# Who will end up controlling Iraq's oil? **URL:** \ **Category:** Great Debates\ **Created:** [January 29, 2007, 6:31pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984 "2007-01-29T18:31:59Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 29, 2007, 6:31pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/1 "2007-01-29T18:31:59Z")
U.S. policy towards the final disposition of Iraq’s oilfields and oil industry has gone through several reversals since the war started. See [this thread.](http://boards.straightdope.com/sdmb/showthread.php?t=381910) The “privatization” side is down – but not out. The oilfields currently being worked will have to remain in state hands – but that’s only a fraction of Iraq’s available oil. From [1/15/07: > [@](#): > > Allawi’s guidelines also turned all undeveloped oil and gas fields over to private international oil companies. Because only 17 of Iraq’s 80 known oil fields have been developed, Allawi’s proposal would put 64 percent of Iraq’s oil into the hands of foreign firms. However, if a further 100 billion barrels are discovered, as is widely predicted, foreign companies could control 81 percent of Iraq’s oil—or 87 percent if, as the Oil Ministry predicts, 200 billion barrels are found. > > \ > > The draft petroleum law adopted Allawi’s recommendation that currently producing oil fields are to be developed by Iraq’s National Oil Company, while all new fields are opened to private companies using PSAs. > > The Bush administration and U.S. oil companies have maintained constant pressure on Iraq to pass the petroleum law. The administration appointed an advisor to the Iraqi government from Bearing Point to support completion of the law. And in July 2006, U.S. Energy Secretary Samuel Bodman announced in Baghdad that oil executives told him that their companies would not enter Iraq without passage of the new oil law. Petroleum Economist magazine later reported that U.S. oil companies considered passage of the new oil law more important than increased security when deciding whether to go into business in Iraq. > > The Iraq Study Group, recognizing as it did the primacy of oil in its Iraq calculations, recommended that the U.S. “assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise” and “encourage investment in Iraq’s oil sector by the international community and by international energy companies.” > > Put simply, U.S. oil companies want access to as much of Iraq’s oil as they can get and on the best possible terms. The fact that Iraq is a war-ravaged and occupied nation works to the companies’ benefit. As a result, the companies and the Bush administration are holding U.S. troops hostage in Iraq until they get what they want. Once the companies get their lucrative contracts, they will still need protection to get to work. What better security force is there than 144,000 American troops? > > Three days after the release of the Iraq Study Group Report, the al-Maliki government announced that Iraq’s oil law was near completion. The law adopts PSAs and not only opens Iraq to private foreign companies, but permits “for the first time—local and international companies to carry out oil exploration in Iraq.” > > To ensure that this model prevails, the Iraq Study Group recommends that Iraq’s constitution be rewritten to give the central government of Iraq—as opposed to individual regions—the ultimate decision-making authority over all of Iraq’s developed and undeveloped oil fields. The problem is, the Iraqi government has to enact the necessary legislation, and they can’t agree among themselves. Their Oil and Gas Committee has been working on the problem for five months. See [url=[http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070129\ACQDJON200701290631DOWJONESDJONLINE000162.htm&](http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070129%5cACQDJON200701290631DOWJONESDJONLINE000162.htm&)]this](]_In These Times,_[/url) article: > [@](#): > > Outstanding issues, according to one official participating in drafting the law, include the proposal of a new federal petroleum council, headed by the prime minister or his deputy and the ministers of oil, planning and finance, which would have final say on contracts signed with oil companies. This is causing prolonged ructions with the Kurdistan Regional Government, which runs northern Iraq and wants control of oil resources in its territory and a share of revenue. How will this play out? Ultimately, who will control/operate Iraq’s oil industry, including the untapped new oilfields? And if the U.S. oil companies win out here, does OPEC have any reason to worry? Or not? ---
