Iraq's Oil Future(s)

Click to Listen to the Show (24 MB MP3)

Oil spill on a highway median in Iraq

An oil spill in Iraq. According to the photographer, “this spill was left for months before it finally soaked into the ground.” [Dave Chung / Flickr]

To accomodate our UK guests, this show will record at 4pm EST.

Among the figures quoted in the Iraq Study Group Report — about things like troop levels and civilian casualties — one number nearly jumps off the page. According to the report, 150,000 to 200,000 — and perhaps as many as 500,000 — barrels of oil are stolen every day.

Between violent chaos and lax metering, Iraq’s oil is being siphoned off, smuggled, and disappeared barrel by barrel. The guilty parties include Sunni insurgents who realized it was more profitable to take the oil than blow up the pipelines, Shiite militias fighting each other for control of oil in Basra, criminal gangs looking to make quick money, and ordinary Iraqis who make a better living selling subsidized fuel to illegal traders than running their own legitimate businesses.

Meanwhile, the future of Iraq’s oil industry is being negotiated right now in the Iraqi Oil Ministry, the halls of Parliament, and the American State Department. The laws up for discussion will shape control of Iraq’s oil reserves — estimated at 110 billion barrels — for decades to come, and are widely controversial. Two main areas of debate are:

Private vs. nationalized control: What kind of arrangement should govern the relationship between the government and foreign oil companies? Should Iraq develop a national oil company like Saudi Arabia’s Aramco, or contract out to foreign oil companies?

Federal vs. regional control: Who should have the authority to manage existing oil resources and broker agreements with foreign oil companies? The Kurds are pushing for regional control as part of their separatist aims in the oil-rich north, and in October passed a draft petroleum act stating that “Kurdistan has sole authority in respect of petroleum operations in Kurdistan and in the ‘Disputed Territories’, where Kurdistan is party to the dispute, including Kirkuk.”

We don’t want to rehash the now obvious place of oil in the litany of reasons America invaded Iraq. We do want to get into the oil fields and the corporate back room negotiations to understand what’s happening right now. Is finding and brokering a quick solution to the oil situation crucial to tempering sectarian tensions? How much pressure is still coming from America and American-owned oil companies? Does the Iraqi government have the money to develop new oil fields or fix existing infrastructure without the help of the US or foreign oil companies? How should Iraq manage this most valuable resource, and what’s the best-case scenario for the future of the oil industry there?

Ed Harriman

Reporter and audit-watcher

Author, The Least Accountable Regime in the Middle East, London Review of Books, 11/2/06

Open Source guest, Show Us the Money

Yahia Said

Director, Iraq Revenue Watch

Research Fellow, London School of Economics

Greg Muttitt

Co-director and Lead Researcher, Platform

Author, Crude Designs: The Rip-Off of Iraq’s Oil Wealth

Fadel Gheit

Senior VP for Oil Research, Oppenheimer & Co.

Related Content


  • sana

    I am curious as to whose interests are represented by Iraq’s current minister to OPEC? Who is he, how and when did he gain that position and by what authority?

    Also, though exit strategy in Iraq isn’t your topic, shouldn’t we expect whatever course President Bush announces next month to be defined by the answers to the questions you pose above as much as by public opinion or anything else?

  • Ben

    The ISG Report states that “the United States should assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise.

    “(ISG co-author) Baker is a longtime associate and now senior partner of Baker Botts, which this year, for the second year running, was recipient of “The International Who’s Who of Business Lawyers Oil & Gas Law Firm of the Year Award,” while the Middle East remains a central focus of the firm.” – Antonia Juhasz

  • loki

    One of the selling points of the war was that the invasion and reconstruction of Iraq would be funded by Iraq’s oil reserves. Whar happened?

  • MarkGiese

    Most governments that have control of oil resources are despotic and violate human rights. If we set up yet another such government aren’t we going to perpetuate the problems present in Iraq today? What if the US took control of the oil industry and set up a non-profit corporation that was dedicated to distributing the oil profits to the entire Iraqi population (including women!) similar to the payments distributed to Alaska residents? Wouldn’t the power structure in the country be much more likely to behave reasonably? Could this sort of an arrangement prompt liberalization in other countries?

  • MarkGiese

    Why not keep the books of this non-profit corp. on the web where anyone can audit them?

