This really does take the biscuit. Naomi Klein\’s not normally all that clued up, agreed, but she rarely actually undermines her own argument in the same piece.
Firstly, there\’s this:
It started with no-bid service contracts announced for Exxon Mobil, Chevron, Shell, BP and Total (they have yet to be signed but are still on course). Paying multinationals for their technical expertise is not unusual in itself. What is odd is that such contracts almost invariably go to oil service companies – not to the oil majors, whose work is exploring, producing and owning carbon wealth.
Any of our resident oil industry experts want to take that on?
But then there\’s this:
One week after the no-bid service deals were announced, the world caught its first glimpse of the real prize. After years of backroom arm-twisting, Iraq is officially flinging open six of its major oilfields, accounting for half of its known reserves, to foreign investors. According to Iraq\’s oil minister, the long-term contracts will be signed within a year. While ostensibly under the control of the Iraq National Oil Company, foreign corporations will keep 75% of the value of the contracts, leaving just 25% for their Iraqi partners.
That kind of ratio is unheard of in oil-rich Arab and Persian states, where achieving majority national control over oil was the defining victory of anti-colonial struggles. According to Greg Muttitt, a London-based oil expert, the assumption up until now was that foreign multinationals would be brought in to develop new fields in Iraq – not to take over those which are already in production and therefore require minimal technical support. "The policy was always to allocate these fields to the Iraq National Oil Company," he told me. "This is a total reversal of that policy, giving the Iraq National Oil Company a mere 25% instead of the planned 100%."
So what makes such lousy deals possible in Iraq, which has already suffered so much? Paradoxically, it is Iraq\’s suffering – its never-ending crisis – that is the rationale for an arrangement that threatens to drain Iraq\’s treasury of its main revenue source. The logic goes like this: Iraq\’s oil industry needs foreign expertise because years of punishing sanctions starved it of new technology, while the invasion and continuing violence degraded it further. And Iraq needs to start producing more oil urgently. Why? Also because of the war. The country is shattered and the billions handed out in no-bid contracts to western firms have failed to rebuild it.
And that\’s where the new contracts come in: they will raise more money, but Iraq has become such a treacherous place that the oil majors must be induced to take the risk of investing.
So a system of contracting out the running of oilfields which will raise more money (as she says) is in fact pillaging?
That doesn\’t even make sense in and of itself, let alone her analysis of the wider issues.
Effectively what the Iraqi contracts are doing is allowing the private sector oil companies to invest, find, drill, pump up, transport and sell the oil: while paying whacking great royalties to the Iraqi government for the privilege of doing so.
The system is such a terrible rip off, such a disastrous deal, that it\’s exactly the system that we use in the North Sea and the same system that the US uses in that country. Indeed, it\’s the same system used in Ms. Klein\’s native Canada.
So why is everyone complaining about it?