WSJ : Iraq's Oil Surge

Iraq's Oil Surge

July 5, 2008

Here's a thought experiment: Assume that Iraq's democratic government declared it was nationalizing its oil industry, a la Venezuela or Saudi Arabia, while excluding American companies from the country. How do you think U.S. politicians would react? With angry cries of "ingratitude" and "this is what Americans died for"?

Of course they would, led no doubt by that critic for all reasons, Senator Chuck Schumer of New York. So it is passing strange that Mr. Schumer and other Senators are now assailing Iraq precisely because it is opening up to foreign oil companies, especially to U.S. majors like Exxon Mobil and Chevron. For some American pols, everything that happens in Iraq is bad news, especially when it's good news for the U.S.

Iraq announced this week that it is inviting global competition to develop its major oil reserves, with 35 oil companies invited to bid. By tapping outside capital and expertise, Iraq hopes to increase production by 60%, providing a much-needed boost to its own coffers and the world's tight oil supply.

This is welcome news. With elections looming later this year and next, the temptation for Prime Minister Nouri al-Maliki's government must have been to play the nationalist card – the way that Mr. Schumer did against Dubai Ports World's proposed U.S. investment in 2006 (see, for instance, "Ports of Gall"). Many Iraqis remain suspicious of outside oil companies – the legacy of a colonial past in which Iraq felt exploited for its oil.

Instead, Iraq chose competitive bidding that will bring in the best expertise to exploit its national resource. Oil Minister Hussain al-Shahristani is predicting that, with outside help, Iraq could become the second or third largest oil-producing country in the world. Today it produces about 2.5 million barrels a day, compared to 11 million for the world-leading Saudis. Foreign companies will be required to have an Iraqi partner, and to hire Iraqis, while most oil revenues will still flow to the Iraqi people.

What seems to irk Mr. Schumer – and running mates John Kerry and Missouri's Claire McCaskill – is Iraq's decision to sign shorter-term, no-bid service contracts with Exxon Mobil, Royal Dutch Shell, BP, Total and Chevron. Most of these firms had extensive experience in Iraq prior to Saddam Hussein's nationalization, and were chosen because their knowledge will help Iraq boost near-term production. The contracts will run no more than two years, and all five firms have spent the past three years providing training, analysis and advice to Iraq – free of charge.

The Democrats nonetheless stomped their feet in a letter last week to Secretary of State Condoleezza Rice. They demanded that she intervene to stop the Iraqis "from signing contracts with multinational oil companies until a [national oil law] is in effect in Iraq." Their complaint is that a hydrocarbon law is one of the Bush Administration's "benchmarks for reconciliation" in Iraq, and that these oil contracts would only "further deepen political tension in Iraq and put our service members in even greater danger." They also griped that the five firms would get an "insider's advantage" to later oil bidding.

Also piling on is House baron Henry Waxman, who is upset with a separate contract that the Kurdistan Regional Government has signed with Texas's Hunt Oil. Mr. Waxman thinks the Bush Administration didn't do enough to stop the deal. Then again, this is old news, as the contract was signed last year. And while the Baghdad central government wasn't pleased the Kurds had moved on a contract without national approval, the deal hasn't impeded Iraq's broader progress.

We doubt French politicians are objecting to Total's contract, but American Democrats are so blinkered about Iraq that they now object even to U.S. companies getting business on the merits. The hydrocarbon law would help to clarify revenue-sharing between Baghdad and Iraq's outlying provinces. But even without that law, oil revenues are already flowing throughout the country, including to Sunni-majority areas.

The faster and more efficiently the oil deposits are developed, the more revenue there will be to distribute. And the faster Iraq will be able to rebuild on its own – which is what Democrats say they want. Meanwhile, by inviting foreign partners, Iraq is avoiding the trap of nationalization that has harmed so many countries. It concentrates political power, undermining democracy. National oil companies also tend to underinvest in technology, letting harder-to-exploit oil become a wasting asset.

What the U.S. should promote in Iraq is some kind of oil trust, or stock or revenue dispersal, that would give individual Iraqis a share of their oil wealth. This would be both a tool to build national unity and to prevent any one political group from dominating Iraq's main revenue source. If Mr. Schumer wants to help on that score, he might do some good.

Reuters : Iraq invasion was "successful endeavor": Cheney

Iraq invasion was "successful endeavor": Cheney

By Tabassum Zakaria | March 17, 2008

BAGHDAD (Reuters) - U.S. Vice President Dick Cheney on Monday declared the 2003 U.S.-led invasion of Iraq a "successful endeavor" during a visit to Baghdad, on the same day a woman suicide bomber killed 40 people.

"If you look back on those five years it has been a difficult, challenging but nonetheless successful endeavor ... and it has been well worth the effort," Cheney, an architect of the invasion, said after meeting Iraqi leaders.

The Iraq war is a major issue in the U.S. presidential campaign. Entering its sixth year this week, it has cost the United States $500 billion. U.S. Democratic hopeful Hillary Clinton said on Monday the final bill could be $1 trillion.

