The future of Iraq’s oil

Oil prices are sky high and Iraq is sitting on massive untapped oil reserves which is why the government in Baghdad is eager to get the oil flowing again. The problem is the government has yet to pass a legal mechanism to distribute the oil and its profits. This veteran oil engineer says the draft law has been changed for the worst over two years of political negotiations. Now Baghdad appears ready to move ahead on short-term, no-bid contracts with big, foreign oil companies even before it passes an oil law with the goal of boosting supply to take advantage of high oil prices. The Iraqi government will announce the deals by the end of this month. The question is�will the companies that sign these no-bid contracts be getting a leg up on competitors for future, longer-term contracts? This Iraqi ambassador to the UN says these short-term contracts are based on technical rather than political reasons. If anyone is pointing to these deals as evidence that the US-based invasion was all about oil, the ambassador says they’d be off base. there’s little doubt that the government in Baghdad is feeling pressure to gain control of the oil industry. The northern Iraqi government has signed its own deal with foreign oil companies and the federal companies say these contracts are illegal. Not surprisingly, the Kurds disagrees. Few doubt Iraq has the potential to make a lot of money from their oil, but Iraqis are skeptical about who’s going to benefit in the long run and many suspect the profits will go to the ruling elite and the foreign companies. Violence and government corruption also stand in the way of a thriving oil economy in Iraq.