Iraq and Gulf Analysis

The Exxon Mobil Bombshell

Posted by Reidar Visser on Monday, 14 November 2011 19:24

So far, conspiracy theorists alleging that American appetite for oil was the real factor behind the Iraq War – perhaps even in a plot intended to partition the country for the benefit of US oil interests – haven’t quite been able to fit their theory to the empirical realities. Until now, American companies have not been particularly prominent in terms of their involvement on the ground in “the new Iraq”. Also, generally speaking, most of the contracts of the IOCs signed with Baghdad come across as modest in terms of profit rates for the Western companies compared to what goes to Iraq.

Enter Exxon Mobil and its recent Kurdistan dealings. The story began in the shape of rumours last week but has now been confirmed by a sufficient number of sources that it can be treated as facts: Exxon has cut separate exploration deals with the Kurds, circumventing Baghdad and thereby potentially jeopardising its existing service contract with Baghdad for the supergiant West Qurna field near Basra. The move could also signify the entrance of “big oil” into Kurdistan after a period of “small oil” dominance (including, most recently, former BP chief Tony Hayward in his new role in Genel). 

The bid comes at the most critical juncture imaginable. For the first time in the history of Iraq, the central government is threatened by federalism movements in both Sunni and Shiite areas, alongside the existing challenge from the established Kurdish region. Today saw further unprecedented moves in this direction in parliament where Usama al-Nujayfi, the speaker of the national assembly, organised an impromptu conference on federalism and decentralisation issues. The conference – attended by representatives of five Sunni-majority provinces and reportedly boycotted by the ten Shiite-majority ones – concluded with a statement that highlighted such broad issues as the constitutional right to form regions, the need to reform the provincial powers law of 2008 and even the question of the impartiality of the Iraqi judiciary.

Whether Prime Minister Nuri al-Maliki in this critical situation will bend to the pressure from Exxon Mobil and give up his policy of blacklisting companies that do separate deals with Kurdistan remains to be seen.

A consistent response would involve kicking Exxon out of its Qurna contract which is shared with Shell (which in turn has not concluded any deals with the Kurds). Maliki has so far been able to resist federalism initiatives from fellow Shiites in Basra and Wasit, and has recently indicated a possible judicial approach that could create delays for the latest Salahaddin autonomy bid. Maliki does not really enjoy the parliamentary backing required to act so boldly, but as long as his enemies are unable to sack him due to their own disunity there is plenty of room for manoeuvre for the prime minister regardless of the parliamentary situation.

If on the other hand Maliki does feel threatened by the growing number of unhappy oppositionists he will likely turn to deal-making with the Kurds in order to ensure his own survival. In that respect, bargains over oil may perhaps be an easier route than a sell-out on Kirkuk (which is certain to meet with opposition even in Shiite Islamist circles that are normally friendly to the Kurds). Taking a pragmatic approach to the latest Exxon deals in Kurdistan might be one aspect of such an approach.

The international dimensions of these developments are particularly hard to grasp. It seems remarkable that a company of Exxon’s stature should run such an incredible risk with West Qurna had there not been some kind of deal-making and assurances under the table.  Could the move have been clarified with the Obama administration? Right now, it seems Washington cannot quite make up its mind as to whether to slap Maliki in the face or try to put a gloss on the whole situation. It is noteworthy that according to Kurdish sources, the deals with Exxon were signed on 18 October 2011 whereas 21 October was the date of Obama’s “total withdrawal” speech on Iraq. Would Washington really want to put all its eggs in basket of central-northern Iraqi energy when even the most optimistic scenarios for the Kurdish areas (including the projected Nabucco pipeline) dwindle by comparison with the south? The geopolitical risk of those fields falling under ever firmer Iranian control is certainly considerable.

The net effect of the Exxon Mobil dealings are easier to evaluate: They make Iraq look more fragmented, vulnerable and susceptible to foreign influences than for a long time.

