Oil In Iraq

Iraq has the world’s second largest proven oil reserves. According to oil industry experts, new exploration will probably raise Iraq’s reserves to 200+ billion barrels of high-grade crude, extraordinarily cheap to produce. The four giant firms located in the US and the UK have been keen to get back into Iraq, from which they were excluded with the nationalization of 1972. During the final years of the Saddam era, they envied companies from France, Russia, China, and elsewhere, who had obtained major contracts. But UN sanctions (kept in place by the US and the UK) kept those contracts inoperable. Since the invasion and occupation of Iraq in 2003, everything has changed and the companies have been scrambling to grab their share of the spoils. In the new setting, with Washington running the show, "friendly" companies expect to gain most of the lucrative oil deals that will be worth hundreds of billions of dollars in profits in the coming decades. The new Iraqi constitution of 2005, greatly influenced by US advisors, contains language that guarantees a major role for foreign companies. Negotiators hope soon to complete deals on Production Sharing Agreements that will give the companies control over dozens of fields, including the fabled super-giant Majnoon, whose 21 billion barrels are worth $1.5 trillion at today's prices. But no contracts could be signed until after elections and the formation of a new government, so that the Iraqi side would appear legally legitimate. While regional governments angle for influence over the foreign oil contracts, most Iraqis favor continued control by a national company and the powerful oil workers union opposes de-nationalization. Iraq's political future is very much in flux, but oil remains the central feature of the political landscape.