Exxon Mobil Lobby Spent $16.9M
Thu Mar 27, 2008
This is pocket change to Exxon, cheap protection for their racket. -oom
Exxon Mobil spent $16.9M lobbying
March 19, 2008
http://money. cnn.com/news/ newsfeeds/ articles/ newstex/AFX-
0013-23905827. htm
<http://money. cnn.com/news/ newsfeeds/ articles/ newstex/AFX- 0013-23905827. htm>
WASHINGTON (AP) - Exxon Mobil (NYSE:XOM) Corp., the largest U.S. oil
company, spent more than $16.9 million to lobby the federal government
in 2007, according to a disclosure form. The company lobbied on
various appropriations bills and on legislation dealing with Federal
Aviation Administration reauthorization, patent reform, taxes and
royalties, international relations and trade agreements, lobbying
reform, railroad security and more, according to the form posted
online Feb. 14 by the Senate's public records office.
Irving, Texas-based Exxon Mobil spent $10.5 million in the second half
of 2007 to lobby on those issues. The energy bill President Bush
signed in December did not include billions of dollars in higher taxes
for large oil companies that many Democrats wanted to use to fund tax
breaks for various clean energy (NASDAQ:CLNE) industries.
Similar proposals were revived earlier this month and are working
their way through Congress. Besides Congress, Exxon Mobil lobbied the
White House, Federal Energy Regulatory Commission, U.S. Trade
Representative' s office, the departments of Energy, Defense, Interior,
State, Commerce, Homeland Security and more. Lobbyists are required to
disclose activities that could influence members of the executive and
legislative branches, under a federal law enacted in 1995.
===
Iraq to pay oil firms to boost its output
By Randy Fabi and Ahmed Rasheed
http://www.guardian .co.uk/feedartic le?id=7397775
<http://www.guardian .co.uk/feedartic le?id=7397775>
BAGHDAD, March 19 (Reuters) - The Iraqi government is expected to pay
up to $2.5 billion to five top oil companies to increase the country's
oil output by nearly a quarter, a government adviser told Reuters on
Wednesday.In what would be the biggest foreign involvement for
decades, Baghdad is close to signing technical support contracts with
BP, Royal Dutch Shell, Exxon Mobil, Chevron and Total.
Thamir Ghadhban, energy adviser to Iraq's prime minister, said he
expected the contracts, which would add 500,000 barrels per day (bpd)
to current production of 2.27 million bpd, would be signed by early
next month.
"There is a rough estimate that it could cost about $400 to $500
million per field," he said in an interview."So a total could be up to
between $2 (billion) and $2.5 billion over two years that should be
paid by the government to companies.
"With oil prices at around $100 a barrel, the contracts could mean
extra revenues to Iraq of around $1.5 billion a month before costs,"
according to Reuters calculations.
Ghadhban said Iraqi representatives met with company officials last
week in Amman, Jordan, to discuss final details of the initially
two-year contracts, including whether payment would be by cash or by
oil."As far as we are concerned, everything is positive and it's a
matter of time for the minister of oil and oil companies to finalize
and shake hands," he said.
Shell is negotiating for the northern Kirkuk oilfield and is also in
talks, along with BHP Billiton, for the development of the Maysan
fields.BP also has its eyes on Iraq's southern Rumaila field, while
Exxon wants the contract for the Zubair oilfield in Basra.
Finally, Chevron and Total are looking to work together to develop the
West Qurna oilfield.
Ghadhban said he expected the companies to boost output by around
100,000 bpd at each of the fields
.
HEAD START
The ongoing talks have also given the five major oil companies a head
start in efforts to bid for future oil contracts.
"I have no doubt whatsoever those five major companies are going to be
qualified," he said. "They are major oil companies and of course they
will be qualified."
More than 100 companies have registered to compete for oil extraction
and service contracts to help develop Iraq's oil reserves, the world's
third largest.
Ghadhban said the government was expected to announce the list of
qualified companies next month, a month later than initially
expected.He said the technical support contracts with the five oil
majors needed to be finalized before the government could move on to
other contracts.
===
Forbidden fields: Oil groups circle the prize of Iraq's vast reserves
By Roula Khalaf and Steve Negus
March 19 2008
Financial Times
http://www.ft. com/cms/s/ 0/5b24f674- f5e6-11dc- 8d3d-000077b0765 8.html?nclick_ check=1
Royal Dutch Shell has been quietly working with Iraq's oil ministry
over the past two years, advising it on how to increase the production
of two oilfields. Under an agreement struck after the 2003 invasion,
no one from the company, Europe's largest oil group, has set foot in
the troubled country; instead, monthly face-to-face meetings with the
oil ministry have been held in Amman, the Jordanian capital, and
weekly contact has been maintained by video-link.