41 Responses to “The Exxon Mobil Bombshell”

  1. yemaya said

    Another victory for the kurds, they always wanted a fragmented Iraq

  2. Did you see the piece in International Oil Daily? Apparently the Oil Ministry formally warned Exxon the WQ1 contract would be terminated – though maybe Maliki will over-rule the Ministry for the reasons you say. If the Ministry doesn’t follow through on the threat, it will be even more weakened than it is already.

    By the way, Reidar, do you really think oil had nothing (“literally nothing”, as Rumsfeld said) to do with the war? Sure, it wasn’t primarily about getting contracts for US companies, and definitely some ideas went round that were well off the mark, but on top of the fairly clear documentary evidence I just can’t make sense of the “literally nothing to do with oil” view.

    The really interesting question here is whether the State Dept signed off on the Exxon deal. And if so, why? A dog-in-the-manger attitude that if we can’t have Iraq, let it be more of a mess for the Iraqis (and Iran)? A constructive chaos idea that throwing everything in the air might let the US guide where it all lands? Even some deal to have a base in Kurdistan, as Obama first proposed in 2006?

    With the Hunt deal in ’07 different people in State were saying different things – but surely ExxonMobil would want to be sure it was getting the official line.

  3. The Exxon Mobile deal will probably increase Kurdistan’s leverage over Washington’s lobbyists. The will of Washington is not well defined, to say the least.
    This is a particularly opportune time for the Kurds to move in light of the impending Iranian sanction US law, which could spill over and involve pro Iranian Kurds and their lobbyists.

  4. Reidar Visser said

    Greg, I guess my position is in the middle on this, i.e. Washington probably wanted a freer flow of oil and a boost of production compared to pre-2003 levels, but not necessarily in order to specifically advance the interests of US oil companies (as opposed to IOCs more generally), and probably not so much with the deliberate intention of splitting up Iraq as they are sometimes accused of. I think the near-partition situation that we are witnessing today is more the result of US incompetence than of succesful manipulation based on any master plan for partition.

  5. Reidar, I agree on all those points – though to me, a war for freer flows of oil is no more legitimate than a war for one’s own corporations

  6. Reidar Visser said

    Can’t say I disagree with that…

  7. Kjetting said

    Exxon is not in the habit of securing approval from the US government. I will assume that they have sounded them out, and gotten the regular warnings from a cautious Department of State. But there might of course be other parts of the US Governement that has given them a less cautious advice.

    This is a gamble I guess, but despite the size of West Qurna 1, the project is economically marginal. Exxon might also think it is protected by its role in the big Water Injection Project, which is crucial to the development of the fields in the South. First of all this puts the need to act on the shoulders of Baghdad. I think, however, that Exxon is not very happy with the way the Kurds are rubbing it in towards Baghdad and the way the information was released. This has probably generated more negative feelings in Baghdad then it otherwise would have, and could tip the scales in direction of throwing out Exxon. The problem for Baghdad is that if they let this pass, there will be a free for all towards Erbil and very hard to roll-back the KRG gains on these contracts.

  8. Salah said

    There is true fact of oil, Iraqi oil the cheapest in matter of cost/barrel in the region.

    Most oil companies and those who worked in oil new that for long time.

    When Oil prices dropped below $10 /Barrel this figure was the killing for most US oil producers on US land. Before and during the war publically many news outlet “western” said the cost of getting barrel of oil from Iraqi oil filed cost less than $2 while in US average cost of oil/barrel is $10-$11.

    With that in mind the amount of production per number of digging oil wells also factor here, in US Texas 10,000 oil well produced 100,000 Barrel/day while in Iraq you have 80 oil wells which give more in matter of production. So oil was and is one of the major factors going for war but the question is who get that wealth & control it that another matter altogether.

