The organization representing Iraq's Sunni religious leadership is the latest voice to protest the deal finalized last week between the Iraqi Oil Ministry and partners BP and the Chinese National Petroleum Corp. The statement from the Association of Muslim Scholars [2] called the deal to develop the Rumaila field "at the very least suspicious." The Rumaila field currently produces just below 1 million barrels per day (bpd). Under the 20-year contract this figure is to be boosted to 2.85 million bpd within seven years. BP and CNPC would hold 75% of the project, with the Iraqi state owning 25%.
The Association of Muslim Scholars statement recalled the time before nationalization, when the world's largest oil companies had a stranglehold on Iraq's oil sector. "BP is one of the monopolizing 'Seven Sisters' which started work in Iraq in 1927," the statement reads. "The present oil minister attempts to return this company to Iraq while it continues to suffer from the despicable occupation of which Britain is a partner." (Iraq Oil Report [3], Nov, 9)
The BP-CNPC partnership formally took control of Iraq's biggest oilfield Nov. 3—in the first important energy deal since the 2003 invasion. The move has sparked an outcry from local politicians nearly across the spectrum, who have invoked resentful memories of their nation's colonial past. Many Iraqi MPs say that the deal is illegal, and that the constitution should give them—not the Oil Minister—final say over control of the country's vast resources.
The field is believed to hold about 17 billion barrels of oil, and boosting production there is forecast to increase overall Iraqi production from 2.5 million bpd to 7 million in about six years. Ownership of the field officially remains in Iraqi hands, with the contract giving the companies $2 for every barrel extracted. Critics within the industry call the return laughable, but BP is evidently eager to get a foothold in Iraq.
Iraq is the world's 11th-biggest oil producer, but has the potential to climb to third place or higher. Saudi Arabia is the world's second-largest producer at nine million barrels a day, behind Russia at ten million barrels.
As the field was turned over to BP, several Iraqi MPs wrote a letter of protest to Christopher Prentice, the British ambassador in Baghdad, charing that the deal undermines democracy by circumventing parliamentary approval. "BP's willingness to sign the contract encourages the Oil Ministry to violate the constitution," said Jabir Khalifa Jabir, secretary of the oil and gas committee in parliament. (London Times [4], Nov. 3)
Half dozen major oil companies are close to deals with Iraq, on the heels of BP and the CNPC. The deals are part of an Oil Ministry effort to bring foreign capital, expertise and technology for the underachieving yet third largest oil reserves in the world. Iraq holds 115 billion barrels of proven reserves. (The CIA World Factbook [5] places Iraq fourth in proven reserves, after Saudi Arabia, Canada and Iran.)
Late last month, Iraq's Prime Minister Nouri al-Maliki and Oil Minister Hussain al-Shahristani visited Washington DC to court investment at a conference organized by Iraq's National Investment Commission, the US Embassy in Baghdad and the US Chamber of Commerce.
The Rumaila deal followed months of negotiations between the companies and the Ol Ministry. It was approved by the Iraqi Council of Ministers days before the Washington conference opened. (Iraq Oil Report [6], Oct. 20)
A bid from Japan's Nippon Oil and partners was chosen above offers from Eni and Repsol for an engineering, procurement and construction contract for the 4.4 billion-barrel Nassiriya oil field, the Oil Ministry also announced that week. (Iraq Oil Report [7], Oct. 20)
Labor repression continues
Iraqi labor unions, which have been at the forefront of protesting the handover of oil resources to multinational corporations, continue to meet with harsh repression. The Federation of Workers Councils and Unions in Iraq (FWCUI) reports that government soldiers guarding the Green Zone opened fire on a peaceful labor march in Baghdad Oct. 6, also detaining and beating several protesters. The demonstration had acquired the proper permit from Baghdad's military authorities.
The shooting began when some 2,000 marchers approached the gates of the Green Zone to demand a meeting with MPs. As the soldiers opened fire over their heads, the workers at the front ranks of the march stood firm, shouting at the troops, "We do not want you Baathists! We do not want you Baathists!" Other chants included "Why you are starving the workers and their children?" and "Our wages are a handful of soil compared to the salaries of the parliamentarians" and "Yes to Equality!"
Finally the troops began beating the leaders in the front ranks, and four were arrested: Thamir Hameed and Muhammad Khangar from the state-owned battery plant, Muhammad Khamees from the electrical sector, and Munadhil Attia from the leather industry. A cameraman, Muhammad Jasim, was also beaten, and his camera seized to prevent media coverage of the events.
The marchers were demanding back payment of salaries that have been arrears since last year, as well as benefits and settlement in the cases of workers politically dismissed during the Saddam Hussein regime. (FWCUI Oct. 6, via USLAW [8])
See our last posts on Iraq's oil [9] and the labor struggle [10].
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