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Western Oil Companies Back in Iraq With Unusual Contracts


Thirty-six years after Saddam Hussein nationalized oil and kicked out Western companies, Iraq's Oil Ministry has awarded Exxon Mobil, Shell, Total, and BP contracts set to bring the oil giants back.

Despite the fact that high oil prices put these contracts in high demand, Iraq granted very unusual no-bid contracts, meaning the companies did not have to compete with their counterparts in China, Russia, and India. Today's New York Times explains:

There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism. It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq’s Oil Ministry.

The oil companies assure that they intend to help Iraq rebuild its neglected oil infrastructure. To see how, read more.

Private companies will bring new technology and expertise to Iraq, as well as new oil revenue to help rebuild other infrastructure. Interestingly, the contracts, designated as "service contracts" to be paid with oil, circumvented any legislative approval.

For a more in-depth explanation on this unusual, yet seemingly predictable development, check out the whole NY Times story. Would it have been better if Western oil companies came back to Iraq under less exceptional circumstances?

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