Biggest Sale Ever: Iraq's Oil Up For Grabs Today
Iraqi government fuels 'war for oil' theories by putting reserves up for biggest ever sale· BP, Shell and Exxon in meeting with minister · Unprecedented 40bn barrels up for grabs
Terry Macalister and Nicholas Watt
The Guardian,
Monday October 13 2008
The biggest ever sale of oil assets will take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up for offer in London.
BP, Shell and ExxonMobil are all expected to attend a meeting at the Park Lane Hotel in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.
Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces.
Two smaller agreements have already been signed with Shell and the China National Petroleum Corporation, but today's sale will ignite arguments over whether the overthrow of Saddam Hussein was a "war for oil" that is now to be consummated by western multinationals seizing control of strategic Iraqi reserves.
Al-Shahristani is expected to reveal some kind of "risk service agreements" that could run for up to 20 years, with formal offers to be submitted by next spring and agreements signed in the summer.
Gregg Muttitt, from the UK-based social and ecological justice group Platform, says he is alarmed that the government is pushing ahead with its plans without the support of many in Iraq.
"Most of the terms of what is being offered have not been disclosed. There are security, political and reputational risks here for oil companies but none of them will want to see one of their competitors gain an advantage," he said.
Heinrich Matthee, a senior Middle East analyst at the specialist risk consultant Control Risks Group, also believes there are many pitfalls for those considering whether to make an offer.
"Currently it is unclear which party in Iraq is authorised to award a contract and at the same time to deliver its side of the bargain," he said. "Any contract with an independent oil company will be subjected to opposition and possible revision after pressure by resource nationalists."
Oil companies will find their reputations at risk from the actions of their Iraqi counterparties, such as joint venture partners, suppliers and agents. They will also have to contend with oil smuggling and the possibility that the ruling alliance could collapse, Matthee said.
He said that if the conspiracy theory that western oil companies egged on US and British governments to invade Iraq were true, the plan could backfire on them and benefit rivals in Asia instead. "It is possible the American army has provided the economic stability that will encourage Malaysian, Chinese and other Asian companies to become involved," he said.
There is no precedent for proven oil reserves of this magnitude being offered up for sale, said Muttitt. "The nearest thing would be the post-Soviet sale of the Kashagan field [in the Caspian Sea], which had 7bn or 8bn barrels."
The Guardian,
Monday October 13 2008
The biggest ever sale of oil assets will take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up for offer in London.
BP, Shell and ExxonMobil are all expected to attend a meeting at the Park Lane Hotel in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.
Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces.
Two smaller agreements have already been signed with Shell and the China National Petroleum Corporation, but today's sale will ignite arguments over whether the overthrow of Saddam Hussein was a "war for oil" that is now to be consummated by western multinationals seizing control of strategic Iraqi reserves.
Al-Shahristani is expected to reveal some kind of "risk service agreements" that could run for up to 20 years, with formal offers to be submitted by next spring and agreements signed in the summer.
Gregg Muttitt, from the UK-based social and ecological justice group Platform, says he is alarmed that the government is pushing ahead with its plans without the support of many in Iraq.
"Most of the terms of what is being offered have not been disclosed. There are security, political and reputational risks here for oil companies but none of them will want to see one of their competitors gain an advantage," he said.
Heinrich Matthee, a senior Middle East analyst at the specialist risk consultant Control Risks Group, also believes there are many pitfalls for those considering whether to make an offer.
"Currently it is unclear which party in Iraq is authorised to award a contract and at the same time to deliver its side of the bargain," he said. "Any contract with an independent oil company will be subjected to opposition and possible revision after pressure by resource nationalists."
Oil companies will find their reputations at risk from the actions of their Iraqi counterparties, such as joint venture partners, suppliers and agents. They will also have to contend with oil smuggling and the possibility that the ruling alliance could collapse, Matthee said.
He said that if the conspiracy theory that western oil companies egged on US and British governments to invade Iraq were true, the plan could backfire on them and benefit rivals in Asia instead. "It is possible the American army has provided the economic stability that will encourage Malaysian, Chinese and other Asian companies to become involved," he said.
There is no precedent for proven oil reserves of this magnitude being offered up for sale, said Muttitt. "The nearest thing would be the post-Soviet sale of the Kashagan field [in the Caspian Sea], which had 7bn or 8bn barrels."
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