    Babylonian built their city with by-product of oil called in Iraq “zift” which the heavy material from the oil used normally in road surfacing. If you visit Babylon today clearly you see the bound material they use to build their city and roads “specially the “Warsaw Gate” and Original brick surface of the great processional route through the gate very obvious to the victors

    let read maps of Iraq’s oil industry operations as of 1953 and 2003

    more history here

  9. Reidar Visser said

    The ways in which Iraqi local politicians keep inventing rules for how to create federal regions are just unbelievable. Now Anbar say they will have a referendum in a week’s time, without following any kind of formal initiative procedure:

    أكد مجلس محافظة الأنبار، الثلاثاء، أنه يعتزم إجراء استفتاء في الأسبوع المقبل بخصوص تحويل المحافظة إلى إقليم، متوقعا أن يصوت أهالي المحافظة لصالح إقامة الإقليم.

    وقال نائب رئيس المجلس سعدون الشعلان في حديث لـ”السومرية نيوز”، إن “المجلس شكل لجانا زارت أقضية ونواحي المحافظة، لمعرفة مدى رغبتها بتحول الأنبار إلى إقليم”، مؤكدا أن “المجلس سيجري استفتاءً الأسبوع المقبل بهذا الصدد”.

    وتوقع الشعلان أن “تكون نتيجة التصويت لصالح إقامة الإقليم، بسبب شعور مواطني المحافظة بالغبن ومصادرة صلاحيات محافظتهم”، مشيرا إلى أنه “في حال موافقة مواطني الأنبار على تشكيل الإقليم، فإن حكومة الأنبار ستقدم طلبا للحكومة المركزية بهذا الشأن”.

  10. Xenophon said

    Good information, Kjetting.

    When you say that West Qurna is economically marginal for Exxon, is that because of the lack of a production sharing agreement?

  11. Observer said

    Shehristani should be held accountable for not being able to increase the production of oil He has been in charge of the oil portfolio for 7 years. Time to be judged on results not intentions.

    Instead, everybody is debating blacklisting of Exxon and the merit of federation.

    Santan – that is the earth shaking announcement Qubadh talked to you about 😉

  12. Salah said

    ” Iraqi local politicians keep inventing rules for how to create federal regions”

    النجيفي يصل تكريت ويؤكد على دستورية انشاء الاقاليم

    وصل الى مدينة تكريت صباح اليوم رئيس مجلس النواب اسامة النجيفي برفقة عضوي المجلس عن القائمة العراقية سلمان الجميلي وشعلان الكريم
    وقال مصدر في المحافظة لوكالة الصحافة المستقلة ( إيبا ) إن النجيفي اجتمع فور وصوله باعضاء مجلس المحافظة واكد على دستورية انشاء الاقاليم

  13. Reidar Visser said

    Salah, the problem is not Nujayfi, who is generally constitutional in his approach (even if the change to a pro-federal position over the past half year is quite remarkable). The problem is Sadun al-Shaalan, quoted above, who is devising his own roadmaps for a new federal region in Anbar.

    Thanks by the way to Santana and Observer for correctly forecasting the Exxon developments on 1 November:

    (Comments 45 and 53.)

  14. bb said

    All this Exxon thing indicates is that large IOCs feel much more secure in Kurdistan than the rest of Iraq and are therefore prepared to invest there.

    How on earth would an IOC rate security in the south when the Iraqi parliament can’t even pass a coherent oil law? The US withdrawal has finished off any proper devolopment of the south’s resources for the indefinite future.

    Maybe that Sunni/Kurd region isn’t looking such a bad idea from the sunni perspective, since the Sunni areas don’t have any oil and need investment in exploration?

  15. greg muttitt said

    Kjetting, agree that EM doesn’t need permission – but inconceivable that it would take a gamble like this without reassurance as to how US will react, presumably pressure against WQ1 cancellation.
    The idea that WQ1 is economically marginal is a much-repeated myth tho – originating in shahristani portraying himself as heroic defender of the nation’s wealth, journalists who fell for it, and oil industry folks who thought Iraq’s size should be a bonus for the companies rather than grounds for tougher terms.
    The project return is estimated at 19% – staggeringly profitable for one with no geological risk. The downside is getting govt approvals, at which EM has seemed less adept than BP

  16. Kjetting said

    These contracts have some special features, of which the name of them, PSA/TSC/Buy Back, is not the most important. One thing people should know is that Iraq retains between 96 and 99 % of all the revenue from the contracts. But Iraq also answers for all the cost of the development.

