Michael de Laine

By Michael de Laine, The Copenhagen Voice, 5 July 2009

In ‘Oil companies reject Iraq’s terms’, its website story on 30 June, the BBC reported: “Only one of the bidders for the eight contracts to run oil and gas fields in Iraq has accepted oil ministry terms.”

Six oil fields and two gas fields were available in a televised auction that was the first big oil tender in Iraq since the invasion of 2003, the BBC said.

BP and China’s CNPC agreed to run the 17 billion barrel Rumaila field after Exxon Mobil turned it down.

Iraq has asked the rest of the companies to consider resubmitting bids for the other seven contracts.

The oil ministry is offering 20-year service contracts.

Other fields have failed to find buyers, either because there were no bidders or because terms were declined.

Thirty-two oil companies had been approved as potential bidders.

For each field, the ministry specified a minimum production level, which was close to the amount that is currently being produced.

In a red envelope, the auctioneers have the maximum amount that the oil ministry is prepared to pay.

Those amounts were significantly less than the oil companies were asking for, so the winning bidders were asked to cut their prices.

In the case of the Rumaila field, Exxon Mobil declined to accept the ministry’s maximum payment, but BP and CNPC, which had originally asked for $4 a barrel, agreed to do the work for $2 a barrel.

They will also be able to charge the ministry for the costs of the work they have to do on the production facilities.

The contracts are subject to approval by the cabinet.

Other winning bidders declined to accept the ministry’s maximum payments.

This caused the British political current affairs magazine New Statesman to write in a leader: ‘It was Alan Greenspan who first let slip. In 2007, to the great glee of the anti-war movement, the elder statesman of American finance recognised that the real motive for the Iraq War had little to do with weapons of mass destruction.”

The New Statesman quoted the former Federal Reserve chairman as writing in his memoirs: “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq War is largely about oil.”

On 30 June, the magazine said, US troops began their much-anticipated withdrawal from Iraqi cities at the same time as the Iraqi government began to auction off some of the nation’s largest oilfields to companies such as Royal Dutch Shell, British Petroleum and Exxon Mobil. As Iraqis spilled out on to the streets to celebrate a “day of national sovereignty”, foreign multinationals jostled each other, live on Iraqi television, to bid for the 20-year rights to six fields that hold more than five billion barrels of cheap and easily extractable crude oil.

The price paid by the Iraqis has been high, the New Statesman added.

For six years, Iraq has been plagued by levels of violence, bloodshed and insecurity unmatched anywhere else on earth. The death toll is estimated at somewhere between 100,000 and a million, with more than four million Iraqis uprooted from their homes. The country has been shattered economically and socially – Iraqis continue to lack basic electricity and clean water; unemployment still stands at roughly 30 per cent; disease and malnutrition remain rampant.

On the eve of the invasion, in March 2003, this magazine warned that opponents of the war could only “hope 
for a quick end and a painless liberation for Iraq”. If only.

Click here to read the BBC story, ‘Oil companies reject Iraq’s terms’.

Click here to read the News Statesman leader, ‘Oil is still a dark stain on Iraq’.