Deep Blade Journal

Law assigns powers to “executive managers from important related petroleum companies”

Antonia Juhasz may be the most important writer on Iraqi oil. She had an oped in the New York Times a couple of days ago, that I will reproduce below.

This oped by Ms. Juhasz is a refreshing departure for major media where just about only thing you ever hear about the Iraq Oil Law is that supposedly it will distribute evenly an unexplained portion of revenue on a per capita basis. In theory, this is probably the right way to do it. But that is just a small section the law. What never is discussed is that it is a blueprint for the privatization of control of Iraq’s oil.

A couple of brief media snippets from yesterday illustrate elite posturing on Iraq’s oil and the oil law. First, this is what Rep. Randy Neugebauer (R-TX) said in response to a C-SPAN caller’s question about “stealing” Iraqi oil.

I don’t think our intentions are to steal any oil from the Iraqi people. We are hoping to get those oil wells up so that the Iraqi people can build their nation back. They’ve got a lot of infrastructure to replace. Saddam basically decimated that country during his rule. We’re bringing a tremendous amount of resources to that country and not taking resources out of that country.

Note the lack of discussion about what actually happens to the money received from Iraqi oil sales, which has been stolen by both the American occupation and corrupt Iraqis. During the period beginning with the 2003 invasion, the US-run CPA (Coalition Provisional Authority) did in fact steal every dollar in Iraq’s oil accounts.

It’s also a great technique to blame everything that happens on Saddam, even though he hasn’t been around for four years and, arguably, life for Iraqis along with their oil infrastructure vastly is worse today than it was four years ago today. There is not even mention of the oil law and how, as described below, it will privatize Iraq’s oil and empower multinational oil executives to make the most important decisions about it.

Second, just briefly, a Pentagon report yesterday said, “Some elements of the Iraq war are properly descriptive of a civil war.”

NPR dutifully reported yesterday on All Things Considered the Pentagon take on this admission, including mention of the “positive success” of the oil law, “which would evenly distribute revenues around the country. That’s expected to be debated soon in the full Iraqi Parliament. ”

If you’re curious about the actual text of the law, an expat Iraqi blogger has the whole thing translated here.

Note that the ORIGINAL draft was in English, brewed at a Camp David war council last June after several years of preparation. Then it was TRANSLATED to Arabic. Raed, the blogger, then translated it BACK to English after getting a copy that even the New York Times could not get.

Here’s how the system will work: Iraq will have a “Federal Oil and Gas Council” that will “assist the Council of Ministers in creating Petroleum policies and related plans”.

According to the Law, the Council SHOULD include

• “Federal Government’s Ministers from the ministries of oil, treasury, planning, and cooperative development;
• The director of the Iraqi central bank;
• A regional government minister representing each region;
• A representative from each producing province not included in a region;
• Executive managers of from important related petroleum companies including the national Iraqi oil company and the oil marketing company; and
• Three or less experts specialized in petroleum, finance, and economy to be hired for a period not exceeding 5 years based on a resolution from the council of ministers.”

Check out that fifth item–”executive managers from important related petroleum companies” will be the ones deciding what is best for Iraq’s oil!

Among many other absolute powers in deciding all aspects of exploration, development, and production contracts,

The Federal Oil and Gas Council is the competent authority to review and approve the transfer of rights among holders of Exploration and Production rights, the Federal Oil and Gas Council is responsible for ensuring that Petroleum resources are discovered, developed, and produced in an optimal manner and in the best interest of the people in accordance with legislation, regulations and contractual conditions as well as recognised international standards.

“Optimal manner” looks like an absolutely loaded phrase, doesn’t it? I’ll take it to mean that those “executive managers of from important related petroleum companies” will have at their disposal control of Iraqi oil valves, thus taking direct control of world swing oil production–what the Saudi’s have been in charge of since the Texas Railroad Commission lost its power due to the depletion of Texas oil reserves after 1971. The only way to keep these executives in charge will be to keep thousands of American troops in Iraq for an indefinite time, at least until the reserves deplete.

Whose Oil Is It, Anyway?

by ANTONIA JUHASZ
Published: March 13, 2007

TODAY more than three-quarters of the world’s oil is owned and controlled by governments. It wasn’t always this way.

Until about 35 years ago, the world’s oil was largely in the hands of seven corporations based in the United States and Europe. Those seven have since merged into four: ExxonMobil, Chevron, Shell and BP. They are among the world’s largest and most powerful financial empires. But ever since they lost their exclusive control of the oil to the governments, the companies have been trying to get it back.

