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Politics : Foreign Affairs Discussion Group
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To: Hawkmoon who wrote (175598)11/23/2005 9:27:22 AM
From: Noel de Leon  Read Replies (1) of 281500
 
"Iraq to lose up to US $194 billion in oil "rip-off"

Control of Iraq's future oil wealth is being handed to multinational oil companies through long-term contracts that will cost Iraq hundreds of billions of dollars, according to a new report published today.

Crude designs: the rip off of Iraq’s oil wealth, reveals that current Iraqi oil policy will allocate the development of at least 64 per cent of Iraq’s reserves to foreign oil companies. Iraq has the world’s third largest oil reserves.

Figures published in the report for the first time show:

the estimated cost to Iraq over the life of the new oil contracts is US $74 to US $194 billion, compared with leaving oil development in public hands. These sums represent between two and seven times the current Iraqi state budget.
the contracts would guarantee massive profits to foreign companies, with rates of return of 42 per cent to 162 per cent.
The kinds of contracts that will provide these returns are known as production sharing agreements (PSAs). PSAs have been heavily promoted by the US government and oil majors and have the backing of senior figures in the Iraqi Oil Ministry. Britain has also encouraged Iraq to open its oil fields to foreign investment.

However PSAs last for 25-40 years, are usually secret and prevent governments from later altering the terms of the contract. "Crude Designs" lead researcher, Greg Muttitt of PLATFORM, said: "The form of contracts being promoted is the most expensive and undemocratic option available. Iraq’s oil should be for the benefit of the Iraqi people, not foreign oil companies.”

The new Iraqi constitution opened the way for much greater foreign involvement in Iraq's oilfields. Negotiations with oil companies are already underway, ahead of elections in December and prior to the passing of a new Petroleum Law. This report calls for full and open debate in Iraq about the way oil resources are to be developed, not 30-year deals negotiated behind closed doors.

Not only are these deals being negotiated without public discussion, ongoing violence in Iraq puts it at considerable disadvantage. Mr Muttitt explained: "Iraq's institutions are new and weak. Experience in other countries shows that oil companies generally get the upper hand in PSA negotiations with governments. The companies will inevitably use Iraq's current instability to push for highly advantageous terms and lock Iraq to those terms for decades." "

neweconomics.org
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