The Shell-financed project and the attention showered on Baghdad
appears to be paying off: Shell is now negotiating a technical support
agreement in which it will be compensated for helping upgrade
production of producing fields. The oil company will again set up a
team outside Iraq, helping, among other things, to bring new equipment
into the country and training Iraqis in its use. Shell is one of
several international oil companies including BP and the US groups
Exxon Mobil and Chevron that have been tapping into Iraq's oil
industry by remote control. But now, five years after the invasion,
the oil groups are hoping to take their involvement in the country to
a new level. Baghdad, desperate to increase oil production yet starved
of investment, is starting to dangle what the companies have been
after all along: a chance to develop and later explore what may be the
world's most promising untapped oil reserves. Indeed, as the companies
gear up for technical support agreements, they are also registering to
pre-qualify for the first bidding round of oil development contracts
that are to be offered by Baghdad.
"The [initial projects] were done to work with the Iraqis, get a
feeling for fields and build relationships and knowledge," says one
oil executive, speaking of the assistance projects provided so far.
With parts of the global oil industry threatened with nationalisation
and much of the Middle East still closed to foreign ownership of
reserves, access to Iraq, with the world's third-largest oil reserves,
has long been viewed as a huge prize. Although no decision has yet
been made in Baghdad over the nature of the development or the
eventual exploration contracts that will be on offer, Iraq could prove
one of the rare countries in the region where companies will be
allowed to claim reserves as their own.
Washington-based PFC Energy. According to the oil ministry, only 27
out of 80 discovered fields are producing in Iraq, the result of
decades of under-investment. A report by Wood Mackenzie, the
consultancy, meanwhile says the scale of Iraq's remaining oil
resources surpasses all other countries in the Middle East, including
Saudi Arabia, and its high-quality reservoirs ensure that production
costs would be very low. But Iraq is also a dangerous frontier.
Companies invited to invest in its oil industry and satisfy
Baghdad's plans at least to double oil production from the current
2.5m barrels a day will be walking into a political, security and
legislative minefield. Their involvement threatens to exacerbate the
sectarian tensions that have torn the country apart since the US-led
invasion.
International oil companies acknowledge that security, although better
over the past year, will still need to improve significantly before
workers are dispatched to Iraq. The weakness of the central government
and its patchy control over the southern part of the country, home to
80 per cent of proved oil reserves, will also be taken into account.
Perhaps most important, however, is that they could be entering a
country with deep political fissures and lingering anger at foreign
intervention, without clear legislation allowing for foreign
participation. Despite American pressure and government desperation, a
law to regulate foreign access to the oil industry has languished in
the Iraqi parliament, a victim of sectarian disputes, particularly
between the Kurds and Arabs. Frustrated by the delays, and virtually
giving up on a successful outcome, the oil ministry has now invited
oil companies to pre-qualify for development of existing fields and
says a cabinet decision will be enough to legitimise foreign
participation. Later bidding rounds are envisaged for exploration
contracts.
Officially, companies say they will insist on having new legislation
in place before investing the billions of dollars that would be needed
for development and exploration. Yet the absence of a law is not
preventing them from embarking on negotiations.
Adding to the complications is uncertainty over who has the rights to
sign contracts in Iraq. The Kurdish regional government, based in
Irbil, claims that the constitution gives it power over its own
resources within the borders of Kurdistan, while the government in
Baghdad rejects this claim completely. It insists it has the sole
constitutional authority to dispose of Iraq's oil resources. A further
difficulty is that oil is unevenly distributed throughout the ethnic
regions of Iraq, with resources concentrated in the Shia south of the
country and the Kurdish north. The minority Sunni Arabs, who formerly
controlled the levers of power under Saddam Hussein, can boast few oil
reserves in their ethnic areas. Their priority in negotiating in the
new Iraq has been to ensure they receive their fair share of oil
revenues. But the competing expectations of Iraq's communities have
never been confronted head on, and were sidestepped by the framers of
the constitution, agreed in 2005, by means of ambiguous language.
Specifically, the constitution' s article 112 says the "federal
government, with the producing governorates and regional governments"
should manage oil and gas, but only from "present" fields. The
document's Article 115, meanwhile, declares that "all powers not
stipulated in the exclusive powers of the federal government" belong
to local or regional authorities. The KRG has taken this to mean that
the federal government has the conditional right to manage fields
currently producing, but that a regional government such as itself has
the power to manage exploration and the production from newly
discovered fields. To exploit this loophole, the KRG has passed its
own oil law, which allows it to sign contracts with foreign oil
companies. It has signed such agreements with several (smaller) groups
from Norway, Turkey, Austria, South Korea and other countries in the
face of Baghdad's objections.
"In the Kurdistan region, there is a constitution and there is a law.
We have two instruments that we can rely upon: the law and the
constitution are a pair, and they're consistent and in harmony with
each other in our case," says Ashti Hawrami, KRG oil minister.
Baghdad, however, has declared the KRG contracts illegal,
blacklisting companies that deal with the Kurdistan region and, more
recently, cancelling export deals with South Korean and Austrian
groups that signed exploration deals with the KRG. This has kept
bigger companies away from the north. The Kurds' assertive attitude
has heightened the Sunni Arabs' attachment to strong central control
over the country's regions and their inclination towards economic
nationalism. Their political leaders have pressed for the constitution
to be rewritten to strengthen the federal government and reduce the
powers of the KRG. With no agreement on the constitution, the
hydrocarbons legislation which would set terms for foreign oil
companies along with an agreement on the sharing of oil revenues
locally was controversial from the start.
