Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How the US Stole Iraq's Oil !

Politics / Iraq War Jun 10, 2005 - 09:09 PM GMT

By: CarlosM

Politics

The UK-based PLATFORM has revealed the strategy to take over Iraq's oil in a new report, "Crude Designs."

According to the authors, it's not quite the ownership of oil reserves that western interests are after, but an arrangement that will allow governments and companies to deny that “privatization” is taking place at all.

The plan, which was developed by the US State Department's Future of Iraq Project, and supported by key figures in the Iraqi Oil Ministry, is to use highly complex contracts known as production sharing agreements (PSA's) , which have existed in the oil industry since the late 1960s.

PSA's are an ingenious arrangement that leaves intact state ownership of the untapped oil, while inverting the flow of payments between the state and companies. Whereas in a concession system, foreign companies have rights to the oil in the ground, and compensate host states for extracting their resources (e.g. via royalties or taxes), under a PSA foreign companies are compensated for their investment in oil production infrastructure and the risks they take in extracting the oil. Under PSA's, the private companies will continue to operate as "contractors" -- a label that is misleading because it gives companies control over oil development and access to extensive profits.


"PSA's are effectively immune from public scrutiny and lock governments into economic terms that cannot be altered for decades," the authors contend. As Helmut Merklein, a former senior official of the Department of energy once explained, PSA's inevitably tend to give foreign oil companies excessive profits at the country's expense (the authors estimate those profits will be between 42% and 162%).

PSA's are also designed to deprive governments of control over the development of their oil industry. PSA's would, for example, exempt foreign oil companies from any new laws that might affect their profits, a principle that goes far beyond certain CPA orders which already grant U.S. companies immunity from civil lawsuits in Iraq. Under terms that are reminiscent of certain trade agreement provisions, for example, any disputes would be heard not in the country's own courts but in international investment tribunals, which would rule on commercial grounds without considering the national interest or other national laws.

For that and other reasons, oil experts agree that the purpose of using PSA's is largely political. In Iraq's case, the PSA contracts could be inked while the country still under military occupation. The use of PSA's has been endorsed by the current Transitional Government, while the new Iraqi Constitution includes vague provisions that would allow foreign companies in.

Yet the use of PSA's in Iraq would represent a major departure from the normal practice among large oil producers in the region. Saudi Arabia and Kuwait (not to mention Iran) also do not use any form of foreign company equity involvement in oilfields. (Currently just 12% of world oil reserves are currently subject to PSA's)

Although no one can predict what will happen, the pressure put on Iraq to adopt PSA's is substantial and has a lot to do with the coded language that talks about "spreading democracy" throughout the oil-rich region. The current government is fast-tracking the process and is already negotiating contracts with oil companies in parallel with the constitutional process, elections and passage of a Petroleum Law.

PSA's are the worst possible deals for countries; in Latin America some of the worst PSA's gave domestic governments royalties of just one percent of their natural gas revenues.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in