Tens of thousands of Iraqis and nearly 4,000 U.S. soldiers have been killed. The military said two more soldiers died on Monday when a roadside bomb hit their vehicle near Baghdad.

In a northern district of the capital, six children were killed when a mortar round hit their home, Iraq's military said.

Shortly after Cheney spoke, a woman wearing a suicide vest blew herself up in a cafe in the southern holy Shi'ite city of Kerbala, killing 40 people and wounding 71, police and health officials said. Bombs in Baghdad killed four and wounded 13.

"I was talking with a friend and eating bread a few meters away from the cafe. Suddenly I heard a huge explosion and I was thrown to the floor. I saw smoke and bodies," witness Mohammed Kadhem, 39, recounted after the Kerbala blast.

Cheney arrived as Republican presidential candidate John McCain was meeting Iraqi leaders as part of a Senate Armed Services Committee fact-finding mission.

"I was last in Baghdad 10 months ago and I sense, as a result of the progress that has been made since then, phenomenal changes in terms of the overall situation," Cheney said after meeting Iraqi Prime Minister Nuri al-Maliki.

"This visit is important because it comes at a time when there's a great deal of progress taking place in Iraq," Maliki said through a translator.

A poll of 2,000 people from across Iraq, commissioned by international broadcasters including the BBC and U.S. network ABC, found rising optimism among them.

Cheney said there had been a "remarkable turnaround" in security after 30,000 extra U.S. troops were sent to Iraq last year to help quell sectarian violence that threatened civil war.

Despite the improved security, however, some 4 million Iraqis are still displaced, and the International Committee of the Red Cross said in a report on Monday that millions were still deprived of clean water and medical care.

"SURGE WORKING"

Like McCain, Cheney is in Iraq as part of a wider visit to the Middle East. He was due to spend the night at a military base and will also visit Saudi Arabia, Jerusalem, the Palestinian territories, Turkey and Oman on a nine-day tour.

Both men have been staunch supporters of the U.S. troop build-up or "surge". The U.S. military says violence in Iraq has dropped by 60 percent since last June, although it acknowledges an upsurge in attacks since January.

"The surge is working," McCain told CNN in an interview in Baghdad, countering demands by Democratic presidential candidates Clinton and Barack Obama for U.S. troops to be withdrawn from Iraq as soon as possible.

McCain and Cheney did not cross paths during the day as the vice president held a series of meetings with Iraqi leaders. He traveled outside the U.S.-protected Green Zone in a heavily armored motorcade to visit Iraqi President Jalal Talabani and powerful Shi'ite political leader Abdul-Aziz al-Hakim.

"There is still a lot of difficult work that must be done, but as we move forward the Iraqi people should know that they will have the unwavering support of President Bush and the United States in consolidating their democracy," Cheney said after meeting Abdul Aziz al-Hakim, head of Iraq's largest Shi'ite political bloc, the Supreme Islamic Iraqi Council.

Among the political issues Cheney discussed with Iraq's leaders was a stalled hydrocarbon law, stressing that it was important to Iraq's national development, U.S. ambassador Ryan Crocker said later.

The law would share revenues from Iraq's vast oil reserves, the world's third largest, but remains blocked because of reluctance to compromise among Iraq's political blocs.

(Additional reporting by Sami al-Jumaili in Kerbala and Mohammed Abbas in Baghdad; writing by Paul Tait and Ross Colvin; editing by Andrew Roche)

WaPo : The President Asserted Progress on Security and Political Issues. Recent Reports Weren't Often So Upbeat.

The President Asserted Progress on Security and Political Issues. Recent Reports Weren't Often So Upbeat.

By Glenn Kessler | Washington Post Staff Writer | September 14, 2007

In his speech last night, President Bush made a case for progress in Iraq by citing facts and statistics that at times contradicted recent government reports or his own words.

For instance, Bush asserted that "Iraq's national leaders are getting some things done," such as "sharing oil revenues with the provinces" and allowing "former Baathists to rejoin Iraq's military or receive government pensions."

Yet his statement ignored the fact that U.S. officials have been frustrated that none of those actions have been enshrined into law -- and that reports from Baghdad this week indicated that a potential deal on sharing oil revenue is collapsing.

In a radio address to the nation less than a month ago, the president himself complained that the Iraqi government was failing to address these issues. "Unfortunately, political progress at the national level has not matched the pace of progress at the local level," Bush said on Aug. 18. "The Iraqi government in Baghdad has many important measures left to address, such as reforming the de-Baathification laws, organizing provincial elections and passing a law to formalize the sharing of oil revenues."

Bush also asserted that Baqubah, the capital of Diyala province, was once an al-Qaeda stronghold but that "today, Baqubah is cleared." But in a meeting with reporters on Aug. 27, the head of the State Department team in Diyala said the security situation was not stable, hampering access to food and energy, though he acknowledged that commerce was returning to Baqubah.

"Everything is based around security; if we have security, then we can bring in agencies like USAID," John Melvin Jones said, referring to the U.S. Agency for International Development. "It's going to take a while before the security situation gets stable enough so that you can have a lot of these other agencies involved."

