Iraqi oil Minister Hussein Shahristani announced last week that he aimed to sign oil production contracts with foreign companies by the end of next year. Notably, the announcement was made in Australia - like most of the significant statements of Iraqi oil policy, it was made to non-Iraqi ears.

The same was true of the confirmation last month of the form of such contracts. Speaking to the conference of the International Compact for Iraq, a meeting of international donors in Abu Dhabi, Deputy Prime Minister Barham Salih, who heads the committee drafting a new oil law, announced that production sharing agreements (PSA) would be used - the type of contract favoured by the companies themselves.

Putting Mr Salih's comments into context, the US government representative to those talks threatened that any future economic assistance to Iraq would be conditional on economic reforms - the priority among which was the passing of an acceptable oil law.
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 During the drafting of the oil law over the last five months, three consultations have taken place - none of them with Iraqis. The US government and the multinational oil companies were presented the draft law for their comments in July. Last month, the International Monetary Fund joined this list, examining the draft oil law in its quarterly review of the Iraqi government's compliance with its economic conditions.

But the Iraqi people have not been consulted, nor even has the Iraqi parliament. Indeed, Iraqi civil society groups and parliamentarians who have asked to see the draft have been told that it does not exist. Instead it will be presented to the parliament in December, to be pushed through (the government intends) as a fait accompli.

Russia realised the mistakes it made by signing PSA contracts only when it was too late. It remains to be seen whether Iraq follows the same course.

Thursday, December 14, 2006
Iraqi trade unions attack plans for foreign company control of oil

At a meeting in Amman, Jordan, leaders of Iraq's five trade union federations - between them representing hundreds of thousands of workers - called for a fundamental rethink of the forthcoming oil law, which is designed to allow foreign investment in the oil sector.
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Council on Foreign Relations
Iraq and Oil: Revenue-Sharing Among Regions

According to a recent study by the Global Policy Forum, sixty out of Iraq's eighty known oil fields may be explored under PSAs, handing at least 64 percent of Iraq's known oil reserves over to foreign investors.
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