    Overall, if you make some simplified assumption and assume a full plateau in 2017 (which is unrealistic, but still), the Iraqi state will recive in excess of 4 trillion USD, the companies around 25 billion USD, during the life time of the contracts. There are costs to be deducted from the 4 trillion, but Iraq will during the life time of these contracts still recieve a hefty sum of money. This is why the contract is marginal to any company involved. In addition, for the companies, time is of the essence, Any delay to the project make a big dent in the economics of the contract, making the project even more marginal.

    The PSA exploration contracts in the KRG has a whole different risk profile, where the companies take more of the cost risk, but at the same time can get a bigger share of the upside. This is normally more attractive to a self-confident operator like Exxon.

    The way the KRG presented this contract it seems they stand the risk of hardening the front towards Baghdad instead of making this a break-through. I also doubt that US relations will make much difference to Maliki and Shahristani in this situation – this is a big IOC challening their authoritiy, not the kind of pressure they easily will succumb to. Right now the default position in Baghdad is to throw Exxon out of the West Qurna 1 contract.


    In the oil world these contracts are marginal and with significant risk, I have compared enough to be resonably sure about that. Although not geologically risky (although geologist might disagree with you there), they have significant risk because they are so dependent on schedule, time and issues that are outside the control of the operator and with limited guarantees for compensation from Iraqi caused delays. The level of investment for the IOCs, or rather lending to the Iraqis, are staggering and it is only because the time exposure of the investment/loans is short that the contract are economically viable. And that is dependent on project progress.

    Of course the 1 License Round Contracts generally have a higher remuneration fee and are as such more robust the those with a lower fee from the second round. A lot of the decision making on these contracts, though, took place in a very competitive and aggressive climate, where many companies put a strategic value on these contracts. Reality has now set in, and the calculation made a couple of years back might look overly rosy at the current time. This, combined with Exxons belief in its own position, might at least partly explain this bombshell.

  17. Kjetting said

    You should also note that the Cabinet approved for signature the Gas Deal with Shell yesterday. Shell is a partner in West Qurna 1 (WQ1) and the passing for this yesterday, although having been on the agenda for some time, is making sure to “tie” Shell to Baghdad. Shell has also been rumoured to look at KRG opportunities. This likely also opens up to Baghdad to “freeze” WQ1 while not jeopardising their relation to Shell should they not find a new operator.

  18. Observer said

    on timing of production increases. My information indicates that SOC is causing long delays in granting permission for subcontracts as they are insisting on multiple bids (no single source) and complying with Iraqi contract law which is not geared towards speed, rather towards costs. Thus, pre-qualification is becoming the way the IOC are using to filter out the crazy bids (those who take the job at lower bids, and play change order games). The learning ramp for IOC is very steep and many PM’s are being rotated out as their relations with Iraqi counterparts become poisoned. It does not help that the Iraqi counterparts are resentful of the IOC as they no longer control the “kick back” factor.

  19. Kjetting said


    Increasingly the IOCs are putting the Ministry under pressure and they are making more rapid decisions as Iraqi caused delays come with a cost to Iraq. The tender prodcedures is probabaly a good thing for all parties, and something the IOCs are used to. The problem has also been that all decision, even if they are within the mandate of for instance SOC, have been pushed upwards to the minister. Moving towards the major investment decisions in 2012 it seems the minstry is more willing to push decisions through. This tendency might actually, paradoxically, improve thanks to Exxons decision.

  20. I just read that Issam Chalaby said the Exxon Mobil fields actually fall outside the KRG’s jurisdiction (in Nenawa). This may throw an ax in the clockwork.

