Iraq Foreign Oil Investors: Tread Lightly

Hunger For Outside Expertise, Funds Puts Government In Tricky Position With West-Weary Lawmakers

(CBS)  Written for CBSNews.com by CBS News correspondent Elizabeth Palmer, reporting from Baghdad.

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The Iraqi government has a problem - it needs international help to repair and modernize its creaking oil industry.

But it has one other, bigger problem: How to get that help without being accused of selling out to American multinationals, under pressure by the U.S. administration.

At a press conference Monday, during which officials announced the opening up of six key oil fields to international investment, the Oil Ministry tried to walk a fine line.

At the front of the room, a giant screen displayed a list of 41 foreign companies selected to bid on Iraqi oil development contracts. Only 6 of them were American.

"After all, oil is the property of the Iraqi people - as the Constitution states," said Iraqi Oil Minister Hussain al-Shahristani in an interview with CBS News.

He knew any remarks he made would be scrutinized by everyone - and that includes Parliamentarians, labor leaders, and nationalists - who believe the United States invaded Iraq for its oil, and is about to get its hands on the spoils.

Yes, there has been lobbying and political pressure from some American politicians, said Shahristani.

"But I told them in very clear terms that Saddam's era has gone. No external or internal politics is going to influence our decision. We are blind to the nationality of the oil companies."

"The best bid to develop our oil fields in Iraq's interests will be chosen, and on that basis only."

International oil companies have not been allowed to operate in Iraq since 1972, when the industry was nationalized and many Iraqis resent the idea of allowing them back in.

But the Oil Ministry says foreign help is necessary to boost production in a hurry with innovative equipment and modern operating methods.

According to its own statistics, the Oil Ministry itself has 90,000 employees; 98 percent of them haven't seen new oil technology up close for more than 20 years.

Early in 2009, the foreign companies on the approved list will be invited to bid on contracts that pay a cash fee for work in oil fields already pumping oil.

The goal is to boost Iraq's production by 1.5 million barrels a day, to a total of 4.5 million by 2012.

But the real prize for American, and other international companies is much more lucrative - and controversial.

They are so-called production-sharing agreements (PSAs), which give companies more control over the projects and allow them to take their profits in oil.

However, PSAs could be the red line for Iraqis, especially the powerful oil workers unions which regard these contracts as a sellout of the national birthright.

It's no surprise Shahristani is circumspect about if, or when, the government will allow PSAs. Any serious labor opposition, especially widespread strikes, could shut down an already crippled industry.

"Our producing fields - and some of them are super-giants - will not be offered for PSAs. But when we come to undeveloped fields - smaller fields … what form of contract will be offered will have to be discussed then."

"If the Parliament and the Ministry feel PSAs serve the best purpose for Iraq for certain fields... then they will be considered."

[whiskyrocker]

I love when a plan comes together.

[omnibus66]

It has been reported that Iraq has 50 billion dollars in the bank, but refuses to spend any of it on their own infrastructure. This article infers that they are also unwilling to spend any of it to develop their oil reserves.

Oil speculation is running rampant, the price of everything is soaring, jobs are disappearing, the weather is getting more violent, and people are left to die in emergency rooms.

And what is governments response? Well, the Bush smirk is as pretty as ever, and Congress is on vacation. What more could we ask for?

[samsel3]

Iraq''s oil infrastructure was rebuilt when Cheney controlled Haliburton. Halliburton/Iraq deal was done through the French because it was illegal for US companies to deal with Iraq, except for the oil for food program which US oil companies participated in. Saddam was charging US interests more for oil then other countries and cutting off supplies at times so they took him out.

Taking out Saddam helped BIG OIL drive the prices up. A few months before the invasion, gasoline was under a dollar the lowest since the seventies oil embargo era.
Saddam actually lowered the world price of oil by selling it cheaper to Russia, China, France, Germany and South Korea before the invasion. He created an advantage against US & British oil by charging them more for oil than these countries increasing competition. US oil companies then got subsidies from Congress.

The Times of India August 2007 reported : " Iran, Iraq signed an agreement to build pipelines for the transfer of Iraqi crude oil and oil products." Under the deal crude will be refined and sent back to Iraq. Bush opposes this agreement and wants the Iraqi Parliment to accept and sign a U.S. designed oil law that would result in huge profits for BIG OIL. Iraqi oil workers and 63% of Iraqis polled are opposed to the Bush law and prefer a hands off Iraq oil policy.

[lochlan-2009]

Whoa, let me take off my watch and hold it above my head, because it sure is getting deep in here. Do you think the most blatantly corrupt administration ever, is not going to take as much as they can. These people are the definition of "never enough", and they are proud of it all the way to the bank.

Independence Day? Are you sure?

[deacon20081]

Finally something to give you hope in the Iraqi people. They don''t trust Bush and Cheney...neither do we.

[SteveB47]

what goes around comes around,right? then i''d say it is our turn...let raise the prices of the food that the US sends to the oil counties.they want $143 a barrell.lets charge them $500 for a can of bean soup and $1000 per any can good after that. let them see how long they can survive eating on sand or crude oil.
the US needs to stop playing games with these countries.
I wonder how much money BUSH is making off of this war that he started...but. you idiots voted him in that office...i guess he was a very good lier just like his dad was they said the right things so pull the wool over everyones eyes to get into the big office.
i''d like to get enough money and get out of the usa until we (the people ) can find an honest person that will stand up for the real americans.I for one--served in the us army a vietnam vet. and i am so ashmed of how my country is being ran by people that are only intrested in ripping us off and getting more than one bank account to hold the money they are taking away from us..
listen up usa: we are headed for a very big downfall and we will hit hard. we need help..everyone in our government are nothing but crooks and liers..
IT''S OUR GOVERNMENT LETS TAKE IT BACK... THEY ARE WORKING FOR US NOT THEMSELVES
HOPE I DIDN''T SAY ANYTHING TO UPSET YOU...YEAH RIGHT!

[patriot12436]

WARDADY67
Your right but the American people still have their heads buried in the sans. Not until enough cannot feed their families will they wake up.Hopefully our next president will tell Iraq we are out of there in 30 days, unless they repay us for the cost of the war and guarantee oil contracts. Then agree we stay for six months , then they are on their own. Bush didn''t have the b-a-l-l-a or the brains to set it up.

[samsel3]

Reuters UK December 30, 2007 Reports: "Bin Laden says U.S. seeks to exploit Iraqi Oil". OBL states: "America seeks, alongside it''s agents in the region, to create an allied government...that would accept in advance the presence of major U.S. bases in Iraq and give the Americans all they wish of Iraqi Oil.

The true intent for the Iraq invasion was to gain control of world oil markets for BIG OIL. US oil interests and British petroleum were tired of Saddam flooding the market with cheaper priced oil and then charging US oil companies more for oil then Russia, France, Germany, China and Korea.

The administration is not interested in what you have to pay at the pump. The bottom line is profit for BIG OIL, which is the reason BIG OIL put up 150 million dollars for the election campaign of G.W. Bush.