After months of wrangling, the Iraqi cabinet in February 2007 came to
an agreement on a draft framework that did not include revenue-sharing
legislation. Even that has not been passed by parliament. Moreover, as
talks over the oil law have dragged on, opposition to the
production-sharing agreements (PSAs) favoured by western oil
companies, once relatively muted, has grown among the majority Shia as
well underlining a resurgence in nationalism as much as a reaction
to Kurdish unilateralism. According to Hussein Shahristani, the oil
minister, the cabinet's approval of a draft hydrocarbons law last year
made no reference to PSAs, and what his ministry will offer companies
are "model contracts" that would attempt to balance investors'
expectations of financial return against domestic political concerns,
not least the determination of Iraqis to maintain ownership and
control of oil wealth. Kurdish officials, however, say the contracts
envisaged by Baghdad are PSAs in all but name.
at the London School of Economics.
city that Kurds claim as part of their region but whose status is to
be settled by a long-delayed referendum. It is to minimise the risk
of such confrontation that the US has put enormous pressure on Iraq's
politicians to agree the hydrocarbons legislation. Judging it a
crucial element for Iraqi stability, the Bush administration listed
the oil law as one of the benchmarks the Baghdad government was
expected to achieve as the US military surge helped to reduce violence
over the past year.
Even with the likelihood of an oil law approval fading, US officials
continue to insist that it is essential for signing oil contracts with
foreign groups. For international oil companies, the hope is that as
the negotiations proceed over the next year, Iraq's political and
legislative landscape will gain more clarity. Iraqi experts, however,
warn that the oil law may be dead and Baghdad's only choice,
ironically, will be to fall back on legislation from the Saddam
Hussein era. Although meant to protect the nationalised status of the
industry, the legislation did not stop the previous regime from
negotiating specific contracts with foreign companies, which were then
agreed by the rubber-stamp parliament.
"The ministry might be able to get away with [contracts] by leaning on
Saddam-era regulations. Saddam negotiated contracts that were not PSAs
[the oil companies' preferred arrangement] but with Iraq the only
remaining major resource in the world, companies will have to have
some investment there," says Tariq Shafiq, a former director of Iraq's
national oil company.
Shut out elsewhere, executives await the end of a long exile Just
months before US tanks rolled into Baghdad and Saddam Hussein was
toppled, US government officials met allies from Iraq's opposition and
decided it was in the country's interest for a new government to open
its oil industry to foreign participation as quickly as possible,
writes Dino Mahtani.
The so called "Oil and Energy" working group of the US state
department, which met four times in 2002 and 2003 and included
influential Iraqi exiles, had put forward the idea as a crucial plank
in Iraq's postwar reconstruction plans. Increased foreign
participation in Iraq's oil industry, members argued, would help
revitalise its most important economic lifeline ravaged by years of
neglect and under investment under Saddam's regime. But it would also
get US oil companies close to Iraq's reserves, which remain
significantly under-exploited compared with those of other big
producers and, according to some geologists, could hold the world's
largest deposits, surpassing even those of Saudi Arabia. The Middle
East has largely been off-limits to international oil companies ever
since a wave of oil industry nationalisation swept the region,
starting in the 1950s.
In Iraq's case, the military coup that forced out the British- and
US-backed royal family in 1958 was followed by the gradual takeover
over the next 14 years of the Iraq Petroleum Company, previously a
concession that gave ownership of Iraq's oil reserves to a consortium
dominated by US, British and French interests. Access to Iraqi oil
today would give western oil companies an important foothold in the
Middle East, home to about 60 per cent of global oil reserves, at a
time when resource nationalism is on the rise and companies are having
trouble finding new oil reserves to replace those they exhaust. The
reserves they claim are a main determinant of their stock prices.
Western oil executives had long been impatient with the reluctance of
Middle Eastern countries to open up to foreign participation. This was
summed up in 1999 by the US vice- president Dick Cheney (below), then
a director at the oil fields services company Halliburton.
the US invasion, American officials collaborated closely with their
Iraqi political allies and oil industry executives. Many members of
the Oil and Energy working group had pushed for production-sharing
agreements to be introduced in Iraq after the invasion. These
arrangements would allow companies to claim a share of the reserves
produced as their own, at least for accounting purposes.
In effect, such contracts would amount to a significant step in
reversing Iraq's nationalisation process. The oil industry was
well-placed to lobby for such an arrangement. After the invasion,
former executives of big multinationals acted as consultants to the
new Iraqi oil ministry. The US then hand-picked oil ministry officials
under the coalition provisional authority, which eventually handed
over to the interim government of Iyad Allawi. This in turn advocated
partly privatising Iraq's oil industry. When a transitional government
came into place, the US backed Ahmad Chalabi a man who famously said
in 2002 that
Today, however, the openness of Iraq's oil industry to foreign
participation is still in doubt, not only because of the security
situation. Iraq has no national oil law in place. Its constitution is
vague about the degree of control regional governments can exert over
oil policy.
