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By Joshua Holland
AlterNet
Monday 16 October 2006
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Iraq is sitting on a mother lode of some of the lightest, sweetest, most profitable crude oil on earth, and the rules
that will determine who will control it and on what terms are about to be set.
The Iraqi government faces a December deadline, imposed by the world's wealthiest countries, to complete its final Oil
Law. Industry analysts expect that the result will be a radical departure from the laws governing the country's oil-rich
neighbors, giving foreign multinationals a much higher rate of return than with other major oil producers, and locking
in their control over what George Bush called Iraq's "patrimony" for decades, regardless of what kind of policies future
elected governments might want to pursue.
Iraq's energy reserves are an incredibly rich prize; according to the US Department of Energy, "Iraq contains 112
billion barrels of proven oil reserves, the second largest in the world (behind Saudi Arabia) along with roughly 220
billion barrels of probable and possible resources. Iraq's true potential may be far greater than this, however, as the
country is relatively unexplored due to years of war and sanctions." For perspective, the Saudis have 260 billion
barrels of proven reserves.
Iraqi oil is close to the surface and easy to extract, making it all the more profitable. James Paul, Executive
Director of the Global Policy Forum, points out that oil companies "can produce a barrel of Iraqi oil for less than
$1.50 and possibly as little as $1, including all exploration, oilfield development and production costs." Contrast that
with other areas where oil is considered cheap to produce at $5 per barrel, or the North Sea where production costs are
$12-16 per barrel.
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