**Author:** ![El\_Kabong](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/el_kabong/32/496_2.png) [@El\_Kabong](https://boards.straightdope.com/u/El_Kabong)\ **Post date:** [January 29, 2007, 8:36pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/2 "2007-01-29T20:36:38Z")
A few comments, although I haven’t yet read the full article, as the link didn’t work for me: [Quote=In these times(?)] Petroleum Economist magazine later reported that U.S. oil companies considered passage of the new oil law more important than increased security when deciding whether to go into business in Iraq. [/Quote] If any official statement from any US-based oil company has said any such thing, IMO it is complete bullshit. Any given oil company will come to any agreement that is reasonably advantageous to them. If the Iraqi oil ministry (or a successor organization) chooses to take another approach rather than PSAs, at least some US-based oil companies will enter into agreements on those terms, as long as there is a reasonable expectation that they will profit from them. If no US-based company wishes to do business on those terms, undoubtedly there are other foreign-owned entities that will, and there is, or should be, no reason why the oil ministry cannot deal with them instead. [Quote=BrainGlutton] And if the U.S. oil companies win out here, does OPEC have any reason to worry? Or not? [/Quote] No. The industry is too highly integrated; even if US-based companies take over of Iraq’s production, there is no reason not to think that much of the produced crude will be sold on the open market to the highest bidder. Despite the size of Iraqi reserves, the country will not necessarily become the world’s swing producer; OPEC will still have a larger sway over the market, should they want to exercise that power (and there is no sign they do at present). Besides, once Iraq stabilizes and the Americans leave, which certainly will happen someday, Iraq could decide that it is in its best interest to join OPEC. Assuming they are indeed a petroleum **exporting** country by then, of course. Anyway, in the previous thread on this subject, I believe the main bone of contention was whether the proposed PSAs were financially advantageous to the Iraqi government and people, and IIRC the consensus was, probably not. Nevertheless, even if US companies do end up producing the majority of Iraq’s oil, they would be operators only, not owners. Any Iraqi government with the spine to do so could alter the terms of any agreement to greater advantage at any time. Well, anytime there are significantly fewer than 100,000 US troops there, I guess. Lastly, and I presume I’m stating the blindingly obvious here, if we are really attempting to impose a democratic system in Iraq, I always thought that a main feature of that system is a more or less free market environment. Trying to ram though sweetheart deals of the type referenced by the OP doesn’t seem all that democratic, does it? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 29, 2007, 9:08pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/3 "2007-01-29T21:08:46Z")
[QUOTE=El\_Kabong] A few comments, although I haven’t yet read the full article, as the link didn’t work for me: [/QUOTE] [Try it now.](http://www.inthesetimes.com/site/main/article/2979/) ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 29, 2007, 9:11pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/4 "2007-01-29T21:11:15Z")
[QUOTE=El\_Kabong] Lastly, and I presume I’m stating the blindingly obvious here, if we are really attempting to impose a democratic system in Iraq, I always thought that a main feature of that system is a more or less free market environment. [/quote] No, it isn’t. The main feature of a democratic system is that the people’s collective will, insofar as they have a will, is done. They might choose a free-market system or something else. A democracy might still have a state-owned oil industry. A distinction to which the neocons are mostly blind, of course. But no, a policy imposed by an outside power is not democratic in any sense. ---