Bush also thanked "the 36 nations who have troops on the ground in Iraq." But the State Department's most recent weekly report on Iraq said there are 25 countries supplying 11,685 troops -- about 7 percent of the size of the U.S. forces.

At one point, the president cited a recent report by a commission headed by retired Marine Gen. James Jones, saying that "the Iraqi army is becoming more capable, although there is still a great deal of work to be done to improve the national police."

But the report said Iraq's army will be unable to take over internal security from U.S. forces in the next 12 to 18 months and "cannot yet meaningfully contribute to denying terrorists safe haven." It also described the 25,000-member national police force as riddled with sectarianism and corruption, and it recommended that it be disbanded.

The commission also recommended that U.S. troops in Iraq be "retasked" in early 2008 to protect critical infrastructure and guard against border threats from Iran and Syria, while gradually turning responsibility for security over to Iraqi forces despite their deficiencies -- advice the president did not follow in last night's speech.

The president also painted a relatively favorable picture of Baghdad, saying that a year ago much of it "was under siege" but that today "ordinary life is beginning to return." He did not mention that much of the once-heterogeneous city has been divided into Shiite and Sunni enclaves.

The president also said that groups of "Iranian-backed militants" are "being broken up, and many of their leaders are being captured or killed." In congressional testimony this week, Gen. David H. Petraeus and Ambassador Ryan C. Crocker emphasized that Iran poses a looming menace in Iraq.

NYT : Compromise on Oil Law in Iraq Seems to Be Collapsing

Compromise on Oil Law in Iraq Seems to Be Collapsing

By JAMES GLANZ | September 13, 2007

BAGHDAD, Sept. 12 — A carefully constructed compromise on a draft law governing Iraq’s rich oil fields, agreed to in February after months of arduous talks among Iraqi political groups, appears to have collapsed. The apparent breakdown comes just as Congress and the White House are struggling to find evidence that there is progress toward reconciliation and a functioning government here.

Senior Iraqi negotiators met in Baghdad on Wednesday in an attempt to salvage the original compromise, two participants said. But the meeting came against the backdrop of a public series of increasingly strident disagreements over the draft law that had broken out in recent days between Hussain al-Shahristani, the Iraqi oil minister, and officials of the provincial government in the Kurdish north, where some of the nation’s largest fields are located.

Mr. Shahristani, a senior member of the Arab Shiite coalition that controls the federal government, negotiated the compromise with leaders of the Kurdish and Arab Sunni parties. But since then, the Kurds have pressed forward with a regional version of the law that Mr. Shahristani says is illegal. Many of the Sunnis who supported the original deal have also pulled out in recent months.

The oil law — which would govern how oil fields are developed and managed — is one of several benchmarks that the Bush administration has been pressing the Iraqis to meet as a sign that they are making headway toward creating an effective government.

Again and again in the past year, agreement on the law has been fleetingly close before political and sectarian disagreements have arisen to stall the deal.

One of the participants in Wednesday’s meeting, Deputy Prime Minister Barham Salih, who has worked for much of the past year to push for the original compromise, said some progress had been made at the meeting, but that he could not guarantee success.

“This has been like a roller coaster,” said Mr. Salih, who is Kurdish. “There were occasions where we seemed to be there, where we seemed to have closure, only to fail at that.”

“Given the seriousness of the issue, I don’t want to create false expectations, but I can say there is serious effort to bring this to closure,” he said.

The legislation has already been presented to the Iraqi Parliament, which has been unable to take virtually any action on it for months. Contributing to the dispute is the decision by the Kurds to begin signing contracts with international oil companies before the federal law is passed. The most recent instance, announced last week on a Kurdish government Web site, was an oil exploration contract with the Hunt Oil Company of Dallas.

The Sunni Arabs who removed their support for the deal did so, in part, because of a contract the Kurdish government signed earlier with a company based in the United Arab Emirates, Dana Gas, to develop gas reserves.

The Kurds say their regional law is consistent with the Iraqi Constitution, which grants substantial powers to the provinces to govern their own affairs. But Mr. Shahristani believes that a sort of Kurdish declaration of independence can be read into the move. “This to us indicates very serious lack of cooperation that makes many people wonder if they are really going to be working within the framework of the federal law,” Mr. Shahristani said in a recent interview, before the Hunt deal was announced.

Kurdish officials dispute that contention, saying that they are doing their best to work within the Constitution while waiting for the Iraqi Parliament, which always seems to move at a glacial pace, to consider the legislation.

“We reject what some parties say — that it is a step towards separation — because we have drafted the Kurdistan oil law depending on Article 111 of the Iraqi Constitution, which says oil and natural resources are properties of Iraqi people,” said Jamal Abdullah, a spokesman for the Kurdistan Regional Government. “Both Iraqi and Kurdish oil laws depend on that article,” Mr. Abdullah said.

But the prime minister’s office believes there is a simpler reason the Sunnis abandoned or at least held off on the deal: signing it would have given Mr. Maliki a political success that they did not want him to have. “I think there is a political reason behind that delay in order not to see the Iraqi government achieve the real agreement,” said Sadiq al-Rikabi, a political adviser to Mr. Maliki. Mr. Rikabi was at Wednesday’s meeting.

