Iraq Seeks to Develop Oil
By dglenn Posted in Foreign Affairs — Comments (2) / Email this page » / Leave a comment »
This comes from The BBC.
According to an article from the business section of the BBC News (linked above), Iraq is seeking foreign investment to help develop six of it's biggest oil fields - the Rumaila Field, which is located on the border between Iraq and Kuwait, the Bai Hassan Field, the Maysan Field, and three others.
More Below the Fold...
According to Hussain al-Shahristani, Iraq's oil minister, "It is not possible for Iraq, which has large oil reserves, to stay at the current level of production." He also went on to say that, "Iraq should be the second or third source of oil exportation." Currently, Iraq produces 2.5 million barrels of oil per day, and they want to that number to be about 2.9 million by the end of 2009.
Despite all of this optimism however, there are still a few roadblocks. The first of which is that the Iraqi Parliament still has not figured out how the contracts will work. Nor have they figured out how to share the oil amongst the different groups in Iraq.
So, what is my take on all of this? My take is that next time "Dirty" Harry Reid, San Fran Nanc, or any other dem wants to get up there and say Iraq has not met any of it's "benchmarks," they should realize that the Iraqi government would not be in a place to to talk about oil if they hadn't already met the benchmarks regarding security and governmental structure/organization. As far as the economic implications of this development are concerned, we will have to wait a little while to see what happens. My guess is going to be that once the contracts get handed out and the necessary infrastructure starts to get built, that oil prices will start come down, even if only by a few dollars. By that time though, Oil could have gone up to $200+ per barrel, at which point a few dollars would be meaningless.
They've had plenty of time to read The Art of the Deal and to think about what they can ask for.
I was quite pleased to see that the Iraqi government refused to contractual terms that would have given these oil companies a share in the revenues. As they put it, these are "service contracts."
If the Iraqi government is to thrive it will have to defend its own interests. At times that will run contrary to American interests, or perhaps more narrowly, the interests of American companies.
If the Iraqis want to pay a fixed amount for the work done, as opposed to revenue-sharing, I say more power to 'em. It's their oil, and their future.