Tuesday, July 01, 2008

Iraqis say NO to profit sharing with big oil

The Iraqi oil ministry says big oil companies are dragging their feet about finalizing short term contracts because they want part of the profits of the oil, not just service contracts. It's a little like your gardener demanding you put his name on the deed to your house in exchange for mowing your lawn.

The Iraqis aren't stupid about this and said no.

Profit sharing is what the big oil companies demanded in the Hydrocarbon Law too, but the Iraqis are unlikely to ratify it with that in, given their hard line here.

It would be ironic if after a three trillion dollar war, over four thousand US soldiers dead, and over a million Iraqis dead, the oil companies got the same deal they would likely have gotten before the war.

Ironically, it is likely that the Iraqis are more eager to ramp up production than the major big oil companies. Before the war, Oil & Gas Journal said they were concerned that once the sanctions came off Iraq, they would pump too much and drive prices down. They would probably prefer to be in the driver's seat so they could set the pace to pad their profits rather than help out the Iraqis--or us.

Monday, June 30, 2008

Iraq offers oil contracts

Hussein al-Shahristani, the oil minister, told a news conference that the deals had not yet been concluded as the companies wanted a share of the profits.

"We did not finalise any agreement with them because they refused to offer consultancy based on fees as they wanted a share of the oil," he said.

Shahristani stressed that Iraq needed the services of experienced companies to realise the potential of its reserves but added that it was not ready to do so at any price.

"It is not possible for Iraq which has large oil reserves to stay at the current level of production. Iraq should be the second or the third source of oil exportation," the minister said.

"We went to these global companies and asked them to offer us consultancy but they will have no privileges or will not get a share of oil."



UPDATE: Greg Muttitt at Hands Off Iraqi Oil has a less optimistic and more knowledge opinion of the current contract negotiations.

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