  • forgotten america

    —————–

    the sins of the fathers of once and when

    now upon all the sons of all the men

    of what was once america

    and the clamorant crowds no longer mild

    mistaken to what is seen the devil

    visiting war on foreign shores

    and the seas will wash back the level

    those seething crowds now crazy and wild

    haunting all the places once sacred

    never there, always here and here and here

    its the world in the mind

    that perceives a different kind

    and sees just the ghost of sorrows

    the phantoms of the hungry child

    as tiny hands bite into the soil

    and all these lands turned to desert sands

    for what was once America

    for who have we become, we those sons

    bearing all the sins upon us

    that heavy load as the bombs implode

    in our heart and deepened sorrow

    having mused what was once enough

    and now washed back to sea

    those chosen few who really knew

    and choose not but what’s upon us

    and that dream, that american dream

    in our sleep and in our slumber

    a nightmare become and hope undone

    the exchange of reserves we’d preserve

    barrels of bullets for barrels of oil

    and now its we who are most imperiled

    the sins of the fathers now dead

    and world we alive now dread

    and whither to for all our sons

    by load forced to bended knee

    to pray to dust again

    and pray a more godly dream

    for some long forgotten america

  • Loay

    Who are we and what right do we have to even engagei n such a debate? The arrogance and lunacy of the American elite knows no limits. Any law will last until the last embassy employee is ferried by the last helicopter out of the “Green Zone”. This smacks of the same fantasy as building a Iraqi oil pipe line to Israel.

    Loay

  • Alex Brown

    The US and in fact the global oil industry has been obsessed with keeping Iraqi oil OFF THE MARKET as long as possible. In the ’20s the discovery of more oil provinces in Iraq nearly equal to Saudi Arabia’s threatened to cause the price of oil to plumment, and a US-UK concession in Iraq had a private agreement to pretend it didn’t exist, resulting in Iraqi “known reserves” registered with OPEC being far lower than actual known reserves. Maintenance of Iraq’s low position as a producer was and is an important pillar of the industry’s mideast policy.

    Greg Palast has covered this very well. See http://news.bbc.co.uk/1/hi/programmes/newsnight/4354269.stm:

    “The industry-favoured plan was pushed aside by a secret plan, drafted just before the invasion in 2003, which called for the sell-off of all of Iraq’s oil fields. The new plan was crafted by neo-conservatives intent on using Iraq’s oil to destroy the Opec cartel through massive increases in production above Opec quotas.” …

    “Philip Carroll, the former CEO of Shell Oil USA who took control of Iraq’s oil production for the US Government a month after the invasion, stalled the sell-off scheme.

    “Mr Carroll told us he made it clear to Paul Bremer, the US occupation chief who arrived in Iraq in May 2003, that: “There was to be no privatisation of Iraqi oil resources or facilities while I was involved.” …

    “Ariel Cohen, of the neo-conservative Heritage Foundation, told Newsnight that an opportunity had been missed to privatise Iraq’s oil fields.

    “He advocated the plan as a means to help the US defeat Opec, and said America should have gone ahead with what he called a “no-brainer” decision.

    “Mr Carroll hit back, telling Newsnight, “I would agree with that statement. To privatize would be a no-brainer. It would only be thought about by someone with no brain.” …

    Personally I suspect that permanent misery and chaos would suit the oil industry just as well as rigid control by a Saddam-lite replacement strongman.

    Alex Brown

  • CBP

    Why is anyone talking about oil reserves and revenues when the burning of said oil will result in the deaths of millions of humans and the complete extinction of millions of species? I am writing, of course, about global warming. Shouldn’t the priority be first and foremost to live sustainably before we start talking about petty human problems like war and conflict? Why aren’t we bombing Saudi Arabia, Iran and Venezuela to keep them from selling more of their black death, regardless of their political intentions? Bombing Iraq seems to have reduced its capacity to poison the world with oil. Why shouldn’t the same technique work with other countries?

    Why are a few million lives today worth more than a few billion tomorrow?

  • rc21

    Are you serious or joking?

  • CBP

    Unfortunately, I am only partially joking. I am frustrated that public radio listeners are so easily led to believe oil as a valuable commodity, and not the dangerous, addictive substance that it is. If it’s not possible to convince intellectual Americans that oil is not an asset, how are we to persuade less well-informed people in other nations of the same fact?

    The only way to get an addict off drugs is to deny them drugs. It would be relatively easy for the US to curtail oil production around the world, and in the interest of the world to do so… not that we would be able to claim the moral high ground considering the sheer amount of fossil fuels we consume every day.

    If we were an energy-independent nation, however, and we were to bomb the refineries, pipelines and transportation infrastructure of oil-producing nations, or even threaten to do so, developing countries would move to sustainable energy models quicker than you could possibly imagine, rather than actively working to bring on the impending climate collapse as they are currently doing.