ESL Lesson 1
Oil in Our Every Day Life
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The History of Mining
ESL Lesson 3
Economic growth
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Delivery Systems
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Cities and Population Movement
ESL Lesson 6
Recycling
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Rubber
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Farming
Iraqi regime set to hand over oil reserves to US energy giants
By Jerry White 11 January 2007
http://www.globalresearch.ca/index.php?context=
viewArticle&code=WHI20070111&articleId=4417
As the Bush administration prepares to escalate (build up) military troop numbers in the Middle-East, the US-installed interim government in Baghdad is set to approve a new hydrocarbon law that will hand unprecedented (never before done) control of the country's vast (very large) oil reserves to US and British energy conglomerates (multi-national companies). The terms of which were detailed by the British newspaper the Independent on January 7.
The language of the new law-which is expected to be approved by the Iraqi parliament any day and put into place by March-was written by a US consulting firm Bearingpoint Inc. under a contract from USAID hired by the Bush administration and presented (shown) to the major oil companies and the International Monetary Fund (IMF) during the summer. As of December, many if not most Iraqi parliamentary members had still not seen the legislation.
The Independent, which obtained a leaked version of the law, reported Sunday, “The Iraqi Council of Ministers is expected to approve, as early as today, a controversial new hydrocarbon (oil) law, heavily pushed by the US and UK governments, that will radically (drastically) redraw the Iraqi oil industry and throw open the doors to the third-largest oil reserves in the world. It would allow the first large-scale operation of foreign oil companies in the country since the industry was nationalized (government controlled) in 1972.” The newspaper added that the new law would be a “radical departure from the norm for developing countries” and would be the first of its kind for any major oil producer in the Middle East, where Saudi Arabia and Iran, the world's number one and two largest producers, “both tightly control their industries through state-owned companies with little foreign collaboration (partnership or help),” as do most members of the Organization of Petroleum Exporting Countries (OPEC).
The most significant (most important) legal aspect of the legislation (law) is the introduction of so-called “production-sharing agreements” (PSAs), in which the state maintains formal ownership of oil reserves but pours out billions in compensation (payment) to foreign oil companies for their investment in the infrastructure and operation of drills, pipelines and refineries.
According to the draft of the legislation, the PSAs in Iraq would be fixed for 30 years or more, allowing foreign oil companies to maintain favorable arrangements no matter what a future government might do to regulate their profits, tax rates or production levels. One provision (part) in an earlier draft of the new law-which may or may not be retained (kept) in the latest version-insists (requires) that any disputes with a foreign company must ultimately be settled by international, rather than Iraqi courts.
The terms granted under the new law will guarantee massive profits to ExxonMobil, Chevron, BP and other energy conglomerates. While recovering the costs of their initial investment to develop an oil field, foreign companies will be able to retain (keep) 60% to 70% of oil revenue. After recouping (getting back) their initial outlay (beginning cost), the companies can take up to 20 percent of the profit. By contrast, the French oil company Total signed a deal with Saddam Hussein before the second Iraq war to develop a huge field that would have allowed the company to retain only 40 percent of the profits while it was recovering its costs and 10 percent afterwards, according to Dr. Muhammed-Ali Zainy, a senior economist at the Centre for Global Energy Studies.
According to International Energy Agency figures, PSAs are used in connection with only 12% of world oil reserves, in countries where exploration prospects (possibility) are uncertain and production costs are high. None of this applies to Iraq, where the cost-per-barrel of extracting oil is among the lowest in the world because the reserves are relatively close to the surface, and many fields have already been discovered but not developed due to years of war and economic sanctions. Most of Iraq's giant oil fields have already been mapped and therefore there are no exploration costs and risks, unlike the North Sea, the Amazon, the Arctic or from tar sands in Canada, where huge outlays are required.
Chapter 4, Article 109 specifies that all new oil fields, the country's most valuable commodity must be developed in tandem (together) with foreign multinationals.
The agreement signed by the US-backed government in Baghdad states “Under the chapter entitled, 'Fiscal Regime,' the draft spells out that foreign companies have no restrictions on taking their profits out of the country, and are not subject to any taxation when doing this.” The draft law states, “A Foreign Person may repatriate its exports proceeds [in accordance with the foreign exchange regulations in force at the time].” Shares in oil projects can also be sold to other foreign companies: “It may freely transfer shares pertaining to any non-Iraqi partners.”
More weekly updated information at: http://www.rigzone.com/news/article.asp?a_id=40132
Update Jan 16, 2007. The newly amended copy of the controversial law dated Dec.15, seen by Dow Jones Newswires, doesn't refer directly to PSAs, as the first draft did a few months ago. "We have changed the text of the law from PSA to
220;development and production contract” (DPC's)
in order to avoid (media) fuss
," said the senior official, who is close to the committee entrusted with drafting the law.The new draft law recommends the Iraqi government sign "development and production contracts," or DPCs, along with service or risk production contracts with foreign companies to upgrade the country's war-ravaged oil industry.
The Kurdish authority has already signed agreements with several small oil and gas companies, including U.S.-based Calibre Energy Inc. (CBRE), Canada's Addax Petroleum Corp. (AXC.T), Norway's Det Norske Oljeselskap (DNO.OS) and Turkey's Petoil.
Continue to: Iraqi Oil Reserves
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Farming
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Iraqi regime to hand over oil reserves to US energy giants
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Iraqi Oil Reserves
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