor Iraqis. Following years of economic sanctions and the ongoing US occupation, the removal of subsidies will contribute to instability and compound Iraq's economic woes. (Los Angeles Times)

The Kurdistan Democratic Party has signed a deal with Norwegian oil firm DNO over new oil exploration and drilling in the semi-autonomous Kurdish region of Iraq. The agreement, one of the first of its kind since the US-led invasion in 2003, was made without the involvement of Iraq's central government. Given Iraq's sectarian tensions and ambiguous constitution, the deal highlights the potential controversies between the regional and central governments over energy policy and oil control. (Los Angeles Times)

Oil may be the key to Iraqi unity. Article 109 of the Iraqi constitution declares that oil belongs to "all the Iraqi people in all the regions and provinces." Tamara Chalabi of openDemocracy discusses how the democratization of oil revenues would give Iraqi citizens a direct stake in Iraq's oil industry, helping to unify the country while fortifying democratic institutions and stimulating the economy.

Australian, British, and US warships constantly patrol the waters off the Iraqi oil terminals in Basra and Khor al-Amaya. With the world's second largest proven oil-reserves, Iraq plays a significant role in international crude markets. Given the stakes, US Captain Hank Miranda says, "I don't think we will ever leave. We'll always have ships here." (Agence France Presse)

In this transcript of a lecture given at the 2005 International Oil & Money Conference, former Iraqi Oil Minister Issam Al-Chalabi outlines the history of oil in Iraq and prospects for the future. Given the dilapidated state of Iraq's oil infrastructure and potential conflicts relating to Iraq's constitution, Issam Al-Chalabi predicts that oil production will remain at 1.8-2 million barrels per day (mbd) for several years. Not until 2009 and 2012 respectively will production reach 3.5 mbd and 6 mbd. (Middle East Economic Survey)

Despite noisy debates over Iraq's draft constitution, references in the document to Iraq's oil resources have evaded public comment. The interim government is already going ahead with a plan in which the state-owned Iraq National Oil Company (INOC) may only develop oil-fields that are already in production. Development of all other oil fields, the constitution specifies, should follow "modern techniques" and "market principles," a code for Production Sharing Agreements with major firms such as BP, Chevron and ExxonMobil. At estimated reserve levels, that leaves 64% of Iraq's oil open to foreign companies, casting a shadow on Iraq's sovereignty and economic viability. (Carbon Web)

Heritage Oil Corporation, a Canadian firm, has entered negotiations with the Government of the Autonomous Region of Kurdistan to do exploration field studies near the Taq Taq oil field in Northern Iraq. The current arrangement, labeled a Memorandum of Understanding, may lead to a formalized Production Sharing Agreement. If so, Heritage would become the first private oil firm to produce oil in Iraq since the 1970s. The CEO of Heritage Oil is Micael Gulbenkian, great-nephew of Calouste Gulbenkian, founder of the company that dominated Iraq's oil industry for more than half a century. (CNW Telbec)

Poor coordination between US and Iraqi government officials and KBR, a Halliburton subsidiary that was given a no-bid contract after the war, has led to numerous oil reconstruction failures. Engineering mistakes and poor leadership have cost Iraq hundreds of millions of dollars in lost oil production, while threatening the future of some oil fields. This foregone revenue has proven costly to Iraqi reconstruction efforts, as out-put remains below pre-war levels. (Los Angeles Times)

Despite US efforts to protect Iraq's oil infrastructure in the hopes that oil revenues would pay for the war and the occupation, Iraqi insurgent have sabotaged pipelines and refineries. In addition, persistent corruption in the Oil Ministry and sectarian tensions over the future allocation of oil revenues have threatened Iraq's long-term oil productivity. Still, Washington continues to believe in the efficacy of military force as a tool for securing access to foreign sources of petroleum. (TomDispatch)

US President George W. Bush has given yet another justification for the US-led invasion of Iraq: the "protection of [Iraq's] vast oil fields." This announcement comes amid continued violence in Iraq and increasing disapproval of the war within the US. (Associated Press)

According to the Kurdish Iraqi Planning Minister, provincial governments should wield more control over their regions' oilfields. He said that Iraqi central government management of the oil sector leads to the "unjust distribution of wealth and resources." Kurds are lobbying the Iraqi constitutional drafting committee for such a devolution, which would allow the provinces to deal directly with foreign oil companies, and would give more power to Kurdish and Shiite provincial leaders. (Reuters)

New York Times columnist Bob Herbert argues that the US has no immediate plans to withdraw troops from Iraq. He says that despite the Bush administration's numerous and ever-changing justifications for the war, the real reason behind the invasion "was to establish a long-term military presence in Iraq to ensure American domination of the Middle East and its precious oil reserves." No matter how badly the war goes, then, the US will continue the occupation, to ensure its hold of Iraq's vast oil riches.