**Author:** ![Airman\_Doors\_USAF](https://avatars.discourse-cdn.com/v4/letter/a/e36b37/32.png) [@Airman\_Doors\_USAF](https://boards.straightdope.com/u/Airman_Doors_USAF)\ **Post date:** [January 30, 2007, 12:39am UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/5 "2007-01-30T00:39:11Z")
To truly exploit any sort of oil reserves there has to be some kind of stabilization of the country. Barring that there’s no point because no company is going to rebuild everything every other day. A situation like that is far from profitable. So now we have stabilization. Once we manage that, is there anybody here who doesn’t believe that Iraq will nationalize everything the first chance they get? They’d be fools not to. It’s not like we would be coming back even if they did nationalize everything and everyone knows it. After this debacle, once we’re out we’re OUT, just like in Vietnam. Iraq will end up controlling Iraq’s oil. Which is how it should be, and is how it will be. Of course, we first have to determine whether Iraq will even exist as it is right now into the future. But that’s another discussion for another time. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 30, 2007, 12:54am UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/6 "2007-01-30T00:54:01Z")
[QUOTE=Airman Doors, USAF] So now we have stabilization. Once we manage that, is there anybody here who doesn’t believe that Iraq will nationalize everything the first chance they get? They’d be fools not to. It’s not like we would be coming back even if they did nationalize everything and everyone knows it. After this debacle, once we’re out we’re OUT, just like in Vietnam. [/QUOTE] I wish I could believe W had any intention of allowing the Iraqi government that degree of independence. ---
**Author:** ![Airman\_Doors\_USAF](https://avatars.discourse-cdn.com/v4/letter/a/e36b37/32.png) [@Airman\_Doors\_USAF](https://boards.straightdope.com/u/Airman_Doors_USAF)\ **Post date:** [January 30, 2007, 1:16am UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/7 "2007-01-30T01:16:37Z")
President Bush has absolutely no choice. In less than 2 years he’s gone. Why is it that some of you are unable to shake off this strange myopia and look to the future? ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [January 30, 2007, 2:05am UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/8 "2007-01-30T02:05:39Z")
Ultimately, Iran will control Iraq’s oil. After we leave, be it two years, or five years, or fifty years, there will be an Islamic coup over the elected governement, the Shiites are going to slaughter the Sunnis, and Iran will controll a weak puppet government. And it all began with Bush. ---
**Author:** ![Airman\_Doors\_USAF](https://avatars.discourse-cdn.com/v4/letter/a/e36b37/32.png) [@Airman\_Doors\_USAF](https://boards.straightdope.com/u/Airman_Doors_USAF)\ **Post date:** [January 30, 2007, 2:36am UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/9 "2007-01-30T02:36:33Z")
[QUOTE=Fear Itself] Ultimately, Iran will control Iraq’s oil. After we leave, be it two years, or five years, or fifty years, there will be an Islamic coup over the elected governement, the Shiites are going to slaughter the Sunnis, and Iran will controll a weak puppet government. And it all began with Bush. [/QUOTE] Yep. The war between the Sunnis and the Shiites AND Iran’s desire to be the big boy in the Middle East started with Bush. I should start calling him Methuselah. He looks good for being that old. Now that I’m done being sarcastic, I will absolutely concede that this war exacerbated the situation by making it happen sooner. But if you don’t see by now that it was going to happen as soon as Saddam died even if we hadn’t invaded you’re wearing blinders. This fight has been off and on for a few thousand years. All we did was accelerate this round of fighting by eliminating the one man that both sides were afraid of. It would have happened 5 years from now or 30 years from now. Saddam was the only obstacle. ---
**Author:** ![El\_Kabong](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/el_kabong/32/496_2.png) [@El\_Kabong](https://boards.straightdope.com/u/El_Kabong)\ **Post date:** [January 30, 2007, 3:34am UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/10 "2007-01-30T03:34:57Z")
Ok, I read the article and I want to say first of all that IMO it’s very well-written; I think it makes a fairly persuasive rationale for corporate economic benefits being one of rpimary motivations for going to war in Iraq, and I particularly would like to hear more about the shenanigans involving the production of apparel in Oman. I think the article, however, somewhat overstates the long-term impact of what the administration is trying to do regarding getting US oil companies a piece of the Iraqi pie, except that 1) it will, IMO, be no more effective than the administration’s other ham-handed attempts to swing sweetheart reconstruction deals; 2) this will likely do little, as most other reconstruction efforts seem to have done, to enrich any Iraqis other than a few well-placed executives and government officials. I will again state clearly, as I think I have before this, that the Iraqi government should not enter into the types of deals it is contemplating if it seriously has the best interests of its people at heart. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 30, 2007, 3:37am UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/11 "2007-01-30T03:37:12Z")