Iraqi officials know they will have the power to dictate terms to
foreign oil companies. "Iraq is definitely in the driver's seat. They
[the government] know they have one of the most prolific resources
left in the world," says Bob Fryklund, vice-president of IHS, the
international consultancy.
Energy producers such as Russia, Venezuela and Algeria have typified a
new wave of resource nationalism, in effect expropriating foreign
ownership of oil projects. In Libya, another country whose oil
industry has only just opened up to foreign participation after years
of sanctions, the government has now increased its take from all oil
projects to an average of 95 per cent, from 81 per cent in 2000. Even
in Kurdistan, where the regional authority has signed
production-sharing agreements, the government's take of future oil
produced is estimated at 87 per cent, says Mr Fryklund. Oil industry
executives say their companies will not invest if they do not get a
significant part of "the upside", industry jargon for expected
increases in production.
But Tariq Shafiq, a former director of Iraq's national oil company,
says companies would be prepared to accept variations of service
contracts that pay companies fixed returns rather than rewarding them
with control over reserves.
===
US Company to Help Expand Iraqi Refinery
By SINAN SALAHEDDIN
http://ap.google. com/article/ ALeqM5i3MIE14CmM Tl3e-zkwuFBsPOsO eQD8VGQ6OG0
BAGHDAD (AP) Iraq's Oil Ministry has signed a contract with the
Colorado Industrial Construction Services Co. to help expand a
refinery in Najaf, south of Baghdad, an official said Wednesday. The
$85 million contract is designed to increase the refinery's current
capacity of 20,000 barrels of oil per day by roughly 10,000 barrels
per day, a senior ministry official said.
"We are expecting the work to be done in one year or one year and a
half," the official told The Associated Press, speaking on condition
of anonymity because of a lack of authorization to release the
information. The Colorado-based company did not respond to telephone
calls seeking confirmation.
The refinery, about 100 miles south of Baghdad, was constructed in
October 2006 to help meet increasing needs in central Iraq for
petroleum products, including kerosene. The U.S. company will build a
third production unit, the official said.
Last week, the oil ministry inaugurated a second production unit at
the facility and pledged more refineries would be built across the
country, including in Nasiriyah and Karbala, two other cities in the
predominantly Shiite south. Together the new refineries will be able
to refine more than 450,000 barrels daily, it said.
Iraq has the world's third-largest known crude oil reserves, with an
estimated 115 billion barrels, but it suffers acute shortages in
petroleum products as most infrastructure has been damaged or
destroyed after years of U.N. sanctions and then five years of war.
Iraq's three main oil refineries are running at roughly half the
700,000 barrels daily capacity they maintained before the U.S.-led
invasion on March 20, 2003. The shortfall has forced Iraq to turn to
imports from neighboring Iran, Kuwait and Turkey. The country has been
forced to import about 8,000 tons each day, or about 60,000 barrels,
according to figures released last month by the State Oil Marketing
Organization. Insurgents frequently attack pipelines, hoping to rob
the government of oil revenue.
Exxon Mobil spent $16.9M lobbying
March 19, 2008
http://money. cnn.com/news/ newsfeeds/ articles/ newstex/AFX-
0013-23905827. htm
<http://money. cnn.com/news/ newsfeeds/ articles/ newstex/AFX- 0013-23905827. htm>
WASHINGTON (AP) - Exxon Mobil (NYSE:XOM) Corp., the largest U.S. oil
company, spent more than $16.9 million to lobby the federal government
in 2007, according to a disclosure form. The company lobbied on
various appropriations bills and on legislation dealing with Federal
Aviation Administration reauthorization, patent reform, taxes and
royalties, international relations and trade agreements, lobbying
reform, railroad security and more, according to the form posted
online Feb. 14 by the Senate's public records office.
Irving, Texas-based Exxon Mobil spent $10.5 million in the second half
of 2007 to lobby on those issues. The energy bill President Bush
signed in December did not include billions of dollars in higher taxes
for large oil companies that many Democrats wanted to use to fund tax
breaks for various clean energy (NASDAQ:CLNE) industries.
Similar proposals were revived earlier this month and are working
their way through Congress. Besides Congress, Exxon Mobil lobbied the
White House, Federal Energy Regulatory Commission, U.S. Trade
Representative' s office, the departments of Energy, Defense, Interior,
State, Commerce, Homeland Security and more. Lobbyists are required to
disclose activities that could influence members of the executive and
legislative branches, under a federal law enacted in 1995.
===
Iraq to pay oil firms to boost its output
By Randy Fabi and Ahmed Rasheed
http://www.guardian .co.uk/feedartic le?id=7397775
<http://www.guardian .co.uk/feedartic le?id=7397775>
BAGHDAD, March 19 (Reuters) - The Iraqi government is expected to pay
up to $2.5 billion to five top oil companies to increase the country's
oil output by nearly a quarter, a government adviser told Reuters on
Wednesday.In what would be the biggest foreign involvement for
decades, Baghdad is close to signing technical support contracts with
BP, Royal Dutch Shell, Exxon Mobil, Chevron and Total.
