(Dem) Senators seek to block Iraq oil contracts

[sabra]

Source: CNN

Schumer and Kerry appeal to Bush administration to stop no-bid deals with big companies until equal royalty distribution is guaranteed.


NEW YORK (CNNMoney.com) -- Two U.S. senators asked the Bush administration Tuesday to stop the Iraqi government from signing imminent no-bid contracts with several U.S. and European oil companies, expressing concern about the distribution of royalties from the deal.

Sen. Charles Schumer, D-N.Y., and Sen. John Kerry, D-Mass., sent a letter to Secretary of State Condoleezza Rice expressing concerns about a contract that the government of Iraq is preparing to sign with Exxon Mobil Corp., (XOM, Fortune 500) Royal Dutch Shell (RDSA), Total SA (TOT), Chevron Corp (CVX, Fortune 500)., BP (BP) and other companies. The contract would let those companies develop Iraq's largest oil fields.

The senators, who released the letter, said they are worried that unfair distribution of oil revenue could inflame the violence between the warring religious and political groups of Iraq.

"We urge you to persuade the to refrain from signing contracts with multinational oil companies until a hydrocarbon law is in effect in Iraq," read the letter from Schumer and Kerry.

Read more: http://money.cnn.com/2008/06/24/news/economy/iraq_oil/?postversion=2008062411

[The Blue Flower]

1. Like that's going to change anything

Waste of ink.

[irislake]

2. Good to know

there are some Americans who don't want to steal the Iraqi oil. Sheesh!

[DLnyc]

3. Sounds good, but aren't they ignoring the main point?

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In the current system, royalties on existing fields go to the central Iraqi government, while royalties on undiscovered and undeveloped fields go to the regions where they're located. Sunnis tend to have a greater presence in regions without oil and they tend to support royalties going to the central government. Kurds, who dwell predominantly in the oil-rich north, and Shiites, who are mostly in the oil-rich south, tend to favor distribution based on the regions.

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But they fail to mention that the new contracts are, as I understand it, production sharing contracts. In other words, the oil companies won't be paying any (significant) royalties -- they just pump the oil and keep it, and pay a nominal fee to the government. Seems really hard for anyone in the United States to understand that most countries OWN THE OIL UNDER THEIR LAND and don't just let multinational companies take it for a small fee.

See 'nationalized oil' versus 'production sharing agreements' (euphemism for stealing). Probably a lot of the violence in Iraq would have been mitigated if BushCo was not insisting on de-nationalizing (i.e. stealing) Iraq's oil.