IRAQ: ON SALE

Uruknet: Who Will Possess Iraq’s Oilfields?

A friend wrote recently from Occupied Iraq that with the December elections over Iraq had truly been stolen. I thought perhaps they were referring to the stamp of legitimacy elections would give Iraq’s American-approved government, but they were actually talking about the final pieces falling in to place for those who’ve long coveted Iraq’s oilfields.

The "how" begins with Iraq’s new constitution; written largely behind closed doors and with tremendous US influence, it was voted into place during October’s referendum. Cleverly, it gives the impression that Iraq’s oil will remain in the hands of its people by guaranteeing "oil and gas is the property of all the Iraqi people" and that revenues from "current fields" will be fairly distributed across the provinces. The key phrase is "current fields;" in the following section the document then requires all future exploration use "the most modern techniques of market principles and encouraging investment." The modern investment model being promoted in Iraq during these secret meetings is production sharing agreements, or PSAs.

Mostly political in nature, PSAs maintain the technicality—and just as importantly, the appearance—of keeping oil ownership in government hands, yet the majority of profits goes to private companies. These agreements are generally used in countries where oil is either hard to extract and therefore expensive, or where reserves are small enough that companies may be unwilling to invest. PSAs guarantee a high profit margin, providing an enticement to otherwise uninterested oil companies. In Iraq, where extracting oil is not technologically challenging and reserves are huge, PSAs don’t make sense—unless they are intended to benefit someone other than Iraqis.