About the Iraqi Oil Law- What's the Holdup In Signing Away Their Resources? Somervell County Salon-Glen Rose, Rainbow, Nemo, Glass....Texas


About the Iraqi Oil Law- What's the Holdup In Signing Away Their Resources?

8 May 2007 at 11:42:36 AM

From The Struggle Over Iraqi Oil.- Read the whole thing; and this part is interesting about what would be in the contracts-note that the Iraqis have not yet passed and signed the oil bill, despite Bush alluding to it again recently.

Based on leaked information, journalists reported that the PSAs envisioned by the Iraqi petrochemical law contained extremely favorable provisions for the oil companies, in which they would be entitled to 70 percent of profits until development expenses were amortized and 20 percent afterwards. This would have guaranteed them at least twice the typical profit margin over the long run and many times that figure during the initial years.

There are other elements in the law (and the possible PSA contracts) that have also roused resistance inside Iraq. Among the most controversial:

  • Insofar as PSAs or their legal equivalent were enacted, Iraq would lose control over what levels of oil the country produced with the potential to substantially weaken the grip of OPEC on the oil market.
  • The law would allow the oil companies to fully repatriate all profits from oil sales, almost ensuring that the proceeds would not be reinvested in the Iraqi economy.
  • The Iraqi government would not have control over oil company operations inside Iraq. Any disputes would be referred instead to pro-industry international arbitration panels.
  • No contracts would be public documents.
  • Contacting companies would not be obliged to hire Iraqi workers, and could pursue the current policy of employing American technicians and South Asian manual laborers.
  • Finally – and no small matter – the armed resistance is also against the oil law. The Sunni insurgency underscored its opposition by assassinating Vice President Adel Abdul Mahdi, a major advocate of the pending law, on the day the bill was made public. The significance of the opposition of the Sunni insurgency is amplified by the stance of the Sadrists, the most rebellious segment of the Shia majority. Sadr spokesman Sheik Gahaith Al Temimi warned journalist Michael Parenti that while the Sadrists would "welcome" foreign investment in oil, they would do so only "under certain conditions. We want our oil to be developed, not stolen. If a bad law were to be passed, all people of Iraq would resist it."

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