Still waiting to cash in on Iraq’s oil
“You would need a very stable, long-term legal environment” for the big western oil companies to invest the tens of billion of dollars needed to really ramp up production there, said Greg Priddy, a global energy analyst at the Eurasia group, a political risk consultancy. “Everyone sees this as a long-term opportunity, but they have to get the political situation sorted out first.”
Iraqi lawmakers attempted earlier this year to pass a law governing the way oil contracts and revenues are managed. But the law got bogged down in parliament after Kurds objected to the greater control it gave the central government in allotting oil contracts and doling out royalties. The Iraqi public – and many lawmakers – also saw it as giving away the county’s oil reserves to foreign firms.
Critics of the proposed oil law said it gave foreign firms control over production on individual fields and did not require them to hire Iraqi workers or share technology.
“It really is a dream law for the companies,” said Antonia Juhasz, a fellow at the research and advocacy group Oil Change International. “And privatization is not viewed as a good thing by most Iraqis.”
But the law could impose high royalties, such as the 90 percent tax on oil profits in places like Russia and Libya, which would return most of the money to the Iraqi people. Some analysts say passing a national oil law and opening up the country to foreign firms is essential.
“The sort of investment they would need would be tens of billion of dollars,” said Priddy. “It would be very difficult for them to do that on their own.”
But others say the Iraq national oil company could do the job themselves, given the resources to invest, renewed training overseas, and, of course, a more peaceful environment.