Thamir Ghadhban, energy adviser to Iraq's prime minister, said he
expected the contracts, which would add 500,000 barrels per day (bpd)
to current production of 2.27 million bpd, would be signed by early
next month.
"There is a rough estimate that it could cost about $400 to $500
million per field," he said in an interview."So a total could be up to
between $2 (billion) and $2.5 billion over two years that should be
paid by the government to companies.
"With oil prices at around $100 a barrel, the contracts could mean
extra revenues to Iraq of around $1.5 billion a month before costs,"
according to Reuters calculations.
Ghadhban said Iraqi representatives met with company officials last
week in Amman, Jordan, to discuss final details of the initially
two-year contracts, including whether payment would be by cash or by
oil."As far as we are concerned, everything is positive and it's a
matter of time for the minister of oil and oil companies to finalize
and shake hands," he said.
Shell is negotiating for the northern Kirkuk oilfield and is also in
talks, along with BHP Billiton, for the development of the Maysan
fields.BP also has its eyes on Iraq's southern Rumaila field, while
Exxon wants the contract for the Zubair oilfield in Basra.
Finally, Chevron and Total are looking to work together to develop the
West Qurna oilfield.
Ghadhban said he expected the companies to boost output by around
100,000 bpd at each of the fields
.
HEAD START
The ongoing talks have also given the five major oil companies a head
start in efforts to bid for future oil contracts.
"I have no doubt whatsoever those five major companies are going to be
qualified," he said. "They are major oil companies and of course they
will be qualified."
More than 100 companies have registered to compete for oil extraction
and service contracts to help develop Iraq's oil reserves, the world's
third largest.
Ghadhban said the government was expected to announce the list of
qualified companies next month, a month later than initially
expected.He said the technical support contracts with the five oil
majors needed to be finalized before the government could move on to
other contracts.
===
Forbidden fields: Oil groups circle the prize of Iraq's vast reserves
By Roula Khalaf and Steve Negus
March 19 2008
Financial Times
http://www.ft. com/cms/s/ 0/5b24f674- f5e6-11dc- 8d3d-000077b0765 8.html?nclick_ check=1
Royal Dutch Shell has been quietly working with Iraq's oil ministry
over the past two years, advising it on how to increase the production
of two oilfields. Under an agreement struck after the 2003 invasion,
no one from the company, Europe's largest oil group, has set foot in
the troubled country; instead, monthly face-to-face meetings with the
oil ministry have been held in Amman, the Jordanian capital, and
weekly contact has been maintained by video-link.
The Shell-financed project and the attention showered on Baghdad
appears to be paying off: Shell is now negotiating a technical support
agreement in which it will be compensated for helping upgrade
production of producing fields. The oil company will again set up a
team outside Iraq, helping, among other things, to bring new equipment
into the country and training Iraqis in its use. Shell is one of
several international oil companies including BP and the US groups
Exxon Mobil and Chevron that have been tapping into Iraq's oil
industry by remote control. But now, five years after the invasion,
the oil groups are hoping to take their involvement in the country to
a new level. Baghdad, desperate to increase oil production yet starved
of investment, is starting to dangle what the companies have been
after all along: a chance to develop and later explore what may be the
world's most promising untapped oil reserves. Indeed, as the companies
gear up for technical support agreements, they are also registering to
pre-qualify for the first bidding round of oil development contracts
that are to be offered by Baghdad.
"The [initial projects] were done to work with the Iraqis, get a
feeling for fields and build relationships and knowledge," says one
oil executive, speaking of the assistance projects provided so far.
With parts of the global oil industry threatened with nationalisation
and much of the Middle East still closed to foreign ownership of
reserves, access to Iraq, with the world's third-largest oil reserves,
has long been viewed as a huge prize. Although no decision has yet
been made in Baghdad over the nature of the development or the
eventual exploration contracts that will be on offer, Iraq could prove
one of the rare countries in the region where companies will be
allowed to claim reserves as their own.
"This is the big frontier,"says Raad Alkadiri, a senior director at
Washington-based PFC Energy. According to the oil ministry, only 27
out of 80 discovered fields are producing in Iraq, the result of
decades of under-investment. A report by Wood Mackenzie, the
consultancy, meanwhile says the scale of Iraq's remaining oil
resources surpasses all other countries in the Middle East, including
Saudi Arabia, and its high-quality reservoirs ensure that production
costs would be very low. But Iraq is also a dangerous frontier.
Companies invited to invest in its oil industry and satisfy
Baghdad's plans at least to double oil production from the current
2.5m barrels a day will be walking into a political, security and
legislative minefield. Their involvement threatens to exacerbate the
sectarian tensions that have torn the country apart since the US-led
invasion.
International oil companies acknowledge that security, although better
over the past year, will still need to improve significantly before
workers are dispatched to Iraq. The weakness of the central government
and its patchy control over the southern part of the country, home to
80 per cent of proved oil reserves, will also be taken into account.
