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For Five Years We've Called It Blood for Oil

For Five Years We've Called It Blood for Oil

By David Swanson

And we've been right. The first of the five "benchmarks" in the war funding bill passed by the U.S. House of Representatives on May 10 requires Iraq to pass an oil law.

The law has long been drafted, and it opens up two-thirds of Iraq's oil to ownership by foreign corporations (widely expected to be dominated by U.S. corporations). Congress Members who voted against the bill, including Rep. Dennis Kucinich and Rep. Lynn Woolsey are speaking out against this as theft of Iraq's oil:

If that sounds familiar, it's because the peace movement has been saying it for five years. First they ignore you, then they laugh at you, then they attack you, then you win.

Oil workers in Iraq are threatening to strike over this proposed law. And the Iraqi government is listening.

We have a chance to listen too, because from June 4 to June 29, Iraqi labor leaders will be touring the United States to talk about this issue.

The labor movement in the United States is supporting our brothers and sisters in Iraq. Here's an explanation of how the draft oil law privatizes the oil: PDF. This summary was prepared by U.S. Labor Against the War.

If you prefer a cartoon video explanation, here's Jim Hightower.

Here's the actual language of the law: PDF.

Antonia Juhasz provides the following explanation of the key sections of the law:

Article 6: Creating the Iraq National Oil Company
B- Its scope of operations shall include: First: Managing and operating existing producing Fields mentioned in Annex No. 1, and both the North Oil Company and the South Oil Company are linked to it.

Article 12: State Participation
B- The Exploration and Production rights with regard to existing producing Fields are hereby given to INOC...

ANALYSIS: Articles 6 and 12 clearly state that the Iraq National Oil Company only has exclusive rights to the oil fields which are currently producing oil. Experts on Iraqi oil commonly refer to the following statistic: "Iraq has 80 known oil fields, 17 of which are currently producing oil." There is some disagreement over the exact number of producing fields and which fields they are. However, there is uniformity in the understanding that approximately 1/3 of Iraq's fields are currently producing oil and 2/3 are not. Thus, the INOC only has exclusive rights to 1/3 of Iraq's oil. The remaining 2/3 are open, under the conditions set out in the law, to private foreign corporate investment. And, the INOC is even permitted to turn over its fields to private foreign companies if it so chooses.

Article 9: Grant of Rights
A- The rights for conducting Petroleum Operations shall be granted on the basis of an Exploration and Production contract. The contract shall be entered between the Ministry (or the Regional Authority) and an Iraqi or Foreign Person, natural or legal, which has demonstrated to the Ministry or the Regional Authority the technical competence and financial capability that are adequate for the efficient conduct of Petroleum Operations according to the guidelines of the Federal Oil and Gas Council and as mentioned in Article 5C Fifth, and in accordance with the mechanisms of negotiations and contracting stated in Article 10 of this Law.

Article 13: Exploration and Production Contracts
A- An Exploration and Production Contract shall give the holder an exclusive right to conduct Petroleum Exploration and Production in the Contract Area.
B- Except if additional time is needed to complete the operations to assess a Discovery, the exclusive Exploration and Production right shall be granted as follows:

(NOTE from Antonia - the draft then goes on to delineate a 30-year period during which the company has exclusive exploration and production rights).

ANALYSIS: Article 9 states that the right to conduct petroleum operations in Iraq is open to both Iraqis and foreigners on an equal footing. Chapter III then delineates the rights of the "holder" of these contracts. These contracts refer to all of the oil fields not granted to the INOC. This refers to the 2/3 of known non-producing oil fields, as well as any and all fields in Iraq that have not yet been discovered. Thus, this is the provision which turns over at least 2/3 of Iraq's oil to private foreign investment.

Private foreign companies are offered the right to exclusive contracts to explore for and produce Iraq's oil with contract terms that last thirty years or more. There is no such thing as a "Exploration and Production Contract," it is not a recognized contract term. The rights delineated in this provision and previous provisions are far more commonly referred to as the rights granted under Production Sharing Agreements (PSA). The fact that the law is offering PSAs is not disputed. PSAs are the favorite contract model of international oil companies and the least favored model of oil-rich countries. Thus, while Iraq currently has a fully nationalized oil system, the result of this law, if passed, would be to open 2/3 of Iraq's oil to private foreign corporate ownership, control, and investment – in other words, privatize at least 2/3 of the oil regime.

More information is available at



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