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Bill Radke: The Russian oil giant Lukoil has just signed a deal to develop one of Iraq’s biggest oil fields. The Russians won the rights to the field at an auction earlier this month, and there were very few American oil companies bidding. Marketplace’s Nancy Marshall Genzer explains why.
Nancy Marshall Genzer: The Iraqis are driving a hard bargain with foreign oil companies. The contracts up for bid earlier this month were only for 20 years. And Iraq gets $2 for every barrel of oil the foreign companies pump.
Bruce Bullock is an oil industry economist at Southern Methodist University. He says Iraq’s terms were just too tough.
Bruce Bullock: They wanted quite a bit to participate, and it would have been very difficult for most U.S. companies to be able to make a comfortable profit on it.
Especially when they’d have to spend lots of money for security in Iraq. And to shore up the creaky infrastructure in Iraqi oil fields.
Oil Industry analyst Stephen Schork says the spoils of the Iraq war aren’t so great.
Stephen Schork: It’s going to be a tremendous cash outlay, and you know, a lot of companies are cash strapped at this point.
Their shareholders are strapped, too, and they won’t support risky investments in places like Iraq. In this economy, they want quick, safe returns.
In Washington, I’m Nancy Marshall Genzer for Marketplace.