Oil Law approved by Cabinet

The Iraqi Cabinet today approved the draft oil law. The AP reports that “the Parliament will take up the measure when it reconvenes early next month after a recess. With all major parties endorsing the bill, approval is likely — although some politicians predicted a vigorous debate on some of the details.” It continues: “Many Iraqis fear the measure will effectively hand the country’s major natural resources over to foreign oil companies. Supporters maintain that oil giants have the billions of dollars needed to upgrade the country’s decrepit wells, pipelines and port. Under the oil legislation, regional administrations will be empowered to negotiate contracts with international oil companies. The contracts will be reviewed by a central government committee in Baghdad headed by the prime minister… According to Iraqis familiar with the deliberations, the draft law would offer international oil companies several methods to invest, including production-sharing agreements. Those would give U.S. and other international companies a substantial share of the oil revenues to recover their initial investments and then allow them big tax breaks.”

Pepe Escobar, Asia Time’s leading journalists, provides a damning critique of the draft law which he says is a result of “SCIRI delivering Iraq’s Holy Grail to Bush/Cheney and Big Oil – in exchange for not being chased out of power by the Pentagon.” He points out that outside of Iraq: “Nobody wants colonial-style PSAs forced down their throat anymore. According to the International Energy Agency, PSAs apply to only 12% of global oil reserves, in cases where costs are very high and nobody knows what will be found (certainly not the Iraqi case). No big Middle Eastern oil producer works with PSAs. Russia and Venezuela are renegotiating all of them.”