Ali Baban, who as a senior member of Tawafiq negotiated the compromise, said that allegation was untrue. “I have a good relationship” with Mr. Maliki, he said. “This is an issue of Iraqi unity. This could cause a split in this country.”

Mr. Maliki has suggested returning to the original language agreed to in February and trying once again to push the law through Parliament. Mr. Salih says there is basic agreement on returning to that language, but conceded that Sunni participants in Wednesday’s meeting might insist on a deal that includes changes to the Iraqi Constitution to safeguard their interests in the distribution of revenues. A law on how the revenue should be shared is being developed as a critical companion piece of legislation to the draft law.

The central element of the compromise was agreed to in February after months of difficult negotiations among Iraq’s political groups.

The main parties in those negotiations were Iraqi Kurds, who were eager to sign contracts with international oil companies to develop their northern fields; Arab Shiites, whose population is concentrated around the country’s southern fields; and Arab Sunnis, with fewer oil resources where they predominate.

Those facts meant that the compromise law had to satisfy both the Sunni insistence that the central government maintain strong control over the fields as well as the push by the Kurds and Shiites to give provincial governments substantial authority to write contracts and carry out their own development plans.

Somehow negotiators managed to strike that balance, but soon after, the agreement began to crumble. Many of the negotiations centered on a federal committee that would be set up to review the contracts signed with oil companies to carry out the development and exploitation of the fields. The Kurds objected to any requirement that the committee would have to approve contracts. So in a nuanced bit of language, the negotiators gave the committee the power only to reject contracts that did not meet precisely specified criteria.

But problems immediately cropped up after the cabinet approved the draft law and, in what seemed to be a perfunctory step, it went to a council that was supposed to hone the language to be sure it complied with Iraqi legal conventions.

When the draft emerged from that council, the members of some parties, particularly the Kurdish ones, thought that the careful balance struck in the draft had been upset, and they accused Mr. Shahristani of meddling. Then the law languished in Parliament and, said Hoshyar Zebari, the Iraqi foreign minister, the Kurds decided to send a signal that they would not wait indefinitely and signed the contract with Dana Gas.

“It served as a reminder: ‘If you keep stalling, life goes on,’ ” said Mr. Zebari, who is Kurdish.

On Monday the Kurdistan Regional Government, or K.R.G., issued another rejoinder to the oil minister’s views that the Kurds’ moves were illegal. “His views are irrelevant to what the K.R.G. is doing legally and constitutionally in Kurdistan,” the regional government said.

Mr. Shahristani was apparently traveling and did not respond to e-mail messages sent Wednesday. But Saleem Abdullah al-Juburi, a Tawafiq member who participated in Wednesday’s meeting, gave his own assessment of the Kurdish agreements with Hunt and Dana Gas. “The contracts are not legal,” he said.

Reporting was contributed by Ahmad Fadam, Ali Hamdani and Khalid al-Ansary from Baghdad, and an Iraqi employee of The New York Times from northern Iraq.

UPI : Iraq unions vow 'mutiny' over oil law

Iraq unions vow 'mutiny' over oil law

July 20, 2007

BAGHDAD, July 20 (UPI) -- Iraq's unions say the draft oil law is a threat and threaten "mutiny" if Parliament approves the bill.

"This law cancels the great achievements of the Iraq people," Subhi al-Badri, head of the Iraqi Federation of Union Councils, told the al-Sharqiyah TV station. He referred specifically to laws that nationalized Iraq's oil sector.

Iraq holds 115 billion barrels of proven reserves, the third largest in the world, and likely much more when the country is fully explored.

It could produce more than the 2 million barrels per day, and many are pushing the oil law as a means of solidifying investment in the sector. The law, as drafted, allows for foreign access to the oil, a line that must not be crossed, the oil unions say.

They have threatened to strike in the past -- and made good on the threat as recently as last month -- and claim workers of all sectors support them.

That was verified by Badri's interview, as reported by the Middle East Economic Survey.

"If the Iraqi Parliament approves this law, we will resort to mutiny," he said. "This law is a bomb that may kill everyone. Iraqi oil does not belong to any certain side. It belongs to all future generations."

The law is stuck in negotiations with various parties demanding either a strong regional/local control over the oil sector vs. a strong federal government control.

Forbes : Hundreds of Iraqis protest draft oil law

Hundreds of Iraqis protest draft oil law

July 16, 2007

BASRA (Thomson Financial) - About 300 oil industry workers gathered in Iraq's main oil port of Basra today to protest a draft law that they said would allow foreigners to pillage the country's wealth.

'To compensate for the military and political failure of the US administration in Iraq, this administration is trying to control the country's wealth,' the organisers said in a statement distributed to reporters.

'If this is endorsed by the parliament it would abolish sovereignty and hand over the wealth of this generation and the generations to come as a gift to the occupier,' the statement said.

The protesters, employees of the Oil Pipelines Company, wore black surgical masks over their faces and carried banners and black coffins with the word 'freedom' written on the sides.

At issue is a clause in the draft hydrocarbon law allowing for production-sharing agreements with foreign oil companies, which many Iraqis see as a throwback to an earlier era of colonial exploitation.