[QUOTE=Airman Doors, USAF] President Bush has absolutely no choice. In less than 2 years he’s gone. Why is it that some of you are unable to shake off this strange myopia and look to the future? [/QUOTE] Because there is no guarantee his successor will be any less in thrall to the neocons and/or the corporations. Furthermore, there are things that can be done in the next two years that can lock in place a pro-U.S.-corporate settlement; they already tried to do that when Paul Bremer decreed no succeeding Iraqi government could reverse his free-market policies (“Order 100”). Whether that can be made to stick remains to be seen. But if the Iraqi government can be persuaded to approve the proposed “oil law” now, it will be hard to change later. Not impossible, but hard. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 30, 2007, 3:40am UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/12 "2007-01-30T03:40:50Z")
[QUOTE=El\_Kabong] I think the article, however, somewhat overstates the long-term impact of what the administration is trying to do regarding getting US oil companies a piece of the Iraqi pie, except that 1) it will, IMO, be no more effective than the administration’s other ham-handed attempts to swing sweetheart reconstruction deals . . . [/QUOTE] 😕 Those weren’t effective?! ---
**Author:** ![El\_Kabong](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/el_kabong/32/496_2.png) [@El\_Kabong](https://boards.straightdope.com/u/El_Kabong)\ **Post date:** [January 30, 2007, 2:15pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/13 "2007-01-30T14:15:14Z")
> [@](#): > > Those weren’t effective?! Effective in completing the contracts they were paid megabucks for? No. Your linked article discusses a number of projects where the contractor was kicked out for corruption, or withdrew without completing the work. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 30, 2007, 5:58pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/14 "2007-01-30T17:58:42Z")
[QUOTE=El\_Kabong] Effective in completing the contracts they were paid megabucks for? No. Your linked article discusses a number of projects where the contractor was kicked out for corruption, or withdrew without completing the work. [/QUOTE] OK, but from the contractors’ POV they were effective. I mean, they got paid, didn’t they? 😉 ---
**Author:** ![marshmallow](https://avatars.discourse-cdn.com/v4/letter/m/df705f/32.png) [@marshmallow](https://boards.straightdope.com/u/marshmallow)\ **Post date:** [January 30, 2007, 7:23pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/15 "2007-01-30T19:23:21Z")
[QUOTE=Airman Doors, USAF] Now that I’m done being sarcastic, I will absolutely concede that this war exacerbated the situation by making it happen sooner. But if you don’t see by now that it was going to happen as soon as Saddam died even if we hadn’t invaded you’re wearing blinders. This fight has been off and on for a few thousand years. All we did was accelerate this round of fighting by eliminating the one man that both sides were afraid of. It would have happened 5 years from now or 30 years from now. Saddam was the only obstacle. [/QUOTE] I see you trotting this out again. The problem is that it’s not immediately obvious to me why there wouldn’t be a smooth succession after Saddam Hussein’s death like in any other dictatorship, Middle Eastern or otherwise. You know, meet the new boss, same as the old…plus, even if there was a hiccup it wouldn’t involve taking a wrecking ball to their country like we did, rooting up the very pillars of their society and creating anarchy in the streets. And if there was a hypothetical changing of hands it may have built upon Hussein’s secular government where women have rights instead of tearing it all down. I imagine Iraq would be really lucky to get something like that in the future, at least from today’s vantage point. As for the oil thing though, I agree with you. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [February 22, 2007, 6:42pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/16 "2007-02-22T18:42:39Z")
Update: Iraqi blogger Raed Jarrar has obtained a leaked copy of the draft oil law and posted it on his [blog.](http://raedinthemiddle.blogspot.com/) English translation (pdf file) [here.](http://www.al-ghad.org/wordpress/wp-content/uploads/2007/02/iraqi_oil_law.pdf) Recent interview with Jarrar [here.](http://www.democracynow.org/article.pl?sid=07/02/20/1523250) ---