Iraq’s oil reserves — thought to be the second largest in the world — have always been high on the corporate wish list. In 1998, Kenneth Derr, then chief executive of Chevron, told a San Francisco audience, “Iraq possesses huge reserves of oil and gas — reserves I’d love Chevron to have access to.”

A new oil law set to go before the Iraqi Parliament this month would, if passed, go a long way toward helping the oil companies achieve their goal. The Iraq hydrocarbon law would take the majority of Iraq’s oil out of the exclusive hands of the Iraqi government and open it to international oil companies for a generation or more.

In March 2001, the National Energy Policy Development Group (better known as Vice President Dick Cheney’s energy task force), which included executives of America’s largest energy companies, recommended that the United States government support initiatives by Middle Eastern countries “to open up areas of their energy sectors to foreign investment.” One invasion and a great deal of political engineering by the Bush administration later, this is exactly what the proposed Iraq oil law would achieve. It does so to the benefit of the companies, but to the great detriment of Iraq’s economy, democracy and sovereignty.

Since the invasion of Iraq, the Bush administration has been aggressive in shepherding the oil law toward passage. It is one of the president’s benchmarks for the government of Prime Minister Nuri Kamal al-Maliki, a fact that Mr. Bush, Secretary of State Condoleezza Rice, Gen. William Casey, Ambassador Zalmay Khalilzad and other administration officials are publicly emphasizing with increasing urgency.

The administration has highlighted the law’s revenue sharing plan, under which the central government would distribute oil revenues throughout the nation on a per capita basis. But the benefits of this excellent proposal are radically undercut by the law’s many other provisions — these allow much (if not most) of Iraq’s oil revenues to flow out of the country and into the pockets of international oil companies.

The law would transform Iraq’s oil industry from a nationalized model closed to American oil companies except for limited (although highly lucrative) marketing contracts, into a commercial industry, all-but-privatized, that is fully open to all international oil companies.

The Iraq National Oil Company would have exclusive control of just 17 of Iraq’s 80 known oil fields, leaving two-thirds of known — and all of its as yet undiscovered — fields open to foreign control.

The foreign companies would not have to invest their earnings in the Iraqi economy, partner with Iraqi companies, hire Iraqi workers or share new technologies. They could even ride out Iraq’s current “instability” by signing contracts now, while the Iraqi government is at its weakest, and then wait at least two years before even setting foot in the country. The vast majority of Iraq’s oil would then be left underground for at least two years rather than being used for the country’s economic development.

The international oil companies could also be offered some of the most corporate-friendly contracts in the world, including what are called production sharing agreements. These agreements are the oil industry’s preferred model, but are roundly rejected by all the top oil producing countries in the Middle East because they grant long-term contracts (20 to 35 years in the case of Iraq’s draft law) and greater control, ownership and profits to the companies than other models. In fact, they are used for only approximately 12 percent of the world’s oil.

Iraq’s neighbors Iran, Kuwait and Saudi Arabia maintain nationalized oil systems and have outlawed foreign control over oil development. They all hire international oil companies as contractors to provide specific services as needed, for a limited duration, and without giving the foreign company any direct interest in the oil produced.

Iraqis may very well choose to use the expertise and experience of international oil companies. They are most likely to do so in a manner that best serves their own needs if they are freed from the tremendous external pressure being exercised by the Bush administration, the oil corporations — and the presence of 140,000 members of the American military.

Iraq’s five trade union federations, representing hundreds of thousands of workers, released a statement opposing the law and rejecting “the handing of control over oil to foreign companies, which would undermine the sovereignty of the state and the dignity of the Iraqi people.” They ask for more time, less pressure and a chance at the democracy they have been promised.

Antonia Juhasz, an analyst with Oil Change International, a watchdog group, is the author of “The Bush Agenda: Invading the World, One Economy at a Time.”

Update: I checked to see about cross-posting this over at Daily Kos, but there are already three good diaries on this oped. Plus another interesting diary concerning an attempt by Rep. Dennis Kucinich to “offer an amendment on the floor to strip out the oil law benchmark from the supplemental” funding bill for Iraq. Sad that we are not so far stopping this funding entirely.

Update 2: HERE is an entry at Huffington Post describing the Kucinich “oil law not a benchmark” effort.