'This law, in fact destroys the achievements of the Iraqi masses and especially the Law number 80 of 1961 and the nationalisation of 1973,' the statement said.

The law from 1961, part of a bundle of socialist reforms issued by then-Prime Minister Abdul Karim Qassim, sharply limited foreign involvement in the oil sector.

US officials see the passing of the draft hydrocarbon law -- aimed at equitably distributing Iraq's oil proceeds -- as a crucial benchmark of the country's political process and a key component of national reconciliation.

The News : Iraqis protest draft oil law that will allow US to pillage the country’s wealth

Iraqis protest draft oil law that will allow US to pillage the country’s wealth

By Kaleem Omar

Hundreds of Iraqi oil industry workers gathered in Basra on Monday to protest a draft oil law that would allow foreigners to pillage the country’s wealth. For ‘foreigners’ read large US oil companies, also known as Big Oil, with whom senior Bush administration officials have long had close ties.

The officials include President George W. Bush (who began his career in the oil business in Texas) Vice-President Dick Cheney (former CEO of Houston-based oil services giant Halliburton) and others. Chevron, a leading member of Big Oil, has even named one of its oil supertankers after Secretary of State Condoleezza Rice.

Iraq has the world’s second biggest proven oil reserves after Saudi Arabia. At 112 billion barrels, Iraq’s proven reserves are worth more than $ 8.7 trillion at the current crude oil price of $ 78 per barrel.

“If this (the new draft law) is endorsed by the (Iraqi) parliament, it would abolish sovereignty and hand over the wealth of this generation and the generations to come as a gift to the occupier,” the organizers of the protest demonstration said in a statement distributed to reporters in Basra.

The AFP news agency reported that the protestors, employees of the Oil Pipelines Company, wore black surgical masks over their faces and carried banners and black coffins with the word “freedom” written on both sides.

At issue, said the AFP report, is a clause in the draft hydrocarbon law allowing for production-sharing agreements with foreign oil companies, which many Iraqis see as a throwback to an earlier era of colonial exploitation.

“This law, in fact, destroys the achievements of the Iraqi masses and especially the Law number 80 of 1961 and the nationalization of 1973,” the statement said.

The 1961 law sharply limited foreign involvement in Iraq’s oil sector.

US officials, however, see the passing of the draft hydrocarbon law – which they claim is aimed at “equitably distributing Iraq’s oil proceeds” – as a “crucial benchmark of the country’s political process and a key component of national reconciliation”.

Skeptics, however, ask: “Equitably distributing Iraq’s oil proceeds to whom?”

“Let’s cut through the bull,” said one American Red Indian skeptic, adding: “Our government is saying, ‘If you don’t turn over your oil, we’re going to bomb you to smithereens. How I love the fostering of American democracy. Out on this reservation where I live, there’s a saying: ‘White man talk with forked tongue.’ No bigger fork than the one in Bush/Cheney tongues. Impeach! Impeach! Impeach!.”

Another American skeptic, who lives in Oregon, said, “The main reason for invading Iraq was to get hold of their oil on a permanent basis. The Bush/Cheney crime family feels like that (Iraqi oil) is theirs and nobody else’s. What right do the Iraqi people have for a future? No more right than we have. They will bomb Iran with their nukes and create nuclear winter, all to keep the oil price up for themselves…”

At a White House press conference last week, Bush repeatedly stressed the need for the Iraqi parliament to pass laws that the US has been waiting for. The new hydrocarbon law would enable US oil companies to acquire control of all undeveloped Iraqi oil fields. The oil companies would then decide how much oil revenue Iraq would receive to give to the country’s various provinces.

Said another American skeptic, “This is why we’re there; why we’re building bases; why we’ll never leave. The key is Bush needs a ‘legitimate’ (Iraqi) government to pass international law scrutiny. Malaki (occupied Iraq’s prime minister) can’t be booted out until the laws are passed.”

Said yet another American skeptic, “It has always been about the PSAs (‘production sharing’ agreements). More power to the Iraqi Petroleum Workers Unions and all of those who want sovereignty over their own oil resources! This is the only bench-mark that matters. I hope Bush & Co never get their greasy meat-hooks into that oil!!”

Another American skeptic imagined the following conversation taking place between Bush and the Iraqi people:

Bush: “Give us your oil and we’ll leave.”

The Iraqi People: “But, but, that’s all we have left, Mr Dictator! You destroyed everything else.”

Bush: “Then we’ll stay for another 50 years. How would you like that?”

Bush has repeatedly said that US forces won’t leave Iraq “until the job is done”. That “job”, say critics of the Bush administration’s policy, is to tie up Iraq into production and revenue sharing of its only asset: oil. The draft hydrocarbon law, if passed, will leave the Iraqi people with less revenue with which to rebuild their war-torn country and unify its disparate factions.

As one American critic of the Bush administration’s Iraq policy said, “I think it’s criminal to plunder another country for its assets, notwithstanding that every war fought and every invasion sanctioned since the mists of time had to do with resources and control. The trouble is that it is now the 21st century and we, as a species, seem to have learnt nothing in ten thousand years. We are still barbaric in nature, still take no notice of history, and dispose too much power in our leaders in whom the said barbarism rises, like muck, to the surface. I remain disgusted. All power to the (Iraqi) oil unions and their members. May they never give up.”

