Bush's Petro-Cartel Almost Has Iraq's Oil

[boise1]

By Joshua Holland, AlterNet.
Posted October 16, 2006.

Even as Iraq verges on splintering into a sectarian civil war, four big oil companies are on the verge of locking up its massive, profitable reserves, known to everyone in the petroleum industry as "the prize."

Iraq is sitting on a mother lode of some of the lightest, sweetest, most profitable crude oil on earth, and the rules that will determine who will control it and on what terms are about to be set.

The Iraqi government faces a December deadline, imposed by the world's wealthiest countries, to complete its final oil law. Industry analysts expect that the result will be a radical departure from the laws governing the country's oil-rich neighbors, giving foreign multinationals a much higher rate of return than with other major oil producers and locking in their control over what George Bush called Iraq's "patrimony" for decades, regardless of what kind of policies future elected governments might want to pursue.

Iraq's energy reserves are an incredibly rich prize. According to the U.S. Department of Energy, "Iraq contains 112 billion barrels of proven oil reserves, the second largest in the world (behind Saudi Arabia), along with roughly 220 billion barrels of probable and possible resources. Iraq's true potential may be far greater than this, however, as the country is relatively unexplored due to years of war and sanctions." For perspective, the Saudis have 260 billion barrels* of proven reserves.

Iraqi oil is close to the surface and easy to extract, making it all the more profitable. James Paul, executive director of the Global Policy Forum, points out that oil companies "can produce a barrel of Iraqi oil for less than $1.50 and possibly as little as $1, including all exploration, oilfield development and production costs." Contrast that with other areas where oil is considered cheap to produce at $5 per barrel or the North Sea, where production costs are $12-16 per barrel.

http://www.alternet.org/waroniraq/43045/

* Although the actual volume is likely nowhere near 260 billion, this number was accepted at face value by the USGS and the DOE when the Saudis suddenly added nearly 90 billion barrels to their proven reserves figure in 1990.(my note)

[mediaman007]

1. I suspect that patriotic Iraquis will not give the oil away for nothing.

Just because the cartel has a contract, they should have to pay a "fair" price for the product. If not, I believe that Iraquis have every right to shut them down.