  21. Observer said

    thanks for the info Kjetting,
    I do not have hope for SOC (or any other Iraqi ministry) to become more agile and move the decisions to their appropriate levels…. A simple decision as to who to send out of Iraq for training has to be approved by the minister!!!! There are only a few DG’s with enough guts to make decisions (usually it is the DG’s who are not corrupt!). The rest always move the decisions upwards (so that there are partners to blame/support) to avoid being accused by the inspector general of corruption. It is a complex problem. By the way, if you think the Iraqi government is dysfunctional now, wait a couple more years when the technical cadres trained in the 60’s, 70s and 80’s retires. But that is so far out on the horizon that few people have even started thinking about it…. Recall, few successful Iraqis came back post 2003. But that is another thread entirely.

  22. Observer said

    Issam is not well informed on this 😉 Please do me a favor and consider for a moment that EXxon is smart enough to know where the fields are. The better part of what Issam is questioning is if the “blocks” contain previously known reservoirs (and thus may fall outside the technical language of the constitution defining “existing fields”). The bottom line, however, is that KRG is pledging that all moneys from sales is to to go to the Iraqi budget. That reduces Sheristani’s arguments to “cost” of recovery. Given that he has been unable to increase the production (and hence net income), he has a hard a time getting the oil committee convinced.

    Loom, the bottom line is that Iraq may end up with unrecovered reserves in 20 to 30 years when the world is going to move from oil to gas and even to solar trough energy. The idea that sheristani is protecting Iraq’s assets from “exploitation” may be easy to swallow if he was able to increase the production on his own already.

  23. John said

    I’m glad Exxon have called Baghdad’s bluff. All year Sharisthani has been stating the KRG contracts are illegal and Maliki has done nothing to get the FOGL through. The reaction in the media if accurate shows that Maliki and Shari had no intention of approving the law by year end or they would not be talking about cancelling the WQ contract.

    It’s crunch time for these centralist dictator’s in the making. Agree the O & G and start making some money for the poor people of Iraq and bringing the regions together or kick out Exxon which will be the final message to the Kurds of Baghdad’s intent and they can then withdraw from the coalition and have a go on their own

    Unbelievable these power hungry egomaniacs in Baghdad. I thought our government was incompetent.

  24. The analysis that Exxon jumped ship simply because KRG contracts are more attractive doesn’t work for me. The KRG indeed offers more attractive terms (PSAs), but that contract’s for exploration – and so the company might find very little oil, or none at all. Why would it gamble an enormous field for a moderate (at best) exploration prospect? This is why we’re speculating as to what conversations have taken place behind the scenes.

    Kjetting, I agree that the risk is about delay – and that’s what has already made the contract less attractive than it looked 2 years ago. But it’s a non-sequitur to say the government gets a lot of money, therefore the contract is marginal for the company. The company doesn’t care what the government gets; it cares about its own return on investment. And no-one can plausibly say a 19% return is marginal

    It’s true that their terms ALONE, considered in the abstract, look tough compared to other countries. But the mistake many people make is to consider the terms in the absence of context. And there’s no other oil province comparable to Iraq that is accessible to IOCs. You can’t simply say Equatorial Guinea, for example, gives the companies a higher take so is more favourable – there’s much less oil in EG and it’s far, far more expensive to extract. The key factor to consider is profitability, taking into account BOTH the terms and the nature of the resource.

    Observer, many of those cadres have already left – either through reaching retirement age or because they were pushed out or because of security issues. That’s a major reason the Ministry is such a shambles.

    Faisal, it was the same with the Hunt deal in ’07, also stretching into Ninewa.

  25. Xenophon said


    I take your point. A 19% rate of return is certainly not negligible. But the total profit ($ amount vice rate of return) is not unimportant either. Do you have an estimate for Exxon’s total raw ($) profit from WQ1? How does that compare to what they think they can get in Kurdistan?

  26. Patrik said

    Really interesting situation with EM and Shahristani I think.

    Do you remember how confident VP Shahristani told the press in person that Maliki was misquoted when he gave the Kurds green light for PSC/PSA in January 2011 in an interview with Reuters? Shahristani did not attend the meeting and still he “knew”.
    With the EM deal his position more remote. His office has made some statements but not Shahristani in person. I think he is really concerned how to get out of this situation and keeping up appearances.