Critics say the new draft law is a form of denationalising the Iraqi oil industry. If passed, it will effectively put Iraq’s oil resources back into the hands of private oil companies and, in the words of one critic, “put the people of Iraq on an allowance for the next 30 years.”

In the words of one critic, “When you read the partitioning, percentage and duration terms of all this, it amounts to the largest mineral-rights looting in the world’s history. Never has a group of private oil companies demanded such terms and got them. When you have an occupying army invading your country, you bargain from a position of weakness and the oil companies know this. This is why they put Bush and Cheney into power in the first place.”

As if to reinforce the arguments of critics that the Bush administration has no intention of withdrawing US forces from Iraq, a story datelined Balad Air Base, Iraq, written by Charles J. Hanley and published by the Associated Press news agency on July 15, 2007 says that the US Air Force is quietly building a presence in Iraq.

Hanley writes: “Away from the headlines and debate over the ‘surge’ in US ground troops, the Air Force has quietly built up its hardware inside Iraq, sharply stepped up bombing and laid a foundation for a sustained air campaign in support of American and Iraq forces.”

Says Hanley: “Squadrons of attack planes have been added to the in-country fleet. The air reconnaissance arm has almost doubled since last year. The powerful B1-B bomber has been recalled to action over Iraq.

“The escalation worries some about an increase in ‘collateral damage,’ casualties among Iraqi civilians. Air Force generals worry about wear and tear on aging aircraft. But ground commanders clearly like what they see.”

Hanley quotes US Army Maj. Gen. Rick Lynch as saying approvingly of air support his 3rd Infantry Division received in a recent offensive south of Baghdad, “Night before last we had 14 strikes from B-1 bombers. Last night we had 18 strikes by B-1 bombers.”

As Hanley notes, “Statistics tell the story: Air Force and Navy aircraft dropped 437 bombs and missiles in Iraq in the first six months of 2007, a five-fold increase over the 86 used in the first half of 2006, and three times more than in the second half of 2006, according to Air Force data. In June, bombs dropped at the rate of more than five a day.

“Inside spacious air-conditioned ‘Kingpin,’ a new air traffic control centre at this huge Air Force hub 50 miles north of Baghdad, the expanded commitment can be seen on the central display screen: Small points of light represent more than 100 aircraft crisscrossing Iraqi air space at any one time.”

Earlier this year, the US Air Force sent a squadron of A-10 “Warthog” attack planes – a dozen or more aircraft – to be based at Al-Asad Air Base in western Iraq. At the same time it added a squadron of F-16C Fighting Falcons at the Balad Air Base north of Baghdad. The additions doubled to 50 or more the number of fighter-bomber jets available at US bases inside occupied Iraq.

Meanwhile, the US Navy has stationed a second aircraft carrier in the Persian Gulf, and the reintroduction of B1-B bombers has added a close-at-hand “platform” capable of carrying 24 tons of bombs.

What all this translates into for the people of war-ravaged Iraq is the killing of more innocent Iraqi civilians in US bombing raids and missile strikes.

NYT : Iraqis Reach an Accord on Oil Revenues

Iraqis Reach an Accord on Oil Revenues

By EDWARD WONG | February 27, 2007

BAGHDAD, Feb. 26 — The Iraqi cabinet approved a draft of a law on Monday that would set guidelines for nationwide distribution of oil revenues and foreign investment in the immense oil industry. The endorsement reflected a major agreement among the country’s ethnic and sectarian political blocs on one of Iraq’s most divisive issues.

The draft law approved by the cabinet allows the central government to distribute oil revenues to the provinces or regions based on population, which could lessen the economic concerns of the rebellious Sunni Arabs, who fear being cut out of Iraq’s vast potential oil wealth by the dominant Shiites and Kurds. Most of Iraq’s crude oil reserves lie in the Shiite south and Kurdish north.

The law also grants regional oil companies or governments the power to sign contracts with foreign companies for exploration and development of fields, opening the door for investment by foreign companies in a country whose oil reserves rank among the world’s three largest.

Iraqi officials say dozens of major foreign companies, including ones based in the United States, Russia and China, have expressed strong interest in developing fields or have done some work with the Iraqi industry. The national oil law would allow regions to enter into production-sharing agreements with foreign companies, which some Iraqis say could lead to foreigners reaping too much of the country’s oil wealth.

Iraqi officials say all such contracts will be subjected to a fair bidding process, but American inspectors have reported that the upper echelons of the government, including the senior ranks of the Oil Ministry, are rife with corruption. There are also fears among non-Americans that American companies could be favored.

But oil industry analysts in the United States say it is unclear whether companies will rush to sign contracts because the law is vague about what legal protections investors would be given.

The oil law and several related measures must still be approved by Parliament before they are enacted. Since the American-led invasion in 2003, Iraqi politics have often been split bitterly along ethnic and sectarian lines, and that kind of conflict could stall the law’s passage. Drafts were debated for months by a committee before the cabinet finally approved one.

