Thursday, September 11, 2008

Iraq Cancels No-Bid Oil Contracts

Say goodbye to those no-bid contracts for Iraq's oil that western oil companies snapped up earlier this summer:
Iraq Cancels Six No-Bid Oil Contracts

Published: September 10, 2008

An Iraqi plan to award six no-bid contracts to Western oil companies, which came under sharp criticism from several United States senators this summer, has been withdrawn, participants in the negotiations said on Wednesday.

Iraq’s oil minister, Hussain al-Shahristani, told reporters at an OPEC summit meeting in Vienna on Tuesday that talks with Exxon Mobil, Chevron, Shell, Total, BP and several smaller companies for one-year deals, which were announced in June and subsequently delayed, had dragged on for so long that the companies could not now fulfill the work within that time frame. The companies confirmed on Wednesday that the deals had been canceled.

While not particularly lucrative by industry standards, the contracts were valued for providing a foothold in Iraq at a time when oil companies are being shut out of energy-rich countries around the world. The companies will still be eligible to compete in open bidding in Iraq.

I criticized these deals here when they were first announced in June. They further proved my suspicion that we are in Iraq for oil; it was especially suspicious that the exact same Western oil companies that Saddam Hussein had thrown out of the country 36 years ago—Exxon Mobil, Shell, Total and BP—were the same companies now negotiating for no-bid oil contracts. Just a coinky-dinky, I’m sure!

Of course, oil and natural gas deals are still being signed at a fast and furious pace. Most noteworthy is that Iraq’s Oil Ministry signed a major deal with China’s national oil company, China National Petroleum Corporation. Our little Iraq War has worked out very well for the Chinese. Maybe they’ll send us a thank you note.

Meanwhile, an interesting little sidebar to all of this comes buried at the end of the story:

Senator Schumer said Wednesday that he would propose an amendment to the defense appropriation bill in Congress that would specify that should Iraq sign any petroleum contracts before passing the [hydrocarbon] law, profits from those deals would go to defray United States reconstruction spending in Iraq.

I’m wondering how fair that is. One the one hand, Iraq is sitting on $79 billion in oil profits while we’re sinking deeper into debt.

On the other hand, they certainly didn’t ask us to invade their country and ruin their infrastructure and stoke the fires of sectarian violence that left Iraq teetering on the precipice of civil war.

Plus, we’ve done a piss-poor job of reconstruction--and yes, I know security has been the main stumbling block hampering this effort. But still, corruption has been rampant , war profiteering and fraud by contractors like KBR has added considerably to the cost. So who should pay for this? The U.S. taxpayers? The Iraqis? Should KBR and Halliburton give back some of the billions of taxpayer dollars they stole misused?

Maybe we should just send the bill to George and Dick.