Tuesday, December 01, 2009

Iraq 1, Exxon 0

Yes, I really am a vindictive bitch. I thoroughly enjoyed this NY Times article, in which we learn that Iraq out-maneuvered the American oil mega-corps.

More than six and a half years after the United States-led invasion here that many believed was about oil, the major oil companies are finally gaining access to Iraq’s petroleum reserves. But they are doing so at far less advantageous terms than they once envisioned.

The companies seem to have calculated that it is worth their while to accept deals with limited profit opportunities now, in order to cash in on more lucrative development deals in the future, oil industry analysts say. ...

Iraq’s first stab at opening its oil industry to foreign investment ended in disappointment at an auction in June in which most companies declined to bid. But last month many of those same companies — including Exxon Mobil and Occidental Petroleum, the first American companies to reach production agreements with Baghdad since the 2003 invasion — signed deals at much the same terms they rejected over the summer.
[Emphasis added]

What happened?

A couple of other nations' oil companies cut deals after the auction with the same limitations demanded at the auction the American companies balked at. Fearful at being completely shut out, the Exxon Brigade caved. Those limitations, by the way, are very significant and the Iraqi leaders showed some wisdom and some, well, leadership in demanding them.

In the recent deals, the major oil companies have agreed to accept service contracts, in which they earn a fee for each barrel of oil produced. Yet they vastly prefer production-sharing agreements, in which they gain an equity stake in the oil itself. Such deals are far more lucrative to oil companies, but for Iraqis they are reminiscent of the colonial era, when foreign companies controlled the country’s oil wealth. “We have shown that we can attract international companies to invest in Iraq and boost production through service contracts,” Hussain al-Shahristani, Iraq’s oil minister, said recently. “They will not have a share of Iraqi oil, and our country will have total control over production.” [Emphasis added]


The war in Iraq was supposed to be a cakewalk, as was taking control over the vast oil reserves Iraq has. George and Dick's Fabulous Adventure didn't turn out so well, did it, boys and girls.

Schadenfreude: it's not just for breakfast.

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Anonymous Anonymous said...

How could you expect leaders named Dick and Bush to lead well

4:01 PM  

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