Big Oil in Iraq: ”World Class Racketeering”

Those who want to hold Iraqis “accountable” with a series of benchmarks that are important to Washington fail to understand what those benchmarks are about to begin with.

As experts who have followed Iraq’s oil sector explained at the hearing, one benchmark Iraq is being pressured to pass involves not one but a series of hydrocarbon laws (i.e. not just a revenue law that divvies up Iraq’s oil revenues between the federal government and the different regions, but also three other interrelated laws that would also establish the oil sector legal framework, the Ministry of Oil and the new Iraqi National Oil Company).
GAO’s Joseph Christoff, a key witness at the hearing, explained that Iraq is being pressured to pass the hydrocarbon laws at a time when we don’t even know, for example, what regions will even exist that might lay claim to a portion of the oil revenues.

The committee responsible for drafting changes to the country’s constitution has not even been formed. Thus, the role of the regions and whether or not new regions will be formed, such as a Shi’a region in the South, has not yet been determined, and defining the regions will have some bearing on how the oil revenues would be divided.

Other issues that Christoff says should first be resolved include the disposition of Kirkuk and what census would be used to define the populations for purposes of revenue percentages.

“I just can’t understand the logic in terms of the sequence here,” Rep. Bill Delahunt (D-MA) gasped in astonishment after hearing all this. “It makes little sense to pass a hydrocarbon law in all of its aspects without having the work of the constitutional committees accomplished as a prerequisite.”

It’s not like there’s any need to rush to pass the law for Iraq to produce oil. Iraq has 115 billion barrels of proven reserves in 80 fields (20 of which are currently in production). If it were to build up to a capacity of 10 bbd production, it wouldn’t have to discover any new reserves for at least ten years.

Yet for some reason the Iraqis are under a lot of pressure to pass a law allowing for the exploration of additional oil. The reason, of course, is because the multinational oil companies, whose own proven oil reserves have been in steep decline, see Iraq’s untapped reserves as the bigger prize.

AlterNet