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Iraq has the world’s second largest proven oil
reserves. According to oil industry experts, new
exploration will probably raise Iraq’s reserves to
200+ billion barrels of high-grade crude,
extraordinarily cheap to produce. The four giant
firms located in the US and the UK have been keen to
get back into Iraq, from which they were excluded
with the nationalization of 1972.
During the final years of the Saddam era, they
envied companies from France, Russia, China, and
elsewhere, who had obtained major contracts. But UN
sanctions (kept in place by the US and the UK) kept
those contracts inoperable. Since the invasion and
occupation of Iraq in 2003, everything has changed
and the companies have been scrambling to grab their
share of the spoils. In the new setting, with
Washington running the show, "friendly" companies
expect to gain most of the lucrative oil deals that
will be worth hundreds of billions of dollars in
profits in the coming decades. The new Iraqi
constitution of 2005, greatly influenced by US
advisors, contains language that guarantees a major
role for foreign companies.
Negotiators hope soon to complete deals on
Production Sharing Agreements that will give the
companies control over dozens of fields, including
the fabled super-giant Majnoon, whose 21 billion
barrels are worth $1.5 trillion at today's prices.
But no contracts could be signed until after
elections and the formation of a new government, so
that the Iraqi side would appear legally legitimate.
While regional governments angle for influence over
the foreign oil contracts, most Iraqis favor
continued control by a national company and the
powerful oil workers union opposes
de-nationalization. Iraq's political future is very
much in flux, but oil remains the central feature of
the political landscape.
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