“At the end of the day, we all supported this thing because it’s workable for all the parties,” said Barham Salih, a deputy prime minister and the head of the committee.

Distributing revenue by population is not guaranteed to placate the feuding parties because no accurate census exists. There is intense disagreement over demographics in Iraq — many Sunni Arabs insist they are the majority of Iraqis, even though Sunni Arabs are generally estimated to be 20 percent of the population, Kurds 20 percent and Shiite Arabs 60 percent.

If the law is passed, its effect on the oil industry could be enormous, assuming that foreign companies would be willing to work here despite the violence. Iraq has 80 known oil fields, 65 of which will be offered for bids for development contracts, said Hussain al-Shahristani, the oil minister.

Iraqi leaders say they want the 275-member Parliament to approve the law before May. The legislature is in recess but is expected to reconvene next month. American and Iraqi leaders had tried to get the law approved last year, but the effort bogged down at the drafting level. Before the cabinet vote on Monday, the main Sunni, Shiite and Kurdish political blocs agreed to work together to ensure that the law passes Parliament in an expeditious manner, Mr. Shahristani said.

Since last year, senior Bush administration officials and top American commanders here have said a new oil law is crucial to the country’s political and economic development, and they have pressured Iraqi leaders relentlessly to make passage of the law a priority.

In recent weeks, Ambassador Zalmay Khalilzad, the senior American envoy here, has been in intense talks with Kurdish leaders in the north to overcome their objections to the draft, which centered on the contracting powers given to the central government versus the regions. Iraqi officials say Mr. Khalilzad’s negotiations were crucial to winning unanimous cabinet approval on Monday.

“This is a significant political achievement because leaders representing all of Iraq’s communities have demonstrated that they can pull together to resolve difficult issues of vital national importance,” Mr. Khalilzad said in a written statement on Monday evening. “The drafting of this framework law was not easy. It presented special challenges for the Iraqi and Kurdistan regional governments, and the leaders of key political blocs.”

Several members of the committee overseeing the drafting said in interviews that they were confident that Parliament would ultimately endorse the law, but perhaps only after heated debate.

“It will be tough,” Mr. Salih said. “I want to admit it and I want to recognize that. It will be an interesting roller coaster, my friends.”

The writers of the draft law tried to balance the powers of regional and central governments, an issue that goes directly to the heart of the Iraq war.

The minority Sunni Arabs, who ruled Iraq for decades before the toppling of Saddam Hussein and are now leading the insurgency, have chafed at rule by the Shiites and Kurds partly because they fear that those two groups might hoard oil wealth for themselves. Sunni Arab leaders have resisted attempts by the Kurds and some Shiite politicians to create laws allowing for greater regional autonomy.

The draft law says that all revenues from current and future oil fields will be collected by the central government and redistributed to regional or provincial governments by population, in theory ensuring an equitable distribution of profits. That method could help assuage Sunni Arabs hostile to Kurdish and Shiite autonomy.

The attitudes of Sunni Arabs could also soften if more oil exploration is done on their land. Iraqi officials recently increased their estimates of the amount of oil and natural gas deposits in Sunni Arab territory after paying tens of millions of dollars to foreign oil companies to re-examine old seismic data across the country and retrain Iraqi petroleum engineers.

Industry and government analysts in and outside Iraq estimate the proven oil reserves at 115 billion barrels. Oil production peaked at 3.7 million barrels a day in 1979, according to the United States Department of Energy. Production stood at 2.6 million barrels a day before the 2003 invasion, but has dropped since.

The oil law’s drafters reached agreement on the principle of revenue sharing fairly early in the process. Much more contentious was the issue of signing oil contracts. The Kurds, who have enjoyed de facto independence in the mountainous north since the end of the Persian Gulf war in 1991, argued strongly for regional governments or companies to have full power in signing contracts with foreign companies to develop oil fields. Sunni Arab leaders insisted on keeping this power in the hands of the Oil Ministry. The Shiites fell somewhere in the middle.

The draft law has a compromise: regions can enter into contracts, but a powerful new central body, the Federal Oil and Gas Council, would have the power to prevent the contracts from going forward if they do not meet certain prescribed standards, Mr. Salih said. A panel of oil experts from inside and outside Iraq would advise the federal council on the contracts.

The draft law also re-establishes the state-run Iraq National Oil Company, which was founded in 1964 to oversee oil production but was shut down by Mr. Hussein in 1987. The company would operate separately from the Oil Ministry and use a business model. In addition, any region that can produce at least 150,000 barrels of oil a day can create its own operating company.

Energy analysts said the new law is unlikely to lead to a stampede by foreign companies anytime soon because it leaves too many unresolved issues, including the lack of a mechanism to settle potential disputes between the federal authority and local governments.

“I think the devil is going to be in the details,” said Fadel Gheit, an analyst with Oppenheimer & Company in New York. “Oil companies need governments that will honor the contracts they sign and they need a safe environment to operate,” he added.