  27. Observer said

    Gregg, and all,
    One variable that is missing from all the speculation here is: WHat happens in the south after the US withdraws? There has been arms smuggling going on in earnest over the past 6 months to pro-iranian militias. the operating theory I heard at the time is that it was stockpiling for the case when (and if) the US does not withdraw. Well now the US is withdrawing. WHat will become of all these weapons in the arms of thugs. Might they be used to “blackmail” IOC’s operating in the south. It is not in the interest of Iran to have the Iraqi oil on the market. US based companies maybe better off reducing their exposure in the south lest they become a bargaining chip.

    An added complication in KRG is that majority of oil deposits are heavy. Hence may require much treatment (expense) to transport via pipeline. There are plans for building pipelines independent of SOC/NOC pipes to Chihan. So the deal may also include down stream work (which is lucrative!).

    All in all, it is three dimensional chess and thus very entertaining. But bottom line, this is a good move not only for KRG, but Iraq and the US in my opinion. A much needed “win” when we have been loosing one chip after another in the short term. It is time to buckle down and do something about the long term Iranian influence in Iraq and the region.

  28. Kjetting said

    First of all, I don’t think it is possible to argue that Exxon has jumped ship. They have taken a risk, possibly reasoning that they are protected by their importance to developments in the South in general and because they are operating an already producing field, i.e. easy barrels for Iraq too.

    Secondly, I do not know where the 19 % IRR number comes from, or whether it is correct today, nominal, real or what other conditions are attached to it. As a non-economist I have at least learned that IRR is not IRR, and can be affected in a number of ways. Without going into the weeds of this completely, I would just say that one should treat such figures with care and as proof of very little. What counts is the IRR in app. 7 years, not what the economist/alchemists tells you it is expected to be today. And experience might now have told Exxon that they risk getting something quite different then 19 % IRR at the end of this.

    As said in a previous comment, Exxon is protected by a slightly higher fee, but the contract and project economics is extremely vulnerable to a very few issues in this contract, and the lack of risk sharing in the contract therefore is favoring the state in this equation. Delays through lack of delivery on the Iraqi side, and even minimal changes to what is cost recovered, will quickly make a mockery of any purported IRR. Because the volume of the investment is so high, and what is left for the companies is so little, this effect is magnified. There is very little buffer here, and that is why the level and size of the government take is important.

    As to the risk of politicized violence in the South, I don’t know. The US has not really played a big role there the last couple of years anyway. The companies are already facing a number of security issues based on local grievances, and are coping more or less well with that. What I think we should consider though is what actual level of activity it takes Iran to significantly affect the output of oil when these fields are producing. The export route will of course be relatively vulnerable to sabotage, but will Iran be willing to start something that looks like a covert war to stop it in full? Would that be accepted by any government in Baghdad? And given the current trajectory of Iranian oil production and the likelihood of a long period of sanctions, would they even care if Iraq reached 5-6 million barrels per day? I doubt that Iran will be able to do much beyond the occasional pin-prick without actually starting something that looks like a full war to stop Iraqi oil export in the South.

  29. Salah said


    I think I am still holding my argument; there are no real politicians in Iraq for the last eight years.

    Iraq got a group of people who are most of them a power hungry, inexperienced, thugs, who don’t care about Iraqis as nation or as state they all worked for their individual goals most of them driven by Sec. sickness and brainless when it comes to politics.

    I am still waiting for Iraq to get some real leaders who can show good well to work for the nation first and foremost who loves Iraq as country and Iraqis as “HIS” nation without differences what ethnic, sec or religion…….

  30. Tore said

    How do you get 19% return when they get 1.9 USD per barrel on WQ1? If the oil price is 100 USD isn’t it more like 1.9%?