**Author:** ![FRDE](https://avatars.discourse-cdn.com/v4/letter/f/e68b1a/32.png) [@FRDE](https://boards.straightdope.com/u/FRDE)\ **Post date:** [February 23, 2007, 1:28pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/17 "2007-02-23T13:28:40Z")
I don’t get it. Proven oil reserves are worth more on the books of oil companies than producing sites. Like being CO2 neutral, they need to be ‘reserve positive’. In any carve up it is going to be those with the fattest cheque books that will get apparent control - and they’ll be more than happy to pay up front for it. They don’t even want the oil - they just want the reserves in their assets. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 23, 2007, 1:51pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/18 "2007-02-23T13:51:46Z")
[QUOTE=Airman Doors, USAF] Yep. The war between the Sunnis and the Shiites AND Iran’s desire to be the big boy in the Middle East started with Bush. I should start calling him Methuselah. He looks good for being that old. Now that I’m done being sarcastic, I will absolutely concede that this war exacerbated the situation by making it happen sooner. But if you don’t see by now that it was going to happen as soon as Saddam died even if we hadn’t invaded you’re wearing blinders. This fight has been off and on for a few thousand years. All we did was accelerate this round of fighting by eliminating the one man that both sides were afraid of. It would have happened 5 years from now or 30 years from now. Saddam was the only obstacle. [/QUOTE] Saddam had kids. They would probably had a controlling war ,but after Saddam died one of his kids would have taken over. They army and police were in place. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [February 28, 2007, 12:28am UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/19 "2007-02-28T00:28:30Z")
Update: [The Iraqi Cabinet has approved the draft oil law.](http://www.boston.com/news/world/middleeast/articles/2007/02/27/iraqi_cabinet_members_approve_draft_version_of_oil_law/) It goes to Parliament next month. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [March 3, 2007, 7:57pm UTC](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984/20 "2007-03-03T19:57:33Z")
[Analysis](http://www.thenation.com/doc/20070319/parenti) by Michael Parenti in _The Nation:_ > [@](#): > > Nor does the proposed oil law simply serve Iraq up on a plate to the oil giants. One London-based oil analyst who expected a more decentralized and free-market law called it “bloody confused.” On key questions of foreign investment and regional decentralization versus centralized control, the law is vague but not all bad. In general terms it reaffirms state control over oil and binds Iraq’s Sunni center and Shiite south to the Kurdish north by re-creating a single Iraqi National Oil Company, which will in turn dole out oil income to the regions on a per-capita basis. This might help de-escalate sectarian conflict. > > But the law leaves plenty of problematic wiggle room: All its important details are left for later resolution by a new Federal Oil and Gas Council to be controlled by the prime minister, which will effectively bypass Parliament. And while the law asserts a set of generally nationalist economic goals, it sets no minimum level for state participation, nor does it cap the amount of profits allowed to foreign firms. > > Among the Iraqi political class there is pervasive confusion about the new law, but there is also a deep resource nationalism that opposes selling off the country’s patrimony. My interviews with Iraqi oil experts, politicians and regular people revealed a quite reasonable and balanced view of the situation: Most felt that foreign participation in the oil sector could be helpful in reviving an industry battered by a fifteen-year nightmare of war, sanctions, more war and now anarchy. But no one felt Iraq should have to enslave itself to the will of Shell, BP or ExxonMobil. > > If an aggressively liberalizing and decentralizing interpretation of the oil law is eventually pursued, it is not at all clear that it will, in fact, shape the future (if there is one) of Iraq’s petroleum sector. “If an unfair oil law is passed, it will be a bone of contention for years to come,” says Kamil Mahdi, an Iraqi academic now at the University of Exeter in Britain. “It will be remembered as something forced through during the worst period of violence. It will sow the seeds of instability throughout the whole region.” [Next page](https://boards.straightdope.com/t/who-will-end-up-controlling-iraqs-oil/389984.md?page=2)