‘The proposed Petroleum Law creates a Federal Oil and Gas Council on which would sit representatives of Exxon-Mobil, Shell, BP, etc., whose tasks include approving their own contracts. Instead of Iraqi central government decision-making on oil, the proposal authorizes regional authorities to individually sign contracts with foreign companies, promoting contract bidding wars between regions that could lead to breaking Iraq into three states.

The practice in Iraq - as in other countries with giant reserves - has been that control of oil production rests with public sector oil companies. The role of foreign companies is limited to “service contracts.” A company is contracted to provide a stated service for a limited period - build a refinery, lay a pipeline, drill a field. Decisions on development, distribution, and flow of profits remain with the government. Kuwait, Saudi Arabia and Iran run their industries this way.

However, the proposed Petroleum Law provides for “production sharing agreements,” or long-term contracts whereby foreign companies control production, development and sale of the oil for up to 30 years, and reap as much as 70% of the profits. Given the severe weakness of Iraqi institutions, with the country devastated, under military occupation and mired in civil strife, Iraq is unlikely to receive a fair deal. With huge reserves and low production costs, foreign oil companies in Iraq stand to make enormous profits at the expense of the welfare of Iraq’s people and Iraqi sovereignty.’

Iraqi Oil Belongs To The Iraqi People