  31. Ok, the 19% figure came from a Deutsche Bank study, using Wood Mackenzie’s model, in April 2010. They didn’t specify whether it was real or nominal, but I assume real, as I don’t see any point in nominal figures. Contact me via if you want me to email the study to you. Of course it’s necessarily full of assumptions, but given the source I reckon it’s as good as you get without access to the companies’ own data and/or a crystal ball. In any case, BP and Eni have publicly given similar or higher IRRs for their first-round projects.

    As I see it, the downside is from delays; the upside from yet-to-be-found reservoirs and from overcharging on cost recovery (which seems to be rife). It’s also not clear that the DB analysis included the post-auction changes from the model contract, which made it more favourable to the IOCs in several respects. Note that the contract sets time limits on govt decisions within the project itself (contracts, procurement, approvals etc) – the main problems in this regard seem to be for indirect decisions such as visas and the like, and infrastructure, including the water injection project.

    One of these days inshallah I’ll get round to building a model of the fields to test what some of the DB assumptions were, and sensitivity to other factors.

    In fact the investment is relatively low. Because the project is structured so as to recycle revenues into investment, the company would never be exposed by more than a few billion, and all investments should be recovered within a few months. These factors combined with the sheer scale of production are what make the project so profitable on a low nominal per-barrel fee.

    Xenophon, DB gives the NPV as $889m, presumably at 10% discount rate. As you’d expect, this is fairly high, due to the size of the project.

    Tore, the return means return on investment – a measure of profitability – rather than how the proceeds are split. It’s complicated, especially by the effect of time, but as a rough analogy, if I invest a dollar and get $1.19 back, that’s a return of 19%.

    Apologies to other readers for going so far into oil project economics in this comment. Perhaps further economics stuff could be discussed by email to spare fellow readers?

    Observer, one point on which I think there is consensus is that the deal will weaken Baghdad. Which means more potential for Iranian interference, not less.

  32. Xenophon, I forgot your other question. You can’t compare the rewards of WQ1 with the Kurdistan blocks because the latter are for exploration – and so no-one knows how much oil will be found there. They may not even find commercial quantities.

  33. Kjetting said


    IRR is in effect the interest on the money you invest, in this case lend to the Iraqi state. There are any number of conditions on that number and a number of factors that play into it, but it has very little to do with the oil price in relation to this contract. The number of barrels the companies get as payment will vary with the oil price and be a function of their remuneration fee and cost recovery claims.

  34. Observer said

    thanks for the info Greg,
    On weakening Baghdad. I am not in support of a centralizing the power. To my way of thinking decentralization is the better way and moreover, it is time to end government control over all aspects of the economy, from natural resources, to employment, to etc. Frankly, i think iraq (and the region) has the oil curse and thus I think there is a need to shake it up. One aspect of centralization and it s stupidity is the fact that Shehristani has been in control of the oil sector since 2005 and what have we got to show for his leadership? More iranian influence is defacto and the Exxon Deal is not going to increase or decrease. One myth that the DOS has been propagating is the idea that Maliki is not an Iranian puppet. Well, I assert the opposite. Yet, the Iranians (and he and his party) played it superbly pretending to be “at odds” until ti was too late for our erstwhile brain trust in DC to recover. Thus we have managed to pull defeat from the jaws of victory after the last elections.

  35. salah said

    So far, conspiracy theorists alleging that American appetite for oil was the real factor behind the Iraq War

    Why on earth else would a group of oil companies meet and discuss division of Iraqi oil fields in 2001? Why on earth would the list of companies attending the task force then turn out to be the same companies who recieved contracts for oil in Iraq in 2009? Why did Cheney not allow the freedom of information on the content of the task force meetings?

    You don’t have to be Sherlock Holmes to start to put it together now, do you?

    Iraq needs investment because of the destruction from the war, Under Saddam they had electricity and water.

    Given that Iraq previously had full sovereign control of it’s own oil, and all other oil producing nations do not allow foreign investment, why should Iraq have felt it necessary to hand out oil contracts to anyone? If they need investment so badly, why did the UN not step in and enforce the Iraqi oil be developed purely for the benefit of Iraqi people, who have suffered so much?