Perhaps most important, however, is that they could be entering a
country with deep political fissures and lingering anger at foreign
intervention, without clear legislation allowing for foreign
participation. Despite American pressure and government desperation, a
law to regulate foreign access to the oil industry has languished in
the Iraqi parliament, a victim of sectarian disputes, particularly
between the Kurds and Arabs. Frustrated by the delays, and virtually
giving up on a successful outcome, the oil ministry has now invited
oil companies to pre-qualify for development of existing fields and
says a cabinet decision will be enough to legitimise foreign
participation. Later bidding rounds are envisaged for exploration
contracts.
Officially, companies say they will insist on having new legislation
in place before investing the billions of dollars that would be needed
for development and exploration. Yet the absence of a law is not
preventing them from embarking on negotiations.
"The companies are positioning themselves; they're playing the game and the oil ministry is trying to create a game for them to play,"says Mr Alkadiri.
"Of course you can hit a whole set of problems and the companies are aware
of that and they will factor it in. But [outside Iraq] there are no
such reserves in an unexplored territory."
Adding to the complications is uncertainty over who has the rights to
sign contracts in Iraq. The Kurdish regional government, based in
Irbil, claims that the constitution gives it power over its own
resources within the borders of Kurdistan, while the government in
Baghdad rejects this claim completely. It insists it has the sole
constitutional authority to dispose of Iraq's oil resources. A further
difficulty is that oil is unevenly distributed throughout the ethnic
regions of Iraq, with resources concentrated in the Shia south of the
country and the Kurdish north. The minority Sunni Arabs, who formerly
controlled the levers of power under Saddam Hussein, can boast few oil
reserves in their ethnic areas. Their priority in negotiating in the
new Iraq has been to ensure they receive their fair share of oil
revenues. But the competing expectations of Iraq's communities have
never been confronted head on, and were sidestepped by the framers of
the constitution, agreed in 2005, by means of ambiguous language.
Specifically, the constitution' s article 112 says the "federal
government, with the producing governorates and regional governments"
should manage oil and gas, but only from "present" fields. The
document's Article 115, meanwhile, declares that "all powers not
stipulated in the exclusive powers of the federal government" belong
to local or regional authorities. The KRG has taken this to mean that
the federal government has the conditional right to manage fields
currently producing, but that a regional government such as itself has
the power to manage exploration and the production from newly
discovered fields. To exploit this loophole, the KRG has passed its
own oil law, which allows it to sign contracts with foreign oil
companies. It has signed such agreements with several (smaller) groups
from Norway, Turkey, Austria, South Korea and other countries in the
face of Baghdad's objections.
"In the Kurdistan region, there is a constitution and there is a law.
We have two instruments that we can rely upon: the law and the
constitution are a pair, and they're consistent and in harmony with
each other in our case," says Ashti Hawrami, KRG oil minister.
Baghdad, however, has declared the KRG contracts illegal,
blacklisting companies that deal with the Kurdistan region and, more
recently, cancelling export deals with South Korean and Austrian
groups that signed exploration deals with the KRG. This has kept
bigger companies away from the north. The Kurds' assertive attitude
has heightened the Sunni Arabs' attachment to strong central control
over the country's regions and their inclination towards economic
nationalism. Their political leaders have pressed for the constitution
to be rewritten to strengthen the federal government and reduce the
powers of the KRG. With no agreement on the constitution, the
hydrocarbons legislation which would set terms for foreign oil
companies along with an agreement on the sharing of oil revenues
locally was controversial from the start.
After months of wrangling, the Iraqi cabinet in February 2007 came to
an agreement on a draft framework that did not include revenue-sharing
legislation. Even that has not been passed by parliament. Moreover, as
talks over the oil law have dragged on, opposition to the
production-sharing agreements (PSAs) favoured by western oil
companies, once relatively muted, has grown among the majority Shia as
well underlining a resurgence in nationalism as much as a reaction
to Kurdish unilateralism. According to Hussein Shahristani, the oil
minister, the cabinet's approval of a draft hydrocarbons law last year
made no reference to PSAs, and what his ministry will offer companies
are "model contracts" that would attempt to balance investors'
expectations of financial return against domestic political concerns,
not least the determination of Iraqis to maintain ownership and
control of oil wealth. Kurdish officials, however, say the contracts
envisaged by Baghdad are PSAs in all but name.
says Yahia Said, Iraq expert and Middle East director at Revenue Watch, a project
"What's happening is that various parties are jostling for position
now rather than reaching agreement on the oil legislation,
at the London School of Economics.
"The KRG is trying to move with as many facts on the ground as possible and the federal government is trying to show that it's in control."Apotential flashpoint for the oil dispute between Kurds and Arabs is in the oil field of Kirkuk, the
city that Kurds claim as part of their region but whose status is to
be settled by a long-delayed referendum. It is to minimise the risk
of such confrontation that the US has put enormous pressure on Iraq's
politicians to agree the hydrocarbons legislation. Judging it a
crucial element for Iraqi stability, the Bush administration listed
the oil law as one of the benchmarks the Baghdad government was
expected to achieve as the US military surge helped to reduce violence
over the past year.