While Mr. Gheit said he expected American and British oil companies to receive preferential treatment in the awarding of contracts, other analysts said Iraqis would be suspicious of awarding preferential deals to American companies.

“Iraqis are extremely protective of their resources,” said Rochdi A. Younsi, an analyst at Eurasia Group, a political risk consulting firm. “Given the level of anti-American sentiment, any major American oil company perceived to take advantage of their relations in government would be seen as being part of the so-called conspiracy to take over Iraq’s natural resources.”

Jad Mouawad contributed reporting from New York.

NYT : Iraqi Cabinet Approves Draft of Oil Law

Iraqi Cabinet Approves Draft of Oil Law

By EDWARD WONG | February 26, 2007

BAGHDAD, Feb. 26 — The Iraqi cabinet approved a draft of a law today that would set guidelines for countrywide distribution of oil revenues and foreign investment in the immense oil industry.

The endorsement marked a major agreement among the country’s ethnic and sectarian political blocs on one of Iraq’s most divisive issues.

The draft law approved by the cabinet allows the central government to distribute oil revenues to the provinces or regions by population, which could lessen the economic concerns of the rebellious Sunni Arabs, who fear being cut out of Iraq’s vast potential oil wealth by the dominant Shiites and Kurds.

The law also grants regional oil companies the power to sign contracts with foreign companies for exploration and development of fields, opening the door for investment by foreign oil companies in a country whose oil reserves rank among the world’s top three in size.

Iraq has 80 known fields, 65 of which will be offered up for bids for development contracts once the draft law is approved by the Iraqi Parliament, said Hussain al-Shahristani, the Iraqi oil minister. The 275-member Parliament is in recess but is expected to look at the draft once it reconvenes next month, Mr. Shahristani said. Ahead of today’s cabinet vote, the main Sunni, Shiite and Kurdish political blocs had agreed to work together to ensure that the law passes Parliament in an expeditious manner, he added.

Since last year, senior Bush administration officials and top American commanders here have said a new oil law is crucial to the country’s political and economic development, and they have been pressuring Iraqi leaders to make passage of the law a priority. In recent weeks, Ambassador Zalmay Khalilzad, the senior American envoy here, has been in intense talks with Kurdish leaders in the north to overcome their objections to the draft. Iraqi officials say Mr. Khalilzad’s negotiations were crucial to winning unanimous cabinet approval today.

Since the American-led invasion of 2003, Iraqi politics has often been split bitterly along ethnic and sectarian lines, and that kind of conflict could still stall passage of the oil law in Parliament. Drafts have been debated for months by a committee overseeing the writing of the law before the cabinet finally approved it.

“At the end of the day, we all supported this thing because it’s workable for all the parties and is all-inclusive,” said Barham Salih, a deputy prime minister and the head of the committee.

Several members of the committee said in interviews that they were confident that Parliament would ultimately endorse the law, but perhaps only after heated arguments.

“It will be tough,” Mr. Salih said. “I want to admit it and I want to recognize that. It will be an interesting roller coaster, my friends.”

The writers of the draft law tried to balance regional control of oil versus oversight by the central government, an issue directly tied to the widening violence in Iraq.

The minority Sunni Arabs, who ruled Iraq for decades before the toppling of Saddam Hussein and are now leading the insurgency, have chafed at rule by the Shiites and Kurds partly because they fear those two groups might hoard oil wealth for themselves. Most of Iraq’s crude oil reserves lie in the Shiite south and Kurdish north. Sunni Arab leaders have resisted attempts by the Kurds and some Shiite politicians to create laws allowing for greater regional autonomy.

The draft oil law says that all revenues from current and future oil fields will be collected by the central government and redistributed to regional or provincial governments by population, in theory ensuring an equitable distribution of oil. This could help calm Sunni Arabs hostile to Kurdish and Shiite autonomy.

The attitudes of Sunni Arabs could also soften if more oil exploration is done on their lands. Iraqi officials recently increased their estimates of the amount of oil and natural gas deposits on Sunni Arab territory after paying tens of millions to foreign oil companies to re-examine old seismic data across the country and retrain Iraqi petroleum engineers.

The drafters of the law reached agreement on the principle of revenue-sharing fairly early in the process. Much more contentious was the issue of signing oil contracts. The Kurds, who have enjoyed de facto independence in the mountainous north since the Persian Gulf war ended in 1991, argued strongly for regional governments to have full power in signing contracts with companies to develop oil fields. Sunni Arab leaders insisted on keeping this power in the hands of the Oil Ministry, and the Shiites fell somewhere in the middle.

The draft law has a compromise: regions can enter into contracts, but a powerful new central body called the Federal Oil and Gas Council would have the power to “prevent” the contracts from going forward if they do not meet certain prescribed standards, Mr. Salih said. A panel of oil experts from inside and outside Iraq would advise the federal council on the contracts.

Much of the wrangling over the draft law stemmed from the minutiae of language. Kurdish leaders insisted that the law not give the federal council the power to “approve” contracts signed by the regional governments. The council should only be able to “reject” contracts, the leaders said. In the end, Kurdish and Arab leaders compromised by agreeing to give the federal council the power to “prevent” contracts, Mr. Salih said.