  36. Reidar Visser said

    Salah, the first part of your comment was cut and pasted from an anonymous commenter on another blog:

    I’d be interested to know the exact details and original source for that 2001 meeting.

  37. Salah said

    Apologies to all of mistyping of last my comment I should use it between (“ “) as quote, however
    Reidar, you been with my comment as “ Sherlock Holmes” but it hard for you “ be Sherlock Holmes” about Iraqi oil and the war/wars with Iraq from 1971 till the distraction of state of Iraq in 2003.
    I hunted for you some source talking about 2001 meeting, as for asking for “the exact details and original source for that 2001 meeting. “ form me I have no sources or tools even links and ties to help me to get you what you asked you are in better position as “Iraqi & Gulf “ historians to sniff for the information unless you are not interested in this field of info.

    Cheney himself a former oil executive that chaired the meeting of the group, moreover he did established oil company in France that was purchased the majority of Iraqi oil the under the sanction and Oil for Food program.

    Leave here and you should play your “Sherlock Holmes” skills to find more about those who looks adfter “BALCK Gold “ folks.

    Surprise, surprise! Iraq war was about oil

    Secret memos expose link between oil firms and invasion of Iraq

    Leave No Oil Reserves Behind, Including Iraq’s: The Geopolitics of American Imperialismby Edmund

    Blood for oil?
    Apr 19th, 2011 by John Donovan. No comments yet

    What Happens to the Iraqi Oil?

    Click to access 427.pdf

  38. Greg said

    Salah, are you thinking of the Cheney Energy Taskforce? It did consider Iraqi oil and it did meet senior executives of oil companies, though I haven’t seen any evidence that both happened at the same time. Also, we know very little about the specifics of its Iraq considerations, in spite of many people’s efforts. All this is because the taskforce was deliberately secretive. (Reidar, I think Salah meant allocation/assignment rather than division in the sense you were using it)

    In my book I revealed the oil company pre-war meetings with the British govt (described in 3 of Salah’s links), and also showed how thinktanks that were thinking about Iraq’s role in the oil market influenced the early Bush administration – per Reidar’s and my exchange earlier in this comment stream.

  39. Reidar Visser said

    Is the 2001 reference a mix-up with this one?

    That article suggests environmental concerns, rather than Iraq, was the main reason for the controversy about the meeting with the IOCs.

  40. bb said

    “conspiracy theorists ….. haven’t quite been able to fit their theory to the empirical realities”

    And Reidar, no doubt you noticed that there were/are no constant rants about Libya being “all about oil”. Perhaps, after all, it was “all” about removing a tyrant and replacing regime with constitutional democracy – the repudiation of 3 decades of the Kissinger Doctrine.
    Iraq’s regional neighbours now cottoning onto the idea with alacrity, even the Syrians.

  41. Salah said

    “Replacing regime with constitutional democracy – the repudiation of 3 decades of the Kissinger Doctrine.?”

    without doubtKissinger he is a war criminal if you like him that your right but he done massive killing in different places around the world this not a word by ““conspiracy theorists” this was the history of a man and a killer.

    Secondly if you think it’s all about democracy you need to think twice before stating yourself:

    “Now, we didn’t go to Iraq to bring democracy to the Iraqis. And I try in the book to really explain that that wasn’t the purpose,”

    We have retold this long story for one simple reason: This is why George W. Bush and Tony Blair and Jose Maria Aznar led their governments and a host of others to war to remove the Saddam Hussein regime in March 2003. It was not, in the first instance, to democratize the Middle East

    No thief will tell you he can go to steal some things, so you searching or hear and read statement in plain English that those lead the war on Iraq from 1971 till 2003, this not can be found just like WMD saga, or they will never come on TV and telling we have to steal Iraqi oil?

    As now days all in news, Israelis will attack Iran, why then Israelis did not went public in 1967, or in 1982 with Lebanon and other wars or bombing Iraq in 1981…..please tell us why they did not went public……?

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