Iraq is evolving into a "key battleground" against the expansion of western oil firms. Rebuilding efforts have been demanding, as looters, undeterred by US and British troops, destroyed much of Iraq's publicly owned oil industry. Although faced with an Oil Minister aligned with foreign private interests, and the possibility of a constitution that allows for oil privatization, Iraqi oilworkers have been working hard to protect the country's valuable resources. (Carbon Web)

Although oil prices are at an all-time high, very little of Iraq's oil revenue finances the country's rebuilding. Analysts say that petroleum smuggling and theft are on the increase, siphoning profits from reconstruction projects. They also blame insurgent attacks on pipelines and power plants for decreased production, and criticize the Iraqi government for not investing enough money to update the country's antiquated infrastructure. (Christian Science Monitor)

The Open Society Institute and the London School of Economics organized a conference to discuss the management of Iraq's oil wealth. Participants discussed many subjects, including the need for a transparent and accountable management of the profits, recalling the Coalition Provisional Authority's "lax accounting" procedures. The chief economist at Iraq's Finance Ministry also presented a controversial plan to remove subsidies on domestic fuel consumption, saying that the current low price of gasoline encourages smuggling. (ISN Security Watch)

This report, a joint effort between the London School of Economics and the Open Society Institute, contains policy recommendations for the future development and management of Iraq's oil sector. It advocates an equitable, accountable and transparent distribution of Iraq's oil wealth, and puts forward ideas on what Iraq should do to repair its damaged infrastructure. (Open Society Institute)

Members of the United Nations Security Council "expressed concern over Iraq's handling of oil sales" in the period after the handover of power from the Coalition Provisional Authority to Iraq's interim government. The move came in reaction to an audit by accounting firm KPMG, which found that "Iraq's interim government mishandled about $100 million in oil money meant for development." (Associated Press)

Iraqi oil workers, who in 2004 formed the General Union of Oil Employees (GUOE), oppose the privatization of Iraq's oil industry. Though "plans are now afoot for sweeping changes to Iraq's oil sector, to give western oil majors access to its reserves," those oil companies will face challenges from Iraq's own oil industry. The author cites the example of an oil union strike in 2003 that stopped all production in southern Iraq for two days, which enabled the unions to successfully push for the replacement of foreign workers with Iraqis, reducing the involvement of US companies in reconstruction, and increased wages. (Guardian)

To protect its oil revenues from future abuse, Iraq should enshrine laws governing the management of natural resources in its constitution. Iraq Revenue Watch recommends that the constitution "guarantee a transparent and accountable budgetary process" as well as "address the equitable distribution of oil revenues" by giving local government officials the right to participate in oil negotations in their region.

A group of writers examines the notion that the US invaded Iraq for its oil. They conclude that "the invasion of Iraq was about Chevron and Texaco, but it was also about Bechtel, Kellogg, Brown and Root, Chase Manhattan, Enron, Global Crossing, BCCI and DynCorp," referring to the opening of Iraqi markets to US corporations. (London Review of Books)

While the media devotes much attention to poor security as the cause for Iraq's "disappointing" oil exports, corruption also plays a major role. The Iraqi oil ministry has fired "more than 450 employees suspected of selling fuel on the black market," and smuggling operations in parts of Iraq take place in plain view of the authorities, prompting Iraqis to ask "whether or not smuggling of petrol is a legitimate act." (Institute for War & Peace Reporting)

Iraqi labor leader Hassan Juma'a Awad, in a conversation with truthout, talks about the challenges facing oil workers under the occupation. "We fear that the purpose of the occupation is to take control of the oil industry," he says. Workers have confronted the occupation authorities, demanding – and getting – higher pay for their labor. Awad also says that oil workers "don't want a new colonization under the guise of privatization, with international companies taking control of the oil."

The two groups that emerged victorious in Iraq's January elections -- the Shiites and the Kurds -- have agreed on who should occupy the posts of Prime Minister and President in the new government. Both, however, want control of the Oil Ministry, a powerful post given that "95% of the country is the oil business." Keen on stability above all else, foreign oil companies want the current head of the ministry to stay. But as a member of Interim Prime Minister Ayad Alawi's party, that appears unlikely. (Wall Street Journal)

Michael T. Klare writes that the Bush administration's choice to invade Iraq stemmed from "a combination of contributing factors," including control of the country's oil resources. But "it appears that the US incursion into Iraq [. . .] has largely failed to achieve its intended purposes." The insurgency has crippled the country's capacity to export more oil, and "no one is willing to predict when, if ever, the country will reach the fabled level of 6 million barrels per day" that US officials confidently spoke of after the invasion. (TomPaine)

BBC Newsnight reveals that the Bush administration made plans for the Iraq war and the country's oil "within weeks" of taking office in 2001. The investigation uncovered two conflicting plans: one developed by "Big Oil" executives in conjunction with the US State Department , and another, drafted just before the 2003 invasion of Iraq, by neo-conservatives at the Pentagon. The latter involved a sell-off of all of Iraq's oil fields, which an Iraqi-born oil consultant said "helped instigate the insurgency."

Oil companies intently await the formation of a new Iraqi government and the adoption of a new constitution, which would pave the way for sought-after long-term oil exploitation contracts. According to former Iraqi Oil Minister Issam Chalabi, some 20 companies from several countries have offered Iraq's interim government "favors" such as oil personnel training or free geological studies, though Iraqi oil officials expect major US companies to win the "lion's share" of contracts. (Associated Press)

With the country's petroleum infrastructure crumbling, Iraqi oil officials must choose between making costly repairs to increase oil output or using existing wells, pipelines and refineries for as long as possible. But because funds for modernizing oil infrastructure must come from oil revenues, the pumping continues, even though much of the outdated technology constitutes a safety and environmental hazard. Despite having the world second largest oil reserves, Iraq imports half of its gasoline. (New York Times)

In an effort to establish good relations with the new post-election Iraqi government, US and European oil companies are working for free on certain projects with the Iraqi oil ministry to "get their feet in the door." Although these companies remain very cautious about committing themselves to a country where violent attacks remain an everyday occurrence, Iraq's vast oil reserves - possibly the second or third largest in the world - make for a prize too tempting to pass up. (San Francisco Chronicle)

Tony Blair has called the notion that control of Iraqi oil was the major reason for the 2003 invasion "one of the most absurd conspiracy theories ever." But while this article allows for "other factors," the author provides several examples of the preeminent role of Iraqi oil before, during and after the war. (Red Pepper)