Even with the likelihood of an oil law approval fading, US officials
continue to insist that it is essential for signing oil contracts with
foreign groups. For international oil companies, the hope is that as
the negotiations proceed over the next year, Iraq's political and
legislative landscape will gain more clarity. Iraqi experts, however,
warn that the oil law may be dead and Baghdad's only choice,
ironically, will be to fall back on legislation from the Saddam
Hussein era. Although meant to protect the nationalised status of the
industry, the legislation did not stop the previous regime from
negotiating specific contracts with foreign companies, which were then
agreed by the rubber-stamp parliament.
"The ministry might be able to get away with [contracts] by leaning on
Saddam-era regulations. Saddam negotiated contracts that were not PSAs
[the oil companies' preferred arrangement] but with Iraq the only
remaining major resource in the world, companies will have to have
some investment there," says Tariq Shafiq, a former director of Iraq's
national oil company.
Shut out elsewhere, executives await the end of a long exile Just
months before US tanks rolled into Baghdad and Saddam Hussein was
toppled, US government officials met allies from Iraq's opposition and
decided it was in the country's interest for a new government to open
its oil industry to foreign participation as quickly as possible,
writes Dino Mahtani.
The so called "Oil and Energy" working group of the US state
department, which met four times in 2002 and 2003 and included
influential Iraqi exiles, had put forward the idea as a crucial plank
in Iraq's postwar reconstruction plans. Increased foreign
participation in Iraq's oil industry, members argued, would help
revitalise its most important economic lifeline ravaged by years of
neglect and under investment under Saddam's regime. But it would also
get US oil companies close to Iraq's reserves, which remain
significantly under-exploited compared with those of other big
producers and, according to some geologists, could hold the world's
largest deposits, surpassing even those of Saudi Arabia. The Middle
East has largely been off-limits to international oil companies ever
since a wave of oil industry nationalisation swept the region,
starting in the 1950s.
In Iraq's case, the military coup that forced out the British- and
US-backed royal family in 1958 was followed by the gradual takeover
over the next 14 years of the Iraq Petroleum Company, previously a
concession that gave ownership of Iraq's oil reserves to a consortium
dominated by US, British and French interests. Access to Iraqi oil
today would give western oil companies an important foothold in the
Middle East, home to about 60 per cent of global oil reserves, at a
time when resource nationalism is on the rise and companies are having
trouble finding new oil reserves to replace those they exhaust. The
reserves they claim are a main determinant of their stock prices.
Western oil executives had long been impatient with the reluctance of
Middle Eastern countries to open up to foreign participation. This was
summed up in 1999 by the US vice- president Dick Cheney (below), then
a director at the oil fields services company Halliburton.
"Even though companies are anxious for greater access there, progress continues to be slow."he said in a speech to the oil industry. After
the US invasion, American officials collaborated closely with their
Iraqi political allies and oil industry executives. Many members of
the Oil and Energy working group had pushed for production-sharing
agreements to be introduced in Iraq after the invasion. These
arrangements would allow companies to claim a share of the reserves
produced as their own, at least for accounting purposes.
In effect, such contracts would amount to a significant step in
reversing Iraq's nationalisation process. The oil industry was
well-placed to lobby for such an arrangement. After the invasion,
former executives of big multinationals acted as consultants to the
new Iraqi oil ministry. The US then hand-picked oil ministry officials
under the coalition provisional authority, which eventually handed
over to the interim government of Iyad Allawi. This in turn advocated
partly privatising Iraq's oil industry. When a transitional government
came into place, the US backed Ahmad Chalabi a man who famously said
in 2002 that
"US oil companies will have a big shot at Iraqi oil"to chair Iraq's Energy Council.
Today, however, the openness of Iraq's oil industry to foreign
participation is still in doubt, not only because of the security
situation. Iraq has no national oil law in place. Its constitution is
vague about the degree of control regional governments can exert over
oil policy.
Iraqi officials know they will have the power to dictate terms to
foreign oil companies. "Iraq is definitely in the driver's seat. They
[the government] know they have one of the most prolific resources
left in the world," says Bob Fryklund, vice-president of IHS, the
international consultancy.
Energy producers such as Russia, Venezuela and Algeria have typified a
new wave of resource nationalism, in effect expropriating foreign
ownership of oil projects. In Libya, another country whose oil
industry has only just opened up to foreign participation after years
of sanctions, the government has now increased its take from all oil
projects to an average of 95 per cent, from 81 per cent in 2000. Even
in Kurdistan, where the regional authority has signed
production-sharing agreements, the government's take of future oil
produced is estimated at 87 per cent, says Mr Fryklund. Oil industry
executives say their companies will not invest if they do not get a
significant part of "the upside", industry jargon for expected
increases in production.
But Tariq Shafiq, a former director of Iraq's national oil company,
says companies would be prepared to accept variations of service
contracts that pay companies fixed returns rather than rewarding them
with control over reserves.
"Given how prolific Iraq is, the returnhe says.
to international oil companies [under service contracts] would be just
as favourable as under investment [contracts]. And I believe the
companies are aware of that,"
===
US Company to Help Expand Iraqi Refinery
By SINAN SALAHEDDIN
http://ap.google. com/article/ ALeqM5i3MIE14CmM Tl3e-zkwuFBsPOsO eQD8VGQ6OG0
BAGHDAD (AP) Iraq's Oil Ministry has signed a contract with the
Colorado Industrial Construction Services Co. to help expand a
refinery in Najaf, south of Baghdad, an official said Wednesday. The
$85 million contract is designed to increase the refinery's current
capacity of 20,000 barrels of oil per day by roughly 10,000 barrels
per day, a senior ministry official said.
"We are expecting the work to be done in one year or one year and a
half," the official told The Associated Press, speaking on condition
of anonymity because of a lack of authorization to release the
information. The Colorado-based company did not respond to telephone
calls seeking confirmation.
The refinery, about 100 miles south of Baghdad, was constructed in
October 2006 to help meet increasing needs in central Iraq for
petroleum products, including kerosene. The U.S. company will build a
third production unit, the official said.
Last week, the oil ministry inaugurated a second production unit at
the facility and pledged more refineries would be built across the
country, including in Nasiriyah and Karbala, two other cities in the
predominantly Shiite south. Together the new refineries will be able
to refine more than 450,000 barrels daily, it said.
Iraq has the world's third-largest known crude oil reserves, with an
estimated 115 billion barrels, but it suffers acute shortages in
petroleum products as most infrastructure has been damaged or
destroyed after years of U.N. sanctions and then five years of war.
Iraq's three main oil refineries are running at roughly half the
700,000 barrels daily capacity they maintained before the U.S.-led
invasion on March 20, 2003. The shortfall has forced Iraq to turn to
imports from neighboring Iran, Kuwait and Turkey. The country has been
forced to import about 8,000 tons each day, or about 60,000 barrels,
according to figures released last month by the State Oil Marketing
Organization. Insurgents frequently attack pipelines, hoping to rob
the government of oil revenue.
Also of interest in very recent news:
 Javno.hr | Global Insight: Violence in Southern Iraq threatening oil exports Petroleumworld.com, Venezuela - New constitutional allowances for provinces to be bound together into autonomous regions of the likes of the northern Iraqi Kurdistan region are also coming ... Democracy in the making |
Heritage Oil announces intention to list on the London Stock Exchange Canada NewsWire (press release), Canada - The timing is opportune given the high-impact drilling campaigns we will undertake in Uganda and Kurdistan this year. I am delighted to welcome General Sir ... Shareholders of Heritage Oil Corporation Overwhelmingly Approve ... |
 BBC News | Return to Kurdistan BBC News, UK - Kurdistan's future will be difficult enough, with or without the oil from Kirkuk, and these passionate students are the key to the region's growth. ... |
 Ghana Broadcasting Corporation | Five Years On - Invasion And occupation CounterCurrents.org, India - The Turkish government is negotiating oil concessions with the Kurdish “Regional” government and Turkish companies have been heavily investing in the area. ... Wobbling all over the place |
KRG Natural Resources Ministry: Oil, gas, mining sector appointments Kurdistan Regional Government, Iraq - As well as developing a robust private sector, the MNR’s petroleum programme will include the institutional development of a Kurdistan National Oil Company ... |
 San Diego Union Tribune | Iraqi Forces Clash With Sadr Militants in Basra for Third Day Bloomberg - An oil pipeline in southern Iraq was on fire after a bomb exploded underneath it, the Associated Press reported, citing an unidentified official in Basra. ... The Shiite - Shiite "Awakenings"...or Chalabi's revenge ? Good Morning, Vietnam! Iraqi Prime Minister Gives Shiite Militia 72 Hours to Surrender |
 AFP | Norway's DNO revises oil deal with Iraq's Kurdish authorities AFP - OSLO (AFP) — Norwegian oil company DNO International said Friday it had revised an agreement with Kurdish authorities on splitting oil production in two ... |
Dispute over Kurdistan oil deals might be solved at federal court ... International Herald Tribune, France - A national oil and gas law is stuck in parliament, with Kurdish and Arab leaders fighting over who has the final say in managing oil and gas fields. ... |
Oil-rich Kurdistan still under thumb of Baghdad ministers The Herald, UK - Kurdistan's oil minister, Ashti Harami, told us there are no limits to the success they can achieve: "You could create a new Dubai in every city in Iraq. ... |
Iraq says it won't recognize oil deals with regional Kurdish ...
International Herald Tribune, France -8 Mar 2008
AP ANKARA, Turkey: Iraq's oil minister said Saturday his government will not recognize any oil deals that the northern Kurdish self-governing region has ...
International Herald Tribune, France -
AP ANKARA, Turkey: Iraq's oil minister said Saturday his government will not recognize any oil deals that the northern Kurdish self-governing region has ...
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