The Independent is whining about potential terms for Iraqi oil development while handily ignoring inconvenient facts.
Iraq's massive oil reserves, the third-largest in the world, are about to be thrown open for large-scale exploitation by Western oil companies under a controversial law which is expected to come before the Iraqi parliament within days. ...Oil industry executives and analysts say the law, which would permit Western companies to pocket up to three-quarters of profits in the early years, is the only way to get Iraq's oil industry back on its feet after years of sanctions, war and loss of expertise. But it will operate through "production-sharing agreements" (or PSAs) which are highly unusual in the Middle East, where the oil industry in Saudi Arabia and Iran, the world's two largest producers, is state controlled.
The fact of the matter is that there are no major non-Western oil companies that aren't state controlled. If you object to "Western" companies profiting, then who would you suggest should develop Iraq's oil? Saudi Arabia or Iran? China?
Furthermore, even state-controlled oil companies in the Middle East are only so financially... all the expertise comes from foreigners.
Supporters say the provision allowing oil companies to take up to 75 per cent of the profits will last until they have recouped initial drilling costs. After that, they would collect about 20 per cent of all profits, according to industry sources in Iraq. But that is twice the industry average for such deals.
When there's a lot of risk and not much profit to be had, even seemingly large percentages might not add up to many real dollars.
Greg Muttitt, a researcher for Platform, a human rights and environmental group which monitors the oil industry, said Iraq was being asked to pay an enormous price over the next 30 years for its present instability. "They would lose out massively," he said, "because they don't have the capacity at the moment to strike a good deal."
Well, that's the free market for you. Any different arrangement forced on oil companies at gunpoint would be a disservice to Iraq. The current instability is the fault of the people of Iraq and it has a definite cost to everyone, them included.
