Did Big Oil Win the War in Iraq?
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On the positive side for the companies, where the development production contracts (DPC) that Iraq was signing prior to the 2003 invasion offered 12-year contracts, today’s run for 20 to 25 years. And while as recently as a year ago the Iraqis offered the foreign companies a 50 percent ownership stake, today’s contracts offer them a 75 percent stake (25 percent for the Iraqi government).
On the other hand, where the PSAs sought under the Iraq Oil Law would give the companies an equity stake and the ability to book the oil in the fields as their own, these contracts provide reimbursement fees for capital and operational expenses and a fixed fee per barrel of oil produced and deny the companies the ability to book reserves.
It remains unclear whether the foreign companies or the Iraqi government ultimately has production decision-making authority. And some of the benefits included in the contracts would be annulled if the Iraq Oil Law were passed, including requirements to hire and train Iraqi workers and the transfer of needed technology.
Finally, the Iraqis apparently sweetened the deals further in the last few weeks by reducing the amount the foreign companies pay in taxes and allowing them to use private security forces to protect their facilities.
The Next Bidding Round
On Dec. 11 and 12, the second, much larger, bidding round will be launched in Baghdad. Forty-four international companies have been prequalified to bid on run for 11 groups of oil and gas fields in already producing and undiscovered fields. Negotiations will include the super giant Majnoon field, which Chevron and France’s Total have teamed up to bid for.
The contracts for these fields are expected to mirror those described above, but no "model contract" has been made publicly available.
The Iraq Oil Law has remained an elusive goal of the world’s most powerful industry and governments because a massive organized global resistance movement has been shining a bright spotlight on its content, its backers, and on the consequences of its passage.
We must continue to shine this spotlight on the new contract negotiations to help ensure that 1) the military occupation of Iraq will be able to conclude, and 2) that the Iraqis are not freed from a foreign military occupation only to be brought under foreign economic control.
(What these contract negotiations mean for the continued U.S. occupation of Iraq is the topic of my upcoming article for Political Research Associates.)
Antonia Juhasz is the director of the Chevron Program at Global Exchange. She is author of The Tyranny of Oil: the World's Most Powerful Industry, and What We Must Do To Stop It (HarperCollins, 2008), paperback to be released on Dec. 8 with a new foreword, and The Bush Agenda: Invading the World, One Economy at a Time (HarperCollins, 2006). She is the editor and lead author of The True Cost of Chevron: An Alternative Annual Report . She is on the National Advisory Board of Iraq Veterans Against the War , an associate fellow with the Institute for Policy Studies , a fellow with Oil Change International , and a senior analyst with Foreign Policy in Focus . http://www.Twitter.com/AntoniaJuhasz