Source:
New York TimesBAGHDAD — More than six and a half years after the United States-led invasion here that many believed was about oil, the major oil companies are finally gaining access to Iraq’s petroleum reserves. But they are doing so at far less advantageous terms than they once envisioned.
Iraq’s first stab at opening its oil industry to foreign investment ended in disappointment at an auction
in June in which
most companies declined to bid. But last month many of those same companies — including Exxon Mobil and Occidental Petroleum,
the first American companies to reach production agreements with Baghdad since the 2003 invasion — signed deals at much the same terms they rejected over the summer.Analysts say the deals on three of the country’s top fields show that Iraq, after an embarrassing start, may be on a path to joining the world’s major oil-producing nations, which could in turn upset the equilibrium in OPEC and increase tensions with the neighboring oil giants Iran and Saudi Arabia. Adding to those strains, development rights to 10 other Iraqi oil fields will be offered to foreign companies at a public auction in Baghdad on Dec. 11.
In the recent deals,
the major oil companies have agreed to accept service contracts, in which they earn a fee for each barrel of oil produced. Yet they vastly prefer production-sharing agreements, in which they gain an equity stake in the oil itself. Such deals are far more lucrative to oil companies, but for Iraqis they are reminiscent of the colonial era, when foreign companies controlled the country’s oil wealth. “We have shown that we can attract international companies to invest in Iraq and boost production through service contracts,” Hussain al-Shahristani, Iraq’s oil minister, said recently. “
They will not have a share of Iraqi oil, and our country will have total control over production.”Read more:
http://www.nytimes.com/2009/12/01/world/middleeast/01iraqoil.html
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