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Jockeying for oil profits in Iraq

Lisa Napoli Dec 21, 2006
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Jockeying for oil profits in Iraq

Lisa Napoli Dec 21, 2006
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TEXT OF INTERVIEW

LISA NAPOLI: There’s a national law being drafted by Iraqi politicians that would put the central government in Baghdad in charge of oil revenues. The law would also encourage foreign investment in the Iraqi oil industry, which is the world’s second-largest. The U.S. government has been pushing for adoption of the law, and the recent Iraq Study Group report pushes for it too. Antonia Juhasz of the Institute for Policy Studies says there’s another take on it.

ANTONIA JUHASZ: The problem with the law is how it has come about. The intense external pressure that the Iraqi government is under to pass it and the potential and most likely beneficiaries of the law, which are foreign — namely U.S. and some British oil companies — and the losers: the Iraqi public.

NAPOLI: What’s the structure of the oil industry in Iraq right now? And how has it been operating during the war?

JUHASZ: It’s a nationalized oil system. It has been nationalized since the 1970s. How it’s been operating is actually fairly well during the occupation period. Prior to the invasion, Iraq’s oil production was at about 2.5 million barrels a day. Since the invasion, it’s been at about 2.2 and now it’s at 2.3 million barrels of oil a day. U.S. companies, among others, are marketing that oil, but Iraq’s national oil system and oil companies are the ones that are making the oil system work right now and have always done so in the past.

NAPOLI: So the oil companies, from what I’ve read, are reluctant to come on in unless this law happens. What’s the reluctance?

JUHASZ: The reluctance is that they want to get as good a deal as they can, and they’re in a pretty good condition to get that right now given that the United States is maintaining an occupation of that country. And the best deal possible is the one that’s currently on the table in Iraq: production sharing agreements opened up to private foreign companies.

NAPOLI: Is it the commercial oil companies that stand to really gain the most financially because of this law?

JUHASZ: The potential beneficiaries are any international oil company. There’s nothing, I imagine, that will be put down in writing that says that U.S. oil companies should be the one to benefit. However U.S. oil companies have certainly played a large role in working for free with the Iraqi government since the invasion. Chevron has been training Iraqi oil workers for free since the invasion began. Companies including Exxon and Conoco and Chevron have been conducting free assessments and studies of Iraq’s oil for the Iraqi government. Of course there’s no guarantee, but I would argue that the presence of the U.S. occupation helps give the U.S. oil companies a leg up in the decision-making process

NAPOLI: Antonia Juhasz is a visiting scholar with the Institute for Policy Studies. In Los Angeles, I’m Lisa